Traditionally, IT organizations were the go-to experts for digital projects – and they are still critical partners. But transformation cannot happen with technology alone. People, processes, and business models must adjust to help fulfill the promise of investments in the latest technologies such as cloud, mobile, analytics, and artificial intelligence.
According to the IDC InfoBrief “The CEO Role in Best-Run Midsize Companies: Strategically Leveraging Intelligent Technologies,” sponsored by SAP, high-performing midsize companies have CEOs (including presidents and business owners) who understand this line of thinking. They view every digital initiative – no matter the size or originating function – as an opportunity for high-level, company-wide transformation.
Centralized leadership ignites business-wide change
Digital transformation is ultimately about providing and capturing more customer value. Companies should rethink the end-to-end customer experience by first addressing the most obvious customer-facing areas, including marketing, sales, and service. Once the required changes are defined, the business should consider any impacts on remaining areas such as finance, human resources, and the supply chain.
Take, for example, a new business model that enables customers to customize products and experiences to meet their unique needs at a sensible quality level and price point. Eventually, the new approach will shift how the rest of the business operates, including:
- Supply chain: When customers order smaller quantities of customized products, the business model eventually moves from providing products to providing a blended set of products and services. For the supply chain, this tactic calls for considerable changes. Growing businesses need to better collaborate with supplier and logistics networks as one ecosystem and handle everything from a shipment of one item to multiple truckloads more efficiently.
- Finance: Products and customer experiences are often redesigned to take advantage of new payment models. These include subscriptions and charges based on usage and service offerings. This shift substantially impacts finance organizations because payment terms are on a monthly, annual, or biannual basis, instead of one payment. In return, they may require cloud software or an intelligent ERP that combines all product usage data, pricing, and service upgrades into one point of access.
- Customer education, service, and support: As a general rule, customers are not willing to buy a product that they don’t understand or know how to use. Customers are more loyal if they had a problem, received excellent support, and are equipped to realize the full value of their investment. For this reason, companies must provide the educational tools, services, and support that customers need to resolve issues quickly, efficiently, and without frustration.
- Human resources: Engaged employees are critical to the success of the customer experience. When process changes are implemented, business leadership must provide new incentives and key performance indicators to energize adoption, foster complementary work behaviors and skills, and build a culture open to innovation.
- Customer community: Whether a purchase transaction is business-to-business or business-to-consumer, customers want to be connected to other people using the same product. Such an accessible and honest forum allows customers to exchange best practices to answer questions and support their fellow users. More importantly, businesses gain a community that helps guide future product innovation and value.
Even with this small glimpse into how changes to product design affect the rest of the business, it’s clear that digital transformation leadership must come from the top.
Digital initiatives are more than just one-off projects
In most growing businesses, a variety of organizations are undergoing digital initiatives that are confined to individual groups of people, business systems, or processes. However, such a siloed and fragmented approach only leads to failed experiments that do not deliver the expected changes or adaptations that these companies need to succeed.
IDC points out that efforts that drive significant outcomes are never confined to one organization or governed by a dedicated transformation-specific team. Instead, they should impact the whole breadth of the company, changing how the back office and front office operate and breaking down traditional organizational and information silos.
Read the IDC InfoBrief “The CEO Role in Best-Run Midsize Companies: Strategically Leveraging Intelligent Technologies,” sponsored by SAP, to learn how high-performing CEOs are strengthening the position of their midsize business with intelligent technologies.