The digital transformation journey dissected – why do some businesses succeed while others lag behind?

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Ask a business leader who has undertaken a project to implement new technology within their company, and you may find yourself hearing stories about delayed timelines, cost overruns and unforeseen roadblocks. The reason for this is that digital transformation is inherently complex if it is not thought through from end to end. Our customers, across a range of industries, are telling us that their digital journey is not an easy one. Taking on the challenge of aligning technology features with business functions, integrating new technology with old technology, and delivering innovation in areas that are traditionally risk-averse is no mean feat. This is especially true when you consider that all this must be done while taking into account the impact on the culture of a business and its employees.

However, business leaders cannot allow these challenges to stand in the way of their company’s digital future. It is important to understand why digital transformation projects are perceived to be so difficult for companies, and what the priorities should be for the C-suite in order to make digital projects a success.

What the numbers say – expectations don’t reflect reality

When it comes to implementing digital transformation projects, our own global survey showed that there is a significant gap between business leaders’ confidence about the potential outcomes of digital projects, and the real-life success of these projects.

On a very promising front, 90 per cent of organisations said that they have a clearly defined digital strategy and 88 per cent feel the leadership team has a clear view of all digital projects. In spite of this, 71 per cent worry about their ability to adapt to the rapidly changing tech landscape. What’s more, 66 per cent of organisations also said that failed digital projects have put them off pursuing them in the future and one in three organisations had cancelled a digital project in the last two years.

With the average cost of a failed project standing at a staggering half a million Euros, the stakes are high for companies who undertake digital projects without first understanding the steps they must take to achieve success.

Why is digital transformation still a huge challenge for companies?

Ultimately, digital transformation isn’t a ‘one-size-fits-all’ approach. Each company and each industry will be facing its own problem that it’s hoping digital transformation will solve. For example, our most recent global survey, carried out in February of this year, was designed to find out where people were on their digital journeys and what was motivating them. We found that different industries are transforming at different speeds, with Financial services the most advanced, followed by transport and manufacturing with retail and healthcare further behind. The outcomes pursued were different too. Financial services and manufacturing were looking for efficiency, retail was looking for growth and transport was looking to respond to competition in an agile manner.

Another big challenge is the current pace of change facing companies. Disruption is moving at a rate of knots, with digital tools providing the framework for innovation. However, for established enterprises, with a long-standing business history, it is becoming harder to meet customers’ expectations through in-house R&D or from demanding innovation in the value chain. Looking back only a few years, innovation was driven internally, but this is no longer the case today. Innovation is generated across agile ecosystems within companies of all types and sizes.

Digital technology is the reason why we have seen companies shift from supplier-centric, vertically-integrated structures to customer-centric, distributed ecosystems. For example, in the automotive industry we’ve seen the rise of the connected vehicle, which has led to multiple sources of customer value – from car-sharing to new insurance models. These areas of value are created outside the factory, its supply chain and the car showroom.

In financial services, new digital services are being used for everything from investment and peer-to-peer lending, to building trust among consumers. These things are not just about a product or service, but enabling innovation within business models.

So, what is the key to overcoming the challenges presented by rapid technological transformation?

Delving into the data

At the heart of digital disruption is data. Organisations are collecting, processing, storing and analysing more data than ever before. With different types of data needing different technologies to derive business value, the first step is to ask questions about what you’re looking to achieve. This means applying business knowledge and domain experience to understand how different datasets can be brought together, and what insights you are hoping to discover.

Once these types of questions have been answered, the next step is to apply learning technologies to the data, to try to recognise new patterns within the information. This is where AI comes into play; in particular, ‘Explainable AI’, which is a version of the tech that can elaborate the workings on how it arrived at an insight. This is especially important in industries like healthcare and financial services, in which decisions come under harsh scrutiny.

However, this is not just about AI. Companies must look to other technologies too. For example, IoT is a key technology for generating the data in the first place, while Cloud technologies allow businesses to bring together different types of data sets and construct new software services around them.

Therefore, by combining domain knowledge, different sources of data, and different technologies, it is possible to learn patterns and create insights. The final critical step is to convert this insight into a business outcome. Once you have information you didn’t have before, how do you respond? Companies must ensure they have the experience and the mind-set to be able exploit what the data has revealed.

Six business factors for digital success

When looking at the companies that have achieved success from digital projects, six factors stand out as differentiators. Fujitsu’s own research found that these factors were less advanced for companies in the implementation phase of digital projects, while they were non-existent in organisations that had not yet started digital transformation.

Interestingly, our report found that the six factors were universal, regardless of industry or geography. When we looked at it, the factors seemed a lot like muscles. They are not things that happen overnight, but that you have to build up and work on over time. This may explain why many companies experience disappointing results from digital – they don’t look at it as a journey of gradual improvement, but expect instant gratification and results.

For success, we found the six key factors were: leadership; people; agility; business integration; partner ecosystems; and deriving value from data. Companies that were realising benefits from digital transformation had developed these digital muscles and used them to create a strategy that takes advantage of disruptive technology.

Finding a partner in digital tech

While the factors for success may be clearly defined, many businesses are still struggling with the challenges of digital transformation. Companies cannot afford to face the challenges alone – they must look to tech partners to co-create value from new digital projects. After all, organisations might have the understanding of the pain points and the problems that they are looking for digital transformation to solve, but tech partners have the experience, and the technology, to help find new ways of working and implement the right tech solutions to age-old business problems.

At Fujitsu, we have driven this charge and set up Digital Transformation Centres (DTC) across the globe – we now have centres in Japan, Munich, New York and London. These centres act as hubs of innovation that our customers can turn to when they are asking questions about how they can take advantage of new digital tech – from AI and machine learning, to IoT and Blockchain. Utilising Design Thinking principles, the co-creation sessions at the DTC serve to stoke the imagination of the participants on how digital can aid in their business and open up new avenues of revenue, deliver better employee and customer experience and do this in a way that is inherently efficient.

Ultimately, to overcome the challenges that come with digital transformation, companies must work with service providers who bring a rich ecosystem of connected partners to build a solid strategy and ensure they can deliver the innovation and outcomes they need to keep ahead of the competition; and take their company into the digital future.

Conway Kosi, Head of Digital Technology Services (DTS), Fujitsu EMEIA
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