How to Nail Your Digital Transformation
The world has gone digital, whether we like it or not. When I was a kid, I remember my parents having music on records. As I grew up, records were eventually replaced by cassette tapes, then by CDs. By the time I finished university, MP3s were slowly gaining popularity as the music medium of choice. With changes in music media also came the inevitable changes in the way we played our music. We went from bulky record players to more portable players like Sony’s iconic Walkman and Discman, and then to palm-sized MP3 players popularized by the iPod to play our favorite tracks. Now, we don’t even need to own an MP3 player to play our favorite music. The introduction of music streaming services changed that. Now, as long as you have a device that you can stream your music to, you’re all set.
That, my friends, is a digital transformation.
Digital Transformation is a term that is very prevalent these days. Most large enterprises have either gone through one, are in the midst of one, or are contemplating one. Many tech consultancies, from the big to the boutique, offer services to help companies with their Digital Transformations. There are courses and seminars out there on Digital Transformation, offered by the likes of Harvard and MIT in the States, and UofT and McGill in Canada. There are blog posts on Digital Transformation. Medium alone is a treasure trove of Digital Transformation blog posts. And of course, there are lots and lots of opinions on what Digital Transformation is.
And now, I’m here to tell you that most of the info out there on Digital Transformation is hooey, and to set the records straight.
First things first. Let’s understand the key players.
Digitization refers to creating a digital representation of a physical object. This is also known as a digital artifact. For example, a paper contract can be digitized by converting it into a PDF document. The digitized version of the document is easier to distribute, and is easier to search through.
Digitalization refers to enabling, improving, or transforming business processes by leveraging digital technologies and digitized data. For example, the traditional process of signing a contract means signing multiple paper copies (one for each party) of the contract by pen, and delivering a copy to each party by hand. When this process is digitalized, the single copy of the contract is the source of truth. It is signed by each party using software. All parties are notified electronically of the signing, and have access to the same electronic copy of the contract. The new process uses less paper, is a lot less complex than the old process, and has a single source of truth.
Digital Transformations enable you to achieve digitization and/or digitalization, depending on your organization’s goals.
But we’re not done yet. Because we’ve left out a crucial element.
Digital Transformation in itself is pretty worthless unless it’s data-driven.
Data-Driven Digital Transformation is about making data a first-class citizen, letting both the data and the dataflow drive how you revamp your digital artifacts and processes.
Use Case: Buying a House
Let’s suppose that you’re putting in an offer to buy a house.
The Old Way
Your real estate agent puts together the paperwork for the offer in a Word doc. The agency has their own template with some standard clauses, and the agent inserts some additional stipulations from you. Your agent then prints a copy of the agreement to give to the selling agent.
After you’ve signed the offer, your real estate agent faxes the offer to the selling agent, and calls them to confirm receipt. The selling agent consults with their client and makes updates to the offer by hand, striking out unfavorable items and/or inserting new items. The updates are initialled by hand, to signal that they are signed off by the buyer. The amended agreement is then handed back to your agent.
There are two more rounds of this back-and-forth, until, finally, the buyer is satisfied with the offer and signs it. The final offer looks like an exam marked by a high school English teacher.
After everything is signed, the agents scan copies of the agreement into a PDF and shred the paper copy so that they don’t have to deal with piles of paper lying around in their respective offices. You do the same. Much easier to search through electronic records than paper ones, after all. Win.
Congratulations. You got your house. After three hours of back-and-forth and manual BS that I’m sure you could’ve done without.
Now, let’s see how things look when we take a data-driven approach.
The Data-Driven Approach
Your real estate agent has been selling homes for a while now, and runs her own brokerage. Over the years, she has come to realize that her clients are tech-savvy, busy, and on-the-go with demanding jobs. Keeping this in mind, she’s decided to invest in hiring a company to build an end-to-end digital solution for putting in an offer on a home and signing home purchase agreements. A solution that all agents in her brokerage can use.
When you’re ready to put in an offer on the house, the agent leverages the new digital solution. First, she puts together an electronic document for the offer. The new process was built from the ground up, and its sole purpose is to allow agents to create home purchase offers quickly and efficiently. The agent selects what clauses to include from an electronic checklist, and adds in your additional terms typing them into a textbox. Looks good, so the agent hits save, and shares a link to the doc with you by email so that you can digitally sign it. After that, she shares the link with the selling agent by email.
The selling agent then reviews the doc with their client, who makes changes directly to the agreement. The agreement is on the blockchain, so it’s very easy to see who made what changes, and because they’re verified users, changes made to the doc also provide automatic sign-off. You and your agent both get a notification once the agreement has been updated, and the two of you review the updates together over Zoom.
After some back-and-forth (each set of edits triggering a notification), the seller accepts your offer. Congratulations! No trees were harmed during this process. No need to strike out content and initial it. All of the doc changes are tracked and are fully-transparent to all parties involved. This has been a much faster and smoother process!
Why the Data-Driven Approach is Better
So what did we learn from this?
We saw that in the old way of doing things, we started with an electronic document (the Word doc) and even ended up with an electronic document. The thing to note, however, is that the document at the start and at the end was not the same document. Remember: it started out as a Word doc, and ended up as a PDF scan of the printed document (not the original Word doc). Also, the steps in-between didn’t support the electronic documents. In fact, they supported the paper version of the document instead. What’s more, the electronic documents themselves were half-hearted at best, so there was never a chance to have a good electronic workflow to support it. In the end, the workflow was manual and slow.
The data-driven approach, however, started and ended with an electronic document. The same one. The same document was updated and amended and eventually agreed upon by all parties. No manual strike-throughs and initialling to make amendments. The digital artifact (the agreement) was made a first-class citizen from the beginning. Equally important, the entire process itself was digital. It was designed around updating and signing the agreement (the digital artifact).
And finally, the data-driven approach started with the real estate agent understanding the fact that her clients are busy, tech savvy, and hungry for a simpler process for putting in an offer on a home. That is, the agent used data (their understanding of their clients’ needs and wants) to drive the decision to digitize and digitalize the process.
This is a big differentiator. In fact, having the right process in place to support your artifacts is what can make or break a Digital Transformation.
Why Some Digital Transformations Fail
Most Digital Transformations fail for one simple reason: failure to change existing processes. Digital Transformation isn’t about lifting and shifting existing processes. It’s about reimagining and disrupting existing processes to accommodate the digital world that we live in. Data-Driven Digital Transformations let the data provide guidance on what the new processes should look like.
We think that it’s perfectly normal to just strike out a part in a contract and initial it to make an amendment, because that’s how it’s always been done. It’s normal, and we like normal. So when we digitalize the process, we allow the ability to strike through, amend, and initial. Just like we do on the paper contract. But now it’s done on the electronic contract.
Instead, we should treat the contract as a living document, and allow only the parties involved in the contract to make amendments as needed, and provide traceability and transparency to those amendments.
Unfortunately, as with the contract example above, leaders will simply “lift and shift” processes, and hope for better outcomes. The problem with this type of thinking is that it’s naïve and it adds complexity to your already complex process, when the goal is to reduce complexity. The gains you think you’ve made are purely for show, because now you’ve shifted the burden to other departments. The front office might look squeaky clean (“Hey, look! All of our contracts are on web forms!”), but now the back office is a mess. You might need to create entire departments just to support this new process. For example, creating a DevOps team to work alongside your Operations team to support the newly-added overly-complex process.
But why should it have to be that way? This is your opportunity to revisit existing processes and reimagine them. It’s your opportunity to disrupt and build cool new things from the ground up. This is your opportunity to denormalize things, and define a new normal.
Why Digital Transformations Matter
These days, Digital Transformations are more important than ever, as technology keeps rapidly evolving. Now, there’s a new urgency for companies to embrace Digital Transformations, thanks in large part to lockdowns and restrictions put in place as a result of the Covid19 pandemic.
Covid19 has forced most tech companies to go fully remote. This means having proper infrastructure in place to support software engineers so that they can deliver code to production more quickly and more efficiently. It means having processes in place to communicate and collaborate on code remotely, to spin up environments, to build and deploy code, and to make and fulfill service requests in a timely manner. If a tech company can’t provide these services properly, it can’t stay competitive.
Covid19 has also forced many retailers to up their digital game, providing a fast and efficient customer experience through online ordering, fulfillment, and returns. Retailers who didn’t have a strong online presence and solid technical infrastructure to support their online presence found themselves in a real bind, as customers expected Amazonesque service levels. Those who didn’t level up quickly and properly ran the risk of losing customers and money, or worse, shuttering for good.
So the question you must ask yourself is, are you ready for an increasingly digital world? Can your business support an increasingly digital workforce? Can you pivot your business quickly and easily to respond to rapid technological and socio-economic changes? If you’ve answered “no” to any of these questions, then it’s time to consider a digital transformation, before your competitors leave you in the dust.