Digital transformation is an overused term. In reality, most firms are moving to digital out of necessity and taking only small steps to get there. While the work is critical, it’s usually far from the massive overhauls spruiked by business leaders.
That is the view of Roz Gregory, head of customer success and digital transformation, APJ at Pivotal, a software and services company that has worked with organisations like Telstra and Service NSW to accelerate their digital journeys.
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“I think everyone understands that in order to improve their position in the market or their profitability or their share of wallet they have to be better [and] they have to better digitally,” Gregory told Which-50.
“What I think is interesting is people are attaching the transformation aspect.”
That attachment is not always warranted. It’s now common to hear of software companies undergoing their own digital transformations. Gregory says this is often a reaction to the digital transformation “hype cycle” rather than a fundamental transformation. And as more and more companies “jump on the digital transformation bandwagon” the phrase loses meaning.
“Like any hype cycle everyone wanted to orientate towards digital transformation when in fact digital is default … Don’t say you’re going to transform as a blanket statement because that implies that you are doing it wholesale.”
Analysts agree the term transformation is generously applied. Gartner found while two-thirds of Australian organisations are claiming to transform the actual number is around 10 per cent. More recent research from DXC found most Australian organisations aren’t even discussing the topic with employees.
Some organisations are indeed undergoing wholesale changes worthy of the transformation tag. Gregory points to Pivotal’s work with The Home Depot. Where its very survival depends on a fundamental change.
“Obviously their market challenge was Amazon,” Gregory said.
“The growth of online [was a threat] where they are very much a bricks and mortar retail company. So their version of digital transformation is how do we change the way we work and engage our customers to be relevant in 10 years time and remain a business.”
Home Depot’s transformation, Gregory says, is very different from an organisation using digital tools to reduce churn or go to market more quickly — outcomes reliant on data-driven strategies but not necessarily fundamental changes. These transformations are no less legitimate but their inclusion under the digital transformation umbrella has led to the term losing meaning, according to Gregory.
The nebulous term adds to the confusion for both leaders and those at the coalface, who often end up with square digital solutions for circular problems.
Gregory says she is sympathetic to those grappling with change in an increasingly complex environment.
“It’s a big complex confusing world out there. I would not want to be a CIO in the market today. There’s a huge amount of pressure both upward and downward to be an advisor and innovator for the company. But they’re also dealing with the shackles of legacy.
“They have to keep the lights on, they have to keep the legacy systems running. They’re in a world where they’re running out of talent, where the costs are potentially going up. So this is not an easy landscape to navigate.
“So customers ending up with solutions that are band-aiding not in exactly the right way is not surprising.”
Sifting through the noise
There’s no shortage of partners looking to help with digital transformations, of course.
“You have big consulting firms that have very high-level recommendations papers that they can give and strategies that they can give which may end up being your ‘north star’.”
While these strategies have their place, Gregory says, digital transformation is fundamentally about problem-solving.
Specifically, finding the right problems to solve first – “what’s going to have the most impact and bring you the most value” – and then allocating the resources necessary to solve them in an iterative way.
According to Gregory this approach is often not taken by Australian incumbents, which have tended to orientate towards solutions first.
“That way of thinking, that very sort of hierarchical decision making construct that [incumbents] are in, it’s very hard to break out of that as an established enterprise organisation, and actually say ‘hang on we’re not just relying on you to have all the answers, what we want to do is figure out what really are the problems we need to solve.”
In Australia in particular, organisations are struggling on the journey because of an obsession with solutions rather than problems, and the insulation of more than two decades of steady economic growth.
Gregory says the market conditions and boards often made up of people who began their role during Australia’s last economic downturn 25 years ago has at times produced a false sense of security around disruption.
Her example: a major Australian retailer with “goggle on” who last year failed to identify Amazon as a potential threat.
“It’s not that [disruption is] happening slowly [in Australia]. It’s happening quickly everywhere else. It’s just not happening here as much.”
The pace here is likely to accelerate, Gregory says, and organisations must initiate their digital change — however they refer to it — now to start moving away from traditional processes that may be superseded.
Where to start?
The question then is where to start? Gregory advises a problem identification (rather than the solution) approach, followed by “actionable chunks” with dedicated funding.
The problems will vary by industry and organisation, but it is critical to nail them down before any technology changes, Gregory said. Often these will be small “slices”, tackled by dedicated teams funded in short sprints. The teams must justify the value of their problem-solving.
“It’s only when you get to the coding point and you get that code in production that you are starting to experience value from that whole process. So it’s about actually doing the work as opposed to having a narrative and a vision at the top level.”
Pivotal’s own approach is to combine lean practices — reducing waste and risk — with “extreme programming”, creating what Gregory describes as a “dialed up form of agile”.
“You put those two things together and what you get is a really lean process that asks you to orientate around the problem.”