Digital transformation trips off the tongue of company executives around the world. They understand the concept and lie awake at night worrying about the challenges. They see the appearance of digital start-ups, such as Airbnb, Uber, Facebook and Netflix, and have nightmares about something similar emerging in their own markets.

They are haunted by the fact that more than half the firms that appeared in 2000’s Fortune 500, the list of the largest US companies, have disappeared from the index, and they know the rate of corporate extinction is increasing as the digital revolution accelerates.

Business leaders also know that some of the greatest brands in history that fell by the wayside, such as Kodak, Borders and Blockbuster, had the technology and the financial and human capital to thrive in the digital world, but failed through lack of leadership vision.

That’s why CEOs and senior business executives around the globe are at pains to talk up their digital vision and their organisation’s digital business strategy at shareholder, analyst and customer events.

However, though fear is a powerful motivator, it can also cloud, rather than clarify, your vision. And even if you have a clear sight of the future, there is a profound difference between vision and execution.

Ask Chief Information Officers (CIOs) and business technology professionals what keeps them awake at night and it is usually not their CEO’s vision or lack of it. Their dominant fear is the lack of resources – the skills and capabilities needed to execute that vision. This is closely followed by the realisation that the current infrastructure – both on premises and cloud – cannot cope with the requirements of a truly digital enterprise.

Most CIOs are business savvy, but they have also risen through the ranks of IT operations and realise the difficulty of consolidating and optimising existing applications and infrastructure to cut costs and improve organisational agility in an increasingly complex digital business environment.

These fears don’t arise from being passive observers of the digital revolution. They emerge most acutely from active engagement in digital projects. CIOs and business technology professionals have in recent times been leading their organisation’s drive for digital transformation. Most often this has involved trying to deliver the infrastructure to enable the rapid delivery of new products and services to market, and allow the business to develop and maintain a sharp focus on digital customer experience. 

For CIOs, these successful proof of concept projects have reinforced an understanding that digital means much more than bolting on a mobile-friendly front end or an analytics dashboard onto a legacy application. Digital transformation requires deep and profound change if organisations are to take advantage of new opportunities and keep ahead of the threats from disruptors.

The true heart of digital transformation must be a technology-led overhaul of business and operating models to support new and enhanced products and services, and significantly improve both customer and staff engagement. This process of refocusing digital transformation efforts from experiences to operations is where the real hard work begins, and it is both complex and expensive.

The challenge for most organisations is to integrate digital technologies – mobile, social, analytics and cloud – into their existing, already hybrid, systems. It is to reduce running costs and increase the reliability of core systems of record – ERP and CRM – while linking them seamlessly to the new systems of engagement, and to do so in a secure, sustainable manner.

According to Scott Gibson, Dimension Data’s Digital Practice Group Executive, the challenge for CIOs and business technology leaders in 2017 is to renovate their enterprise’s core systems to exploit the new. This means it is no longer systems but ecosystems that need integrating.

“In a hybrid IT environment, people need to work in multi-party, multi-vendor ecosystems. So you need individuals with a collaborative mindset, who can look inside and outside the organisation – across a very porous business boundary – and draw on resources that aren’t necessarily on your payroll and assets that aren’t on your balance sheet,” explains Gibson.

This will not be easy. The challenges he sees in migrating to and managing a multi-party, multi-platform IT environment include:

  • Ensuring orchestration and automation, and making certain that workloads move seamlessly between the various platforms and your on-premises environment
  • Metering and billing
  • Data ownership and metadata access
  • Leveraging common service abstractions
  • Security and compliance

In the face of these difficulties, even the largest enterprises lack the budgets and skills required to go it alone in operating a hybrid environment, and nor should they.

CIOs and business technology leaders are well-positioned to move forward their firm’s digital transformation agenda in 2017, but it requires a determined drive to reshape organisational and partnership strategies.

One important initiative for CIOs is to step up their drive to take Agile and DevOps practices pioneered by IT development teams into the wider business. It means building Agile, cross-functional teams to rapidly deliver new products and services, and enhance customer and employee experiences. These teams will probably require new leadership models and may need new workspaces to encourage collaboration and iterative working.

While doing this, CIOs and business technology leaders have to keep the lights on, meet ever-increasing workload demand on applications, networks and datacentres, while also freeing resources from routine operations to fund innovation.

A key part of achieving this goal is to rigorously re-evaluate supplier and partner relationships, and bring the best service providers into the transformation process.

Running traditional enterprise systems was difficult enough for most IT departments, and the first wave of cloud deployments often proved disappointing because they added, rather than reduced, complexity and risk.

Experience suggests that trying to parcel out discrete parts of your digital transformation programme to a plethora of providers will prove equally problematic, particularly since digital is rightly regarded as a journey rather than a destination.

For the enterprise this means transforming relationships with the most important service providers and making them genuine partners. It means adopting shared risk and reward approaches that move beyond the analogue world’s SLA-driven mentality to incentivise ongoing innovation rather than penalising change.

The opportunities presented by the digital revolution are enormous. Those organisations that survive and thrive in the next few years – an era of business and political uncertainty, rapid technical change and where the customer is king – are those that can build truly customer-centric business models on the most appropriate technology for the job.

The stakes are enormous, but so are the rewards.

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