The Combustive Nature of Digital Transformation
The first in a 3 part blog series by iGrafx CTO, Ed Maddock
Digital transformation is quite possibly the most overused – and at the same time misunderstood – term that’s hit the streets in decades. And that’s saying a lot, being exposed to more industry-speak than I can remember since founding iGrafx in 1991. However, when broken down to its core components, “Digital Transformation” represents very powerful, arguably combustible, elements that should profoundly affect how you approach making meaningful progress as an organization.
If clearly understood and carefully managed, digital transformation can be an incredible catalyst for enterprises of all sizes. It just comes down to how the power is captured, contained and focused.
Let’s start with a simple concept. First and foremost, what challenges are you and your organization facing? Too often companies begin their efforts without truly understanding their most important challenges, issues and objectives. They rush to get started, only to have to scale back and reassess whether their efforts are aligned with corporate strategy, and whether compliance has been considered. Instead, as a first step, step back and define your challenges.
The 3 Elements of Digital Transformation
Now that you understand your challenges, let’s consider digital transformation. I like to think of it using the concept of a nuclear reaction. The three elements combined in the reactor are analysis & redesign, workflow automation and RPA (robotic process automation). Analysis & redesign describes designing a better process and making sure that what you are actually executing is the best and highest quality business process. Next, workflow automation is about automation of that complete process. Finally, there is the new kid on the block, Robotic Process Automation (RPA). A good way to think of RPA is as task automation, or in other words, replacing mundane tasks with software bots to free employees to do things that add more value. Together these are very powerful tools – and with great power comes great responsibility.
Harnessing the Power of Digital Transformation
So, how does a company harness this power? They need to direct it at what’s most critical to their business, while maintaining solid governance.
All three elements have upsides and downsides, but there is something available for organizations in each of these particular categories. In the case of analysis and redesign, large scale approaches have been taken for years, and in the heyday, often throwing thousands of Six Sigma and Lean professionals at problems. But there have always been ROI challenges with this type of approach. How do you make sure that the substantial dollars you’re investing come back to you from a quality improvement perspective? It’s oftentimes hard to measure when you’re just doing process redesign.
With the addition of workflow automation there is often clear ROI, and tremendous benefits are usually seen in the form of deploying, running and controlling efficient processes. The challenge here is typically business and IT coordination. IT can tend to be a bottleneck, and it challenges the agility of the business organization to be effective at making changes in our new era of digital transformation.
RPA is the third key element. It allows you to focus on the smaller tasks within an end-to-end workflow. This is much more manageable, much less costly, and can deliver results very quickly, however you also must consider the challenges here. For example, the challenge of “bots gone wild.” In many large enterprises, bots are being integrated very quickly, oftentimes from multiple vendors and across multiple departments. How do you keep tabs on where they all are, what they’re doing and most importantly, whether they’re compliant with your business goals and regulatory requirements?
Critical Factors that Impact Digital Transformation
There are several additional factors that weigh heavily in this “reaction” that is digital transformation.
First and most obvious, there’s the financial side—cost reduction. It’s a priority we hear over and over, and we’ve had many customers tell us they’ve saved millions of dollars by optimizing processes. It’s a huge benefit of successful digital transformation.
Then there is the competitive element. You really have to look at your value chains, making sure that what you’re trying to build as an organization is distinctive. Do it better, or in the case of digital disruptors, do it entirely differently, and you set your organization apart. It’s crucial to make it easier for people to interact with you, so refine their customer journey, improve their experience and as a result, boost your reputation.
And, of course, there is agility. Empowering employees with knowledge, communication and productivity. This increases the appetite for change and allows your organization to quickly adopt new processes and technology in the pursuit of better products and happier customers.
Strategy execution is another key element. Effectively and efficiently executing upon your transformation initiatives is crucial to the successful operation of your business. You can build all the strategies you want, but without positively affecting processes along the way, you’ll never achieve your strategic objectives
And finally, there is the compliance factor. Many (nowadays most) companies are in highly regulated industries. They must identify what they do and then prove that they’re actually doing what they say they do. Managing risk is a key component of that; it’s very important that what the company is doing is compliant remains with the risk elements, and that controls are applied appropriately. And in the world of regulatory fines, this can be all about Cost Avoidance.
Staying Safe with Digital Transformation
All of these are components affect what you’re trying to do in the area of digital transformation. They can’t be ignored because otherwise, just like in a faulty reaction chamber, you’ll get a nuclear meltdown. You have to be careful.
The common theme again is how do you impact the operations of business to achieve strategic objectives while applying necessary governance – all without stifling the transformation efforts? This is the fundamental challenge that corporate Centers of Excellence (COEs) face today. It is difficult to connect strategy and compliance to the operations of the business, and hard to measure if the digital transformation efforts have had the desired impact.
Here’s how we envision digital transformation and the role of iGrafx in containing the power of business analysis & redesign combined with workflow automation and RPA. When bounded by strategic execution and governance, the appropriate levers can be pulled to refine the reaction and generate incredible energy.
Stay tuned for our next blog, as we further discuss real digital transformation, and specifically the tools you need to be successful.