Whether because of a global health crisis or an economic shock, moments like the current one challenge digital transformation leaders to keep at least their most important initiatives alive — particularly those that hold out the promise of a relatively near-term payoff.
“It depends on how much you stumble,” says Martin Mocker, one of the co-authors of Designed for Digital from MIT Press, a professor of information systems at ESB Business School in Germany and a research affiliate of the MIT Sloan School of Management. “If you took a hit, you may not be able to spend the amount of money on digital that you did the year before.” The question is whether the transformation budget really has to drop to zero. “If your situation is really about survival, I guess you should focus on that,” he says.
At the same time, the tremendous disruption companies have been enduring over the past several months has shown how quickly digital transformation can happen when it’s not optional.
That’s true in the “future of work” category, where organizations that never supported remote work before, or only minimally, have had to overhaul enterprise networks and collaboration systems overnight. It happened in many areas of digital commerce to allow business to proceed with a minimum of human contact at a time when avoiding potentially infected people was important.
The upside potential is that the best organizations will turn what they did in the crisis into agile habits for the long term.
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Digital transformation speed and agility ahead
Emmet B. Keeffe III, founder of the Insight Ignite unit of the global private equity firm Insight Partners, says he has talked with leaders at dozens of companies who felt stymied in their digital transformation efforts pre-pandemic but saw barriers to innovation melt away in the midst of the crisis. Presenting at the recent TechStrong online conference (replay available on-demand), Keeffe said that some long-term projects like multi-year software implementations are being put on hold, “but all customer-facing digital projects are going ahead full speed.”
Cybersecurity concerns related to the surge in remote work also shook loose dollars for projects to improve security, he adds.
Perhaps more significant is the speed at which results have been accomplished. For example, IT leaders at one global bank told Keeffe they had been dithering over a slow rollout of Microsoft Teams for 24 months amid concerns from naysayers. “Then in 16 days, they were able to get it out to several hundred thousand desktops,” Keeffe says. “That was a major eye-opener for the CIO. Now he’s asking, How do we do this for all of our transformation projects going forward?”
Keeffe tells a similar story from a major automotive company that had been trying to win adoption for its digital dealer platform for years. “The minute the crisis hit,” he says, “they got another 1,000 dealers onto the platform in two weeks.”
Charles Araujo, an independent analyst and founder of The Institute for Digital Transformation, has noticed the same pattern. For example, he has seen multi-year rollouts of mobile computing accelerated to the point where they happened in weeks.
The organizations that survive will have built what I call an adaptive ability, an adaptive aptitude, Araujo says. “It’s less about any one innovation than the ability to rapidly pivot around whatever may change — that, I think is very real.”
Among other things, this could be a breakthrough for agile development, Keeffe says. Despite the growing use of agile, many big companies have still been running a lot of projects on linear waterfall methodologies. Yet once speed of implementation became all-important, Keeffe notes, “all waterfall projects have been put on hold because they’re deemed higher risk than agile projects.”
Among the leaders Keeffe has spoken with, he says their concern is how to avoid falling back on old ways as the crisis subsides.
Smart companies will apply the agile approach of breaking things into chunks, or short sprints, to business initiatives as well as software projects, as a way of limiting risk, Araujo says.
[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]
Digital transformation rescue
M. Nardia Vincent, a technology and management consultant based in Belgium, devotes a chapter of her book, Leveraging Digital Transformation, to case studies of digital transformation rescue – as in preserving the best elements of a digital transformation program even when a company is in crisis. “It becomes a question of priorities,” she says.
When a company is on the brink of collapse, what matters is sustainability, at least to the next year or the end of the year, Vincent points out. When evaluating projects, the higher the return on investment, the better. Understanding that you can’t do everything at once, it’s time to make choices that allow the company to survive in the short term without sacrificing too much of the potential for the medium and long term, she says.
Many organizations are scrambling to make up for past mistakes, for example with software choices and technical architectures that prevent them from being as agile as they need to be right now. Vincent offers the example of one supermarket chain that didn’t do its homework when picking self-checkout technology and is at a severe disadvantage right now as automated rather than cashier-based checkout is particularly important.
On the other hand, Vincent agrees that well-managed organizations will learn from the experience of the past few months and be better for it. “The world for tomorrow, at least for the next few years, is being created now. COVID-19 is not over – it’s going to last for a little while – and the people who are solving problems are going to create revenue. I don’t think any company that decides to stay and wait for the future will survive.”
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