Refocus: Getting DX back on track

Even before COVID-19 roiled the markets and upended digital transformation (DX) plans, many enterprises were already experiencing a deceleration in their DX efforts.

Typically, an organisation sets out on the DX journey guided by what seems to be a crystal-clear vision. However, without the benefit of experience, it is often difficult to articulate a well-defined digital ambition and scaffold it with sustainable milestones and goals. As a result, many DX efforts start to meander.

According to a survey by consulting firm Heidrick and Struggles¹, 70% of organisations that embarked on DX “lost momentum at some point”. Some of the common factors behind this included the lack of C-suite sponsorship; failure to approach digital as a holistic set of activities; failure to view DX as a new operational norm; and failure to develop the mindset, culture and capabilities that were needed for DX.   

The COVID-19 crisis has, interestingly, addressed some of these factors while exacerbating others.

COVID-19 saw IT teams embarking on “heroic efforts” to cope with new demands. Many of the initiatives that they rolled out were undeniably digital and transformational in nature. They arose out of the massive switch to remote work, the need to scale up digital channels to serve customers, and the need to do all these whilst ensuring that security was not being compromised.

As management consultancy firm McKinsey & Company² pointed out, the importance of digital services to customers, suppliers, and to the entire economy rapidly accelerated during the crisis.

However, the hasty approach of bolting on solutions to plug digital gaps, brought about by necessity under the prevailing circumstances, means that many projects could end up as piece-meal initiatives out of sync with a more holistic approach to DX. Disparate efforts, fighting for limited resources, may create a disconnect between these digital initiatives and the overall DX strategy of the organisation.

On the flip slide of the coin, the pandemic is forcing many enterprises to view digital as the new operational norm. It has catalysed, in Gartner’s³ words, “a reset of the workforce and work itself, a reset of the employer/employee relationship and a reset of the business ecosystem”.

It has also promulgated a change in culture and mindset, with management and employees now more open to the idea of “a new normal” and the need to develop new capabilities and skillsets that are needed to operate under new and sustained digital conditions.

So now is the time for enterprises to seize the day – to refocus their DX efforts, reassess their objectives and look for better ways to run their operations.

“It is possible to think about renewal as you grapple with your triage response and recovery. In fact, if you are an executive leader, it’s not just possible - it’s essential,” said Gartner’s Chief of Research Chris Howard. 

Equally essential is the need for the executive leader to be directly involved in DX as part of the renewal process. He or she will have to keep a firm grip on the reins and make DX a top business priority. This means defining and tracking progress and being prepared to step in when needed, to push things forward in the right direction.

As the pandemic continues to run its course, the first thing that needs to be done is to determine how the crisis has impacted existing business and operating models, identify the uncertainties, risks and opportunities that have emerged, and evaluate them in the context of the wider business strategy. The enterprise may then have to reconfigure its models for the new reality.

Some activities or assets may have to be scaled down or retired; others may have to be scaled up or re-invented. Some could revert to business-as-usual.

For example, some organisations may re-examine the need for centralised physical workspaces as the work-from-home model becomes a semi-permanent arrangement for some of the workforce, supported by business software as a service (SaaS), online collaboration software and productivity tools.

Others may re-invent themselves in other ways for the longer term. Examples include retailers who were pushed by the lockdown to create digital channels or participate in new online ecosystems to reach out to customers. They may continue to pursue these strategies more aggressively as they go forward.

On the technology front, McKinsey & Company² highlights three priority actions that enterprises must take on to ensure a successful restart for DX.

1. A reliable IT infrastructure

The first of these is to make sure that their IT infrastructure is reliable, secure and relevant in meeting the emerging expectations of both customers and internal users.

In a study of consumers in China, the consultancy firm found that 55% were likely to continue shopping online after the end of lockdown. The IT infrastructure will thus have to be able to support the enterprise’s digital sales platforms and deliver a reliable end-user experience.

2. Data-driven decision making

Another technology-related imperative when re-starting DX is to improve access to data and build capabilities that support data-driven decision making. This will put enterprises in a better position to counter business uncertainty in the wake of the pandemic.

At the strategic level, access to data will enable the enterprise to create a “minimum viable strategy” that it can iterate, fine-tune or even pivot in response to changes in the business environment. At the operational level, data can help enterprises to recalibrate their supply chains based on changing demand and production trends and re-train their inventory forecasting models.

3. Reassess technology investments

A third area of focus will be to reassess technology spending. With business revenues expected to slide over the next few months or even years, enterprises will have to re-think and re-prioritise their technology investments to reduce costs whilst at the same time provision enough to build a firm digital foundation to restart, develop or scale business-critical DX initiatives.

Prior to COVID-19, many enterprises were already embarking on DX. However, lack of top leadership involvement, siloed projects and organisational resistance meant that many of these efforts were just stumbling along. What the current crisis presents is an opportunity to recalibrate what DX means to the organisation – to rethink, refocus and reset the transformation.

 Speak to us to recalibrate your DX strategy.

¹ Achieving Digital (Re)Acceleration , Heidrick and Struggles, 2020

²  The Restart, McKinsey & Company, May 5, 2020

³ Reset Your Business Strategy in COVID-19 Recovery, Gartner, June 3, 2020