Digital transformation success: 5 takeaways from MIT Sloan experts

Digital transformation success: 5 takeaways from MIT Sloan experts

Not all of us can be digital natives. A new book by Jeanne Ross shares digital transformation lessons from older companies rethinking product offerings, process, and technology

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4. Pivot to digital ASAP

The need for a robust operational backbone may mean your organization needs to devote more energy to boring but important backend systems before it can do the cool new digital stuff. On the other hand, be alert for the point where it makes sense to declare your operational backbone “good enough.”

One of the case studies Ross cites most frequently, not just in this book but in other writing and speeches like this one, is Schneider Electric, which can trace its corporate lineage back to 1836. A multinational conglomerate headquartered in France, the company makes a wide variety of electrical distribution and management products for utilities and industry.

As far back as 2012, the business unit making equipment for data centers had created sophisticated systems for monitoring and regulating power and cooling. Other, more traditional products were also sprouting IoT monitoring and management capabilities, but initially, these were all different – different sensors, protocols, cloud partnerships, and so on.

Schneider’s management recognized the wasted potential of divergent IoT and cloud efforts.

What makes Schneider a digital design success story is that management recognized the wasted potential of these divergent efforts and gathered them into a coherent cloud platform. With the help of early customers like Hilton Hotels, which validated the potential and provided requirements, Schneider began creating new digital products to help customers manage their energy usage and reduce their costs.

Along the way, Schneider also had an operational backbone problem to solve: a legacy of growth through acquisition that had left it with 150 ERPs and 300 CRM systems, all supporting custom business processes. Schneider recognized the need to simplify its infrastructure. Implementing Salesforce across the company produced a huge win by allowing greater cross-selling of products.

On the other hand, with ERP the company had to decide where to draw the line: “When it reached 12 remaining ERPs, leaders recognized that those remaining would be expensive and time-consuming to replace. The company wanted to refocus on delivering digital offerings, so rather than continuing to invest heavily in digitization of core systems, Schneider decided to link its new offerings to each of these 12 ERP systems,” the book notes.

Ideal? Perhaps not. But settling for 12 ERPs rather than 150 was a sensible compromise.

5. Create a digital platform, not an isolated app

Get started on a digital platform – and then evolve your design.

Creating a compelling digital app, or even a whole series of cool apps, is not the same as creating a digital platform. A digital platform is a set of reusable components – data components, business logic components, and infrastructure components – designed to support all your digital products, now and in the future.

While it will not be possible to create the perfect, scalable, and infinitely flexible platform from the beginning, you must get started and then evolve your design.

Rather than design a platform, the authors write, “digital companies will be tempted to simply code the functionality for any given offering in a one-off, monolithic fashion. This may work for a few early offerings, but it will lead to rework when a company sees growing opportunities to adapt offerings to customer demands.”

[ Get answers to common digital transformation questions and lessons from top CIOs: What is digital transformation? A cheat sheet. ]

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2 comments

Thanks for sharing it, David.

Thanks for sharing it, David.

These are some valuable things people need to aware of. In simple words, opting for digital transformation is rethinking upon old operating models to experiment more and become more agile to respond to customers. You can also check this very helpful article on Staircase To Digital Transformation Success.

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