Strategic digital transformation is moving beyond IT to impact the entire enterprise, modernizing how companies work, compete, and grow in the digital economy, according to Altimeter’s annual State of Digital Transformation report, released Thursday.
“We’re shifting from a ‘digital’-focused approach toward digital transformation to one where digital is an enabler for purposeful enterprise-wide transformation and innovation,” Altimeter principal analyst and report author Brian Solis told TechRepublic. The report surveyed 554 professionals from enterprise organizations across North America, Europe, and China.
Ownership of digital efforts is widening to the C-suite and cross-functional groups that have a broad view of the organization, the report found. CIOs most often own or sponsor digital transformation efforts (28%), and are increasingly becoming business partners who facilitate key digital investments and change organization-wide.S
“In the more elite organizations, CIOs are no longer beholden to managing technology investments, implementation and maintenance. Nor are CIOs continuing to be focused on simply modernizing technology platforms,” Solis said. “They are becoming strategic partners to business stakeholders across the enterprise. They are the enablers of the ‘digital’ within digital transformation.”
Surprisingly, CIOs were followed by CEOs (23%) in taking a more proactive role in digital transformation leadership this year. They were followed by boards (14%), chief digital officers (11), chief innovation officers (11%), CMOs (5%), and chief experience officers (5%).
“Digital transformation is ultimately the sum of its parts,” Solis said. “Where traction really starts to take hold is when these disparate groups collaborate and coordinate holistic digital transformation initiatives.”
For example, customer experience is constantly ranked as one of the leading drivers of digital transformation, Solis said. From the customer’s perspective, they don’t care that organizations are siloed; they just want an integrated, personalized, efficient, and intuitive experience. So when customer-centric digital transformation initiatives are coordinated and optimized, customers will notice, Solis said.
“Enterprise-wide digital transformation is at its greatest effect when it is bigger than any one group and focused on customer experience and business performance and growth,” Solis said.S
Digital transformation success
The following seven priorities will accelerate digital transformation maturity and success, according to the report:
1. Audit the state of digital transformation at your company across the six stages of transformation
Altimeter identifies six stages of digital transformation maturity to define how far along organizations are in the process. Most companies tend to think they’re further along in their digital transformation journey than they actually are, the report found. Auditing your organization at strategic intervals will allow you to track your digital progress, and align your roadmap with those that are succeeding.
2. Study the digital customer journey and organize efforts around insights and opportunities
Organizations tend to prioritize customer experience initiatives without studying digital or mobile customer experiences regularly, the report found. Leaders need to understand how customers’ intents, behaviors, and preferences are evolving to shape CX digital strategies. Studying these insights should be the priority of a cross-functional group, which then communicates their findings to the digital transformation leadership.
3. Study the employee journey to improve EX
Helping employees develop digital literacy, and training and engaging them around a digital transformation vision, will empower them and allow them to become partners in transformation efforts, the report found. Study the employee experience and journey continuously to help connect insights to initiatives.
4. Make data the center of your decision-making
In many organizations, data is fragmented, incomplete, and siloed, the report found. Leading companies are building centralized data infrastructures to better inform and support cross-functional efforts, which promote collaboration and integration, and unify digital transformations around data-supported efforts. Advanced organizations are investing in data science, artificial intelligence (AI), and machine learning to support real-time and predictive analytics, and create a competitive advantage, the report noted.
5. Align digital transformation investments with business objectives
Though CEOs are continuing to lead digital transformation efforts, many of these efforts are still often viewed as cost centers, and the need to substantiate investments is very important, according to the report. To change the perception of digital transformation from cost to investment strategy, leadership teams need ROI metrics, and ways to tie innovation projects to business outcomes.
6. Consider carefully how technology trends factor into your digital transformation roadmaps
As CIOs and others form business partnerships to explore how technology can help meet business goals, digital leaders must track emerging tech trends and assess where those technologies could have the greatest impact and ROI, the report said. IT can help connect those trends to overall enterprise and corporate innovation goals, it noted.
7. Prioritize a culture of transformation and innovation
Culture is consistently named the leading challenge to digital transformation and innovation, according to the report. Companies making the most progress in their digital journeys are prioritizing investments in organization culture to be more iterative, adaptive, and innovative.
“CIOs and IT leaders are experiencing a renaissance, a broadening of their purview within the enterprise,” Solis said. “The key takeaway is that they have to step outside their modus operandi to connect the dots between business goals and current capabilities as defined by market trends and customer expectations and behaviors.”