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What is digital transformation?

A guide for executives in the public and private sectors on the myths, realities and best practice of digital transformation, by digital leaders who have been there and done it

Digital transformation saves money – lots of money. It thaws frozen markets and creates new ones. It brings clarity and beauty to a jumbled mess. It delivers rewards, applause and validation.

But far more important than all of those things, it makes things simpler, cheaper and faster for citizens, businesses and users.

For governments, it is a lever to change the relationship between citizen and the state for the better. This is the real prize – a vast improvement in the efficacy of the state and a resultant upsurge in democratic engagement.

For businesses, it unlocks that most precious and fragile of commodities – a positive relationship with customers based on trust and reputation.

Outrunning the snail

While that prize sounds appealing, there is always the temptation to say one is too busy. Of course you’ll get round to it at some point, but at this very moment, there is no time to focus on digital change. The in-tray is full of urgent crises. You have to place sticking plasters on those first. There will be time to step back later.

This reasoning is powerful, but false. In any big organisation, and certainly any government, there is always an in-tray full of urgent crises.

There is never a point where a senior political figure can kick her feet up on the desk and say, “You know, I’ve got a pretty clear day. Why don’t we finally take a proper look at this?”

In the fog of tactical fixes, the accumulated strategic debt from choosing not to change your grand old organisation slowly grows.

There is a lot of hype about how the pace of technological change is leaving businesses and governments behind. It has become received wisdom that the failure of legacy companies to survive the internet era is a result of them not being fast enough in responding to such giddying change. This is generally nonsense.

Tom Coates, an internet pioneer who worked at the BBC, called this out in a blogpost written in 2006. Writing of media companies terrified by the hardly novel insight that broadband might end up killing traditional TV, he compared them to being pursued by a giant snail. It’s not a fast mover, yet they cannot get away.

“The snail!” they cry. “How can we possibly escape?” As Coates pointed out, “The problem being that the snail’s been moving closer for the past 20 years one way or another and they just weren’t paying attention”.

Many large organisations have watched the internet approach and refused to adapt. Survival is apparently optional.

Broken levers

Governments are shielded from most of the competitive pressures that are forcing industries such as retail, media, banking and insurance to transform or be run over by the snail.

However, incompetent administrations lose elections. There comes a point in every government’s tenure where the distance between rhetoric and reality becomes too great.

This motive force of staying in power provides politicians with a strong incentive to want the system they are piloting to work. Ministers want to feel confident that the levers they pull are connected to something. All too often, they realise too late they are broken.

Many large organisations have watched the internet approach and refused to adapt. Survival is apparently optional

Politically neutral government officials lack the same survival imperative. That does not mean that they are therefore naturally attuned to delay politicians.

Officials are not the opposite side of the coin from their ministers; they are playing a different game. They are also human beings, and the vast majority clearly want to do a good job. Lots are desperate for change.

Many people are already doing their best, but the system they are in thwarts them. Kevin Kelly, the founding executive editor of Wired magazine, once said: “Institutions will try to preserve the problem to which they are the solution.”

Bureaucracies will also, as one experienced British official put it, tend to “resolve ambiguity in favour of continuity.”

It is therefore inconceivable to them that anyone could even think about putting them out of business without their say. This attitude does not sit comfortably with committing to painful and uncertain change.

In many developing nations, where public institutions are immature or not present, digital companies are stepping in, invited or not.

In the Philippines, a country where 44% of the population are active internet users, 94% of those users are signed up to Facebook.

Thanks in large part to companies such as M-Pesa providing financial services through mobile phones, more than 80% of Kenyan adults have a bank account. The global average is 62%.

Communications has long been a piece of national infrastructure, the traditional domain of the state and its officials. This is no longer a given.

It is perhaps too early to say whether the giant snail is coming for better-established public institutions. If it does, those in its path may dive for the armoury of regulations, fines and flaming torches to drive it back. Maybe they’ll work, but maybe they won’t.

The relationship between citizen and state

The message for public officials and politicians is clear: If you don’t change the relationship between the citizen and the state to fit with the internet age soon, someone else will take over that relationship, and in ways which are not always predictable.

In Los Angeles, around 30% of drivers use Waze, a smartphone app that allows road users to share real-time traffic and road information. It provides information on things such as traffic accidents or police traps.

Because it has become so popular, Waze has now effectively become part of the city’s transport infrastructure, with the city administration working directly with the company to alert drivers about potential delays.

Perhaps that doesn’t sound especially radical – just a good example of public-private data sharing. But Waze is now more than a transport app. Having become a part of many people’s daily lives, the app has unexpectedly morphed into a broader policy tool.

After a spate of hit-and-run accidents, LA asked Waze to post a notification on its app whenever a hit-and-run occurred. Drivers were effectively asked to report whether they had seen crimes take place. Not something you might expect from a traffic app.

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Whether it is always a good thing that digital companies end up playing this role is far from certain. Such arguments are already firmly on the political agenda.

The fallout from London and other cities responding to the corporate behaviour of Uber by suspending its licence to operate is indicative of the debates that will come to dominate political discussion. A private company now owns a growing chunk of the public space for transport worldwide.

Governments remaining reactive, yet bouncing between short-term fixes, won’t deliver good outcomes. At the other end of the spectrum, Tencent/QQ, a Chinese instant messaging service, has been cited by Reporters Without Borders as allowing government authorities to monitor online conversations for keywords or phrases and track participants by their user number.

Richard Pope, the first product manager in the UK’s Government Digital Service (GDS), wrote that “software is politics now”. It is very hard to imagine this becoming less true.

No innovation until things work

When faced with something scary or unpleasant, human beings are excellent at creating displacement activity.

Organisations are collectively susceptible to this problem. It is especially common in bigger, older institutions, where mundane tasks – getting one’s basic data in good shape for sharing, hiring new skills into your workforce – have been put off for so long without ill-effect that it has become easy to dismiss them as being optional.

As the consequences of not doing them are minor and largely invisible to start with, people generally believe that it will stay that way.

It becomes even easier for a large business or government administration to ignore hard-yet-necessary tasks if they can find something else that has the characteristics of work, while being more comfortable to sink time into. Fortunately, the technology hype cycle is ready to provide a stream of distractions.

Digital transformation is not all about technology; it is about changing the way you work

All too often, the word digital is conflated with whatever technology fad has made it into the colour supplements this month – blockchain, artificial intelligence (AI), the internet of things (IoT) and connected devices, and robotic process automation.

The captains of industry, ministers and senior officials who read colour supplements during their brief periods of downtime see these exciting things and commission policy papers to unpick their potential effect on the organisations they run.

The papers are good, but there is a gap – sometimes a huge gap – between policy or business school smarts and technological literacy. This translates into a gulf between strategy and delivery.

Too many chief executives and department heads proudly explain their organisation’s pioneering work on AI, for example, while in the same breath conceding their back-office systems can’t reliably pay employees on time. Or running pilots with connected devices while thousands of their customers still post them cheques.

This is not to say that preparing for the future isn’t right and good. Responsible leaders need to keep their eyes on the horizon. The successful leaders are those who can do this while remaining mindful their view will be ruined if they step in something disgusting lying on the floor.

What is digital transformation?

Digital transformation is not all about technology; it is about changing the way you work. This is not easy, and many organisations have learnt that the hard way.

According to Forbes, 70% of corporate transformation efforts fail as a result of being “unfocused, uninspired and unsuccessful”. Failure leaves scars, and dulls the appetite for future change.

The practical steps to creating a digital organisation are not complicated. They are just hard, and often uncomfortable.

For very clever people – as senior officials and executives tend to be – being presented with simple but countercultural solutions is almost an affront. Telling them that part of the answer to problems that have confounded them for decades is, for example, to “use the words normal people would” is not always welcome.

As part of changing your whole organisation, digital transformation means changing what you deliver. You will think more in terms of services that are ruthlessly focused on what their users need from beginning to end. You will choose to build platforms – component parts of digital services that can be used time and again across different parts of your organisation to cut out unnecessary duplication.

To succeed in that, you will also have to fix some of what is broken: the spaghetti of old IT sitting in the heart of processes and services, and fraying data architecture creating confusing duplication.

But the biggest change will be in how you deliver. Working in empowered, multidisciplinary teams. Starting with the needs of users. Publishing your work in the open. Iteratively improving what you do. Testing new services with real people. Using tools of the open internet over expensive proprietary options. Writing clearly for a wide audience. Showing prototypes and working code as a substitute for papers and meetings. Building trust between people in your organisation, and those who it works with. Designing with data. Doing the hard work to make things simple.

Most of digital transformation is simple and obvious. That does not mean that it is easy. Getting it right means getting stuck into the foundations of the institution; the incentives that shape behaviour, the unspoken rules of the game. That is quite a bit more involved than just building a website.

Extract taken with permission from Digital transformation at scale: why the strategy is delivery by Andrew Greenway, Ben Terrett, Mike Bracken and Tom Loosemore, published by London Publishing Partnership on 30 April 2018. The authors are partners in digital consultancy Public Digital.

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