Outlining the challenges facing pre-digital organisations when embarking on the development of a digital transformation strategy.

In recent years, the world of business has changed at a pace not seen since the industrial revolution. This has meant that they have needed to adapt or risk going out of business. As the question suggests this brings with it many challenges. This answer will discuss some of those challenges. To complete a digital transformation, a company needs to have a digital and data strategy. 

 

Like any business-related strategy, a data strategy revolves around the strategic decisions made by the business to achieve its goals. A data strategy revolves around how data is acquired, integrated with existing and new systems, analysed and finally delivered. It is a comprehensive vision of how it will tap into its data capabilities. A data strategy should entail how the company will manage and process its data. How the data is relevant to the firm and why it will benefit the firm. Finally, how will the strategy fit in and untimely help the overall business strategy?

 

Employee Pushback 

The first step to digital transformation is getting staff on board with digital transformation. No matter the industry, people develop their own ways of completing their jobs. They find shortcuts to complete the job efficiently. Naturally, employees don’t want that balance disrupted and with that are likely to push back on any major changes. Any new policy or digital transformation will change how people will work and people might worry that they will be replaced by a machine. This is a major concern in the time of automation, data and artificial intelligence. While some push may be impossible to avoid companies can do somethings to make sure that employees are more open to the change. 

 

This push makes the role of the CIO very important. CIO’s should lead and govern by example so that employees feel involved in decision making and then they are more likely to accept changes that management will be expected to implement. For example, in a past job that I had for a year writing adds for a tach client, we changed the software we used twice and each software become smarter at picking up mistakes and giving suggestions on what needed to be written. While each time there was a software change, it was making our lives easier there was a push back on each occasion as we were simply told to use the new software without having any say in its developing or if would actually make our lives easier. Ideally, if digital transformation is going to take place, those who will be impacted most need to be consulting in an ideal world. It needs to be explained to employees that a digital strategy is not there to replace them or to replace the business strategy they have built. Digital products are there to support the strategy and help the company. See Fig 1 below to how this connection is mapped out on the strategic alignment model. 

 

Strategic Alignment Model

 

 

Understanding new Opportunities 

It can be a challenge for many firms just to understand what opportunities are out there and how digital technologies can make their companies more robust in the modern economy. 

 

One company I feel has not understood this is Primark. With the current pandemic in mind, and stores closed, this means Primark are unable to make any sales. The website also suffers from a lack of range of products but does stand out as it provides products in three different currencies. This means they are falling behind their competitors whose online shops allow customers to buy goods. On top of this, it is impossible to make an account on the Primark website. Primark is currently collecting no information about their customers online. 

 

This means they have no procurement. This makes it much harder for them to understand who their customers are, what items they are most interested in, what products tend to be bought together and why. They are currently missing out on the chance to get to know their customers and respond to what they want. It would appear that at the moment they are stabbing in the dark and relying on old techniques such as store sales to see what products are the most popular. Who is buying what is not getting uploaded to an online database meaning it can’t be analysed. This makes innovation and changes very difficult from both a product design point of view and provinces a lack of agility in such urgent times. All clothes companies will be impacted by the COVID 19 situation but Primark more than most. 

 

On the other hand, an old company who has embraced digital transformation is Lego. They have developed an open innovation business model, where users can submit ideas for new products. Others can then vote on the website of what ideas they like and what ones they won’t. Lego then takes this information and creates products that they know will have a demand. Unlike Primark, they are developing a deep understanding with their customers. This allows them to offer more personalised service and gain brand loyalty with their customers. Lego customers feel they have a say in the direction of a company they love and at the same time, data analytics is improving Lego’s datasets and internal knowledge. In our new world where Covid-19 is impacting every person and every business, it is clear that those who understand the opportunities of digital transformation are the companies that will service. 

 

Combining Digital and Business Strategy/Having the right technology. 

As mentioned above it is vital to show employees that the digital and business strategies are there to work together to replace one another or to compete. Figuring out this strategy in itself is one of the major challenges of a digital transformation for these old companies. Lego above has combined its business strategy of toy making with its digital strategy to make a strong overall strategy. 

 

The MIS quarterly Executive published in 2017 the article “how old big companies navigate digital transformation”  They talk about the need for such companies to develop both operation backbone systems and digital service platforms to succeed. Essentially the piece states that having a digital strategy is of little use without the right technology. Gaining an understanding of what this technology is, is a great challenge for these firms. While it is impossible to speak above all of the needed technologies. A good place for any company to start is an ERP system and a robust database. 

 

The role of the ERP system within an organization to correlate the information collected from the different systems within an organization. By collecting this information the goals of an ERP implementation include improving business performance and business processes. There is also a hope of reducing labour costs due to the automation the ERP system can bring in terms of producing reports and transferring information. These reduced costs aim to increase profits for the firm and be a worthwhile investment. If it does not do this successfully it is unlikely to be seen as a positive investment. Saying this, the introduction of a new system may initially raise costs in the short term but lead to much bigger savings in the long term. The ERP collects data about things such as employees, orders, purchases sales and inventory levels. All of this customer data is then fed into the ERP systems which produce reports at a companywide context. 

 

With all this new data to manage, old organizations need to create functional databases. They need to decide whether they will manage it themselves. If so they will need to bring in many database employees into the business. They may also need to train them and spend a lot of money implementing the systems. They also need to make sure than more digitally aware companies to not take advantage of their lack of knowledge. 

 

Conclusion

There are many more challenging facing old companies are trying to do digital such as getting to grips with using analytics, social media, embracing mobile technology and much more. This answer would have also like to explain the role of data-role and the role of the data value map. But due to a lack of time, this answer has focused on the people involved in digital transformation, the changing of their mindsets, and some of the technology that needs to be understood to make a digital transformation possible.