Digital Transformation: 5 Tips to Avoid the Pitfalls
More and more CEOs are saying “digital” is at the core of their strategies — not surprising, since more and more CEOs are also facing pressure from their boards to turn technology investments into business results.
But even if company leaders understand that digital transformation is an imperative, many of them continue to hit detours, roadblocks, and delays as they attempt to navigate the path from vision to execution. These setbacks can be costly — at best. In the worst cases, they can have significant consequences, even reducing long-standing industry giants into cautionary footnotes.
Luckily, these missteps fall into identifiable patterns, many of them derived from failing to see digital transformation on a holistic level — as something greater than the sum of the technology investments and deployments made to facilitate it.
By working with hundreds of enterprises as part of Google’s Apigee team, we’ve seen firsthand how these missteps can occur. Based on our experiences working with hundreds of enterprise customers, here are five key tips to help organizations avoid digital transformation pitfalls:
Tip 1: Digital transformation involves governance, operations, funding, metrics, professional incentives — much more than just technology.
Digital transformation generally involves the entire organization. It may not matter if the business deploys new technology if governance, funding, and operational models stay the same. How are developers supposed to keep up with customer expectations that can change by the hour if they’re shackled with approval and funding processes that stretch on for weeks or months? How can employees shift to the new plan when their compensation and promotion structure is still based on metrics from the old plan?
In the modern economy, IT is an enabler of business opportunities, not the curator of infrastructure. The entire organization needs to adapt accordingly.
Tip 2: Launching a few mobile apps doesn’t mean the transformation journey is complete.
Digital transformation isn’t about any single technology, goal or project. It’s about having the agility to translate your business across technological and economic shifts.
Today, being adept at mobile technologies is almost perfunctory — just the typical cost of doing business. But what about wearable technology? Voice? Gesture? Augmented Reality? The Internet of Things? Machine Learning? And that’s without getting into the more technical stuff that sits underneath these technologies — things like microservices, containers, and other cloud technologies.
If a company truly succeeds at digital transformation, its leaders understand that the business’s future relies on interfacing with platforms and technologies that haven’t even been invented yet. In this respect, the idea of “transformation” can be misleading — organizations shouldn’t aspire to transform from one thing into another so much as attain a perpetual state of readiness for whatever evolutions customers require.
Tip 3: Digital transformation should be driven from — or at least involve — the C-suite.
A business doesn’t change just because its customers or even employees start using new technologies. In the last decade, most businesses didn’t evolve just by giving employees smartphones or releasing a few mobile apps — they did so by creating new business models and processes that leveraged these tech advances.
Likewise, today’s businesses don’t transform by simply affixing “Blockchain” to their names or launching flashy innovation centers, which far too often are confined to research projects that are cut off from the main business. Rather, successful transformations are often led from the top down and applied directly to the core business.
Tip 4: Don’t treat APIs as an IT-only concern.
Application programming interfaces (APIs) are in many respects the foundation for digital transformation. APIs allow an organization to express its business as a software asset and to connect that asset with others, whether from within the same organization or as part of a larger ecosystem. An API might provide access to inventory information, navigational data, customer data, payment processing — basically to anything that can be leveraged for business value.
Netflix is available on so many devices because of APIs, for example. A consumer can order an item on her phone and pick it up in the store because of APIs. When a smartphone assistant tells a user to leave in order to beat traffic or when a user orders a rideshare to get to her destination — still APIs working behind the scenes, connecting all the systems that make the experience happen.
Though APIs connect, it is important not to think of them as mere connectors — that is, as integration tech. Indeed, the point of an API isn’t just that it connects A to B now but also all the other things that can be done with it in the future. If properly designed, the API basically represents a modular, portable, infinitely replicable manifestation of the business — something that should be leveraged at scale, not just for one use case.
This means the correct way to think of an API is as a product that empowers developers to build new services and experiences around an aspect of a business. Consequently, APIs are something all business leaders — not just IT — should understand.
Tip 5: Don’t always aspire to be like the big tech companies.
Most companies are not going to become gravitational platforms like Android, iOS, Netflix, Amazon Web Services, or Google Cloud Platform — but they don’t need to be.
It’s true that digital transformation generally requires companies to develop platform capabilities — i.e., the ability to repeatedly leverage business assets via APIs. But there’s a difference between employing platform strategies and being an enormous technology platform.
For example, many companies may have potentially valuable data but lack the personnel, infrastructure, and capital to develop the machine learning technologies necessary to unlock that value. To solve this, most of these companies shouldn’t risk spending themselves into oblivion chasing Microsoft, Google, or Amazon. Rather, they should express their valuable data via APIs and use APIs from others — e.g., pre-trained machine learning APIs offered by experts in the field — to fill in the gaps. Compared to developing all of the technology in-house, this more ecosystem-centric approach is likely to enable these companies to much more quickly and inexpensively leverage their core competencies and offer competitive services at scale. The digital economy isn’t about becoming a huge platform so much as using increasingly granular application development techniques to complement your strengths with strengths from others.
The Digital Journey Never Ends
As some of the above tips may imply, the digital journey isn’t a road to some end position so much as the process of gaining the ability to continually evolve. As more businesses embrace this holistic view of transformation, the pitfalls discussed in this article may become less common, replaced by new challenges. For the present, however, businesses that want to improve their chances of a smooth evolution should remember these potential missteps — and the tips for avoiding them.
[Looking for more insights about digital transformation? Check out Apigee’s resource hub here.]
