The Five Pillars Of Digital Transformation Explained

Colm Maloney

Recently, some of my learned colleagues wrote a useful blog post about the five pillars of digital transformation. Rather than simply sharing the article, I decided to expand on it by sharing what I’ve seen (directly or indirectly) over the last couple of years in terms of each of the pillars they describe.

1. Establish a digital mindset

This mindset must start at the top of the organization.

  • I have seen organizations hire senior executives from more digitally savvy organizations, sometimes into a chief digital officer role that becomes the core of their digital transformation efforts. My view is that this should be a temporary role, as the aim of a digital mindset should be consistency across all executives.
  • I have heard of organizations sending their executives on programming introduction workshops so they can understand the digital mindset more completely and help drive the vision.
  • This digital mindset needs to be pervasive across the organization because individuals on the front line often understand the reality of the business better than executives. Their knowledge can anchor the current reality and play an essential role in defining new, digitized processes or products.
  • In the case of completely new digitized markets, I agree this anchor on the current reality is more likely to be a hurdle than an enabler.

2. Define a digital destiny

A destiny is not necessarily known from the start and needs to evolve over time. Agility is needed, too; concepts like “fail fast, fail early” ensure that the digital reality you are designing is one that the market values.

The company-wide vision must adapt to market conditions, new entrants, or entirely new markets and opportunities as they arise (or – hopefully – as you create them), and these are often unknown upfront. The speed of business in 2017 and beyond means your three-to-five-year plan needs to be flexible enough to withstand the market’s changing desires. To paraphrase eminent Prussian general Helmuth von Moltke the Elder, “no plan of operations extends with any certainty beyond the first contact with the main hostile force.”

3. Invest in digital technology capabilities

Coming from a software company, I obviously agree with the transformative power of software to shape new business models. But where do you start? What question do you want digital to help you with?

  • Is it issues within your supply chain or downtime with your assets? The Internet Of Things may help connect that part of your business so you can be more responsive.
  • Machine learning and cognitive and predictive analytics are solving very specific issues today, and over the next couple of decades general artificial intelligence will become a reality.
  • Cloud provides the speed and agility needed.
  • As I wrote in a previous blog, new customer communication channels are essential and should be a starting point.

There are many more technologies we could discuss here (e.g., blockchain, mobile, e-commerce), but I hope you get the idea. It is such an exciting time to be in the software industry

4. Adapt skills and talent management

Attracting and retaining digital skills is a real challenge for all organizations, as it’s not easy to find people who have done this before in this early stage of digitalization.

Consider GE’s ad campaign designed to recruit millennials as “industrial Internet developers” to be part of GE’s massive digital transformation effort. GE has done an incredible job of transforming itself; part of the reason is it has pivoted to be a digital company that attracts people who would otherwise have ended up at a software startup.

5. Evolve the organization

Organizational change management is not my focus, but I have read and experienced enough to understand how important it is to making the transformation stick. According to Boston Consulting Group, “Transformation should start with pilots that pay off in weeks or months, followed by a plan for tackling high priority use cases.” It’s part of a three-phase approach where teams learn from their earlier experiences.

McKinsey talks about scaling a transformative culture through a digital factory and its five approaches and capabilities to driving the next-generation operating model.

The time is now for your organization to take action to stay relevant, and the five pillars my colleagues outlined are a simple but useful framework to ensure you start off on the journey well.

My colleagues quoted Ray Kurzweil’s view on change and the impact of this change. In closing, I offer a quote from another great leader of our time, Bill Gates: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.”

For more insight, read the entire Five Pillars of Digital Transformation series.

Colm Maloney

About Colm Maloney

Colm has worked across all elements of the Business Applications market (ERP, CRM & SCM) for 20+ years with some of the world’s largest brands developing, selling and deploying business applications with customers such as Unilever, Nokia, British American Tobacco, Caterpillar, Bank of China, DHL and Airbus Industries to name a few. Since joining SAP in New Zealand, Colm ran Solution Engineering for SAP Customer Engagement & Commerce in APJ, and recently moved into the Role of Presales Director in ANZ, looking after our Customer Solution Manager community. Prior to joining SAP, Colm worked at organization such as Microsoft, Sterling Commerce, and i2 Technologies across five continents: Europe, North America, Asia, Africa and Australia. Colm was born and raised in Ireland and has a Master’s degree in Operations Research from University College Dublin, and currently resides in Auckland, New Zealand.