Digitalization: The Formula of Success
A recent survey among German, Austrian and Swiss IT decision-makers has shown, for the second year in succession, that companies and industries in these three countries are, to varying degrees, lagging behind in terms of digitalization.
This is partly owed to an obvious underestimation of the significance of the trend that I and my colleagues at CSC do not share. In addition, there is a mix of fears and prejudices, which are, in our opinion, essentially unjustified. Among the latter are, predictably, cost issues, a fear of complexity and a general reluctance to change what are perceived as tried and tested processes and business models.
However, while digitalization is a term that may well delineate different concepts across different industries, the phenomenon as such is, in our view, unavoidable in the medium term. Players who fail to keep up with the universal development will suffer big time.
Digitalization initiatives are by no means as scary and difficult as they seem. In fact, there is a relatively simple formula for success, and it does not require going too much out of ones way – not even for big companies: The trick is to have individual parts, departments or functions of the organization – whatever you like to call them – behave like a start-up rather than an established enterprise for a little while.
- Think big: To start with, you need a master plan for the company as a whole – the Digital Agenda. It should identify which functions, services, applications and geographies lend themselves to digitalization projects, what degree of digitalization the enterprise is aiming for and how these parameters should be determined. Among others, the Digital Agenda should define governance rules for the individual projects, a schedule and fixed targets including milestones. Another important element is a binding framework for ‘experimentation’ (see No. 3 ‘Fail early’.)Obviously, in view of the complexity of the task and the momentousness of some of the decisions to be taken, it is imperative that the Digital Agenda be overseen and supported by senior management. You need a general framework that provides room for experimentation while setting governance rules to guarantee for efficient collaboration across the enterprise. Only top management can approve that.
- Start small: Rather than trying to renew the entire infrastructure in a single effort, it’s better to practice in and learn from selected small projects. In particular, this is how you avoid the much-feared cost explosions. The most important key words here are agile development and DevOps – at least where multi-channel projects in the area of retail and consumer-facing industries are concerned. In this way, you can create proofs of concept in regard to subject and technology: By all means confirm the actual benefits consistently with the respective internal and external user groups – only concepts that are broadly accepted among these groups will generate the expected value added.
- Fail early: The strategy of starting small has a critical advantage: approaches that are unlikely to reach their goals become visible early in the process. Whenever a ‘sprint’ in an agile procedure fails to produce the expected results or no progress is made within the prescribed experimentation frame, this approach ought to be abandoned or at least put on hold. After all, there is always the option to pursue the original idea after a reset, analysis and according optimization. By no means, however, should you throw good money after bad, just because you have already invested so much. There are far too many exciting and competing ideas – every day, and all over the world.
- Scale fast: What’s proven successful for start-ups all over the place holds valid for established enterprises as well: Successful concepts ought to be rolled out and put to use fast. However, things created in agile development are obviously not always appropriate for exact copying. Local regulation as well as internally differing legacy systems and processes across geographies may require observation. Yet companies should aim at maintaining as much uniformity as possible: Scaling is ideally done by way of using centralized services or by rolling out identical ideas across functions, products and geographies.
If you’re interested to learn more about how to tackle the challenges of digitalization, I’d like to invite you to download the whitepaper discussing the results of our recent survey.