The State of Digital Transformation

Every year, I study the state of digital transformation to understand and share where businesses are in what I’ve documented as the six stages of digital transformation. I also apply a different filter to my view of digital transformation. Rather than explore the topic through an IT lens, I zero in on one of the primary catalysts for digital change-customer experience (CX).

Why? Technology is only one part of the story. In the last five reports I’ve written on the subject, CX, I’ve learned, is consistently one of the key factors driving and unifying change along the six stages.

In my latest report, ” The 2016 State of Digital Transformation,” I was reminded that companies are modernizing the back and front office with the best of intentions but not necessarily with people-first perspectives. As a result, IT continues to operate like a technology partner; marketing sells through creativity and new touch points investments in tech to scale; and service and support modernizes automated or dated customer engagement services at a technological arm’s length. With CX as a catalyst for change, it’s surprising how much more could be done to upgrade business integration, continuity, and value propositions through an actual customer-centered approach.

Over time, however, I believe this approach will change. It has to. Companies, large organizations, and start-ups alike that take a people-first approach are demonstrating the upsides of doing so.

As you think about your digital transformation strategy and compare the current roadmap to the survey results of over 500 companies from around the world, consider what you might double-down on versus where you may need to change course. Following are some highlights from the report.

The Changing Customer and the Lack of Customer Appreciation

Fifty-five percent of those responsible for digital transformation cite “evolving customer behaviors and preferences” as the primary catalyst for change. At the same time, the number-one challenge facing executives (71 percent) is understanding the behavior or impact of the new customer. Despite more data being available about customers, this 71 percent statistic represents an increase from 2014, when only 53 percent cited understanding the new customer was a significant challenge. Knowing this, all the more surprising-or not-is that only slightly more than half (54 percent) have completely mapped out the customer journey.

You’d think by now that companies would understand the extent to which we’re living in a mobile-first world. Yet, a mere 20 percent of leaders surveyed are studying the mobile customer journey and behavior. That’s right-20 percent.

This observation means that many companies are changing without true customer-centricity. More so, you can’t know customer behaviors if you don’t study them and let that analysis inform your next steps. Consider the top three digital transformation initiatives:

  • Accelerating innovation (81 percent)
  • Modernizing IT infrastructure with increased agility, flexibility, management, and security (80 percent)
  • Improving operational agility to more rapidly adapt to change (79 percent)

How Do You Accelerate Innovation?

To accelerate innovation, 46 percent of those surveyed said their company has launched a formal “innovation center” to understand and test new technologies and develop new solutions. Altimeter and CapGemini Consulting has published two reports on the rise of innovation centers. In the 2016 edition, we found the following key objectives for these new innovation centers:

  • Companies partner with the start-up ecosystem (51 percent)
  • Companies focus on product innovation, concept development, or both (28 percent)
  • Companies hope to enhance CX as a result of their innovation center (13 percent)

Who Owns Digital Transformation?

Digital transformation is largely led by the CMO (34 percent) and not the CIO, CTO, or both (19 percent).

What’s the Long-Term Vision of Digital Transformation?

The easy answer to this question is that many companies are focusing on the immediate horizon. Digital transformation appears to be driven by short-term plans: Just 29 percent of companies have a multiyear roadmap to guide digital transformation evolution.

Best Practices for Digital Transformation

As in every report I’ve published in this space, CX remains the top driver of digital transformation. I also learned that IT, marketing, and other functions not only influence technology investments (even without fully understanding customer behaviors and expectations), they need to work together to advance along the six stages of digital transformation.

One of the top questions I’m often asked is where most companies reside in the six stages based on the new data in the latest “state-of” report. The answer is that in the broader scope of business transformation, many companies are still early in their development. But the companies that are progressing along the maturity model share the following similar best practices and also the opposite framework introduced earlier this year. Please use these insights models to guide your next steps and bring about the change you wish to see-and you wish others to see-in your work:

  • Study and map the digital customer experience.
  • In addition, study and map the mobile customer journey.
  • Invest in ongoing customer research to better understand digital and mobile behaviors.
  • Develop a digital transformation roadmap.
  • Update and innovate customer-facing technology in digital and mobile.
  • Drive strategies that engage and guide customers seamlessly through digital, mobile, and real-world journeys.
  • Improve processes and operations that expedite changes.
  • Build an agile, integrated, and scalable technology infrastructure.
  • Appoint someone to lead and pave the way for digital initiatives-budget, resources, and culture-and manage expectations among shareholders, stakeholders, and the board.
  • Form a working team to drive initiatives, coordinate activities and resources, and be accountable. Establish new metrics that measure progress and track new outcomes.

Download the Report: ” The 2016 State of Digital Transformation

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