Digital transformation has become one of the most widely-heard buzzwords of the IT and business community in the past decade, yet remains something many are still failing to understand and execute.
As the business world continues to exponentially generate more data, transforming legacy systems into modern, digitally capable environments has become critical for Australian organisations. Yet, according to a recent study by McKinsey, organisations globally pumped US$1.3 trillion into transformation initiatives — 70 per cent of which was wasted on failed programs. To give that a number, it’s around US$900 billion
Despite the gusto and frequency with which organisations and leaders tout their digital strategies, it has become evident that even some of the world’s most innovative companies are either flailing or failing in their transformation efforts.
It is easy to pin these failings onto the technological challenges at stake: changing old legacy systems to a technology environment that changes gear every season isn’t something every business is either ready for.
However, these are symptomatic of more than just technological grapplings: at the heart of this is a cultural disconnect within organisations and no clear drive or vision for change from the top-down. And this change-led culture can no longer come from the chief information officer anymore, but right from the very top, as outlined by Sachin Kulkarni, assistant vice president at Cognizant Australia and New Zealand.
“You can’t transform a business if the chief executive officer doesn’t want to transform the business,” he said. You can be pushing from IT or the business, but the CEO needs to say: ‘Let’s do this’. And then you’ve got the flip side, where the business tries to go in one direction at the leadership level but the people below just don’t want to go on that journey. There is a clear disconnect.”
Yet even the concept of change is a barrier in itself. If businesses are under daily operational pressure and largely working towards making it through the next quarter, it leaves little room for radical, long-term strategies.
“If you look at it in the chief executive officer’s mind, what’s the most important thing? It’s not really the profits or the general efficiency, it’s the worker’s safety,” said Coenraad Bekker, general manager of Wipro Asia Pacific and Japan.
“If there is a directorial relation and the new platform aligns with their own KPIs, that’s how that level matches and then it just flows down from there. ‘What’s there actually a need for it? Is their world going to change? Or is it really just a passing phase that they can survive in?”
For Kevin McIsaac, business value consultant at Domo, a key starting point is imagining the kind of culture you as a leader want to bring, and an acknowledgement that not all change is a guaranteed headache. “Most of us don’t like change; we’re uncomfortable with it,” he admits “But once we change everything, so as everything’s changing, we enjoy it and embrace it so it’s got to be led by the actual leaders of this.”
Often, one of the biggest hurdles in convincing customers to invest in their digital capabilities is the proliferation of the words ‘digital transformation’ across the IT industry. And, as with any overused terminology, the more you hear it, the less the message gets home.
As Angus Mansfield, managing director of XCentral argued, the language around digital transformation is lacking clear definition. In light of this, even though customers may be investing in digitisation efforts, education is still a big component for them from the outset.
“Not only do [the leaders] want the transformation piece around lifeforms, but the people that work for them want to too. So, that transformation is kind of useless without training.”
According to JDS GM for AppDynamics David Steed nobody has “a really good definition” of digital transformation despite its prevalence in the market. If partners are able to grapple that themselves, then comes the conversation about what’s its value for customers.
“For me, what your transformation is largely about, is using digital technologies to change the way you deliver value to your customers. The first part of digital transformation is to ask the leadership: ‘What is your vision?’ What’s your vision about how digital technology will transform how you deliver customer value?’ The value is really the value that the client gets from the transformation.”
As he reiterates, there are “thousands of initiatives” that can be undertaken by organisations and it doesn’t necessarily “have to be one big thing” — which can be a daunting task for customers.
Domo Asia Pacific senior vice president and general manager Paul Harapin likens the “one big thing approach” to approaching climate change by cleaning the entire ocean. “It’s an overwhelming task. You wouldn’t have a clue where to start and so people will go: ‘Forget it, I’m going to move on’.
“But you can make a start by cleaning a beach. What I see, consistently, across the region, it’s rapid time-to-value projects that deliver value quickly and then do the next one and the next one, learning each time along the way. They’re the organisations that, at the end of those three years, have added value consistently and deliver change and transformation that does change the course of the business.”
Taking charge of this value though presents its own challenges, as Bekker highlighted. For one thing, measuring any kind of “value” is a grey area in itself and will naturally mean different things to different organisations.
Smaller projects can be measured in terms of business productivity or customer satisfaction around eight months down the line. However, when the change spans across an entire organisation, for example, the likes of Woolworths and Commonwealth Bank, that measurement becomes much harder, he said.
“These are the customers that are doing enterprise-wide transforming and it’s going to be incredibly hard for them to actually measure what impact it’s going to have because you are developing this problem in a thousand little squads,” he said. “You would get to this point where ninety-nine per cent of the squad is doing what they want to do but what did they achieve?”
There also is a sense of caution around data protection and security, especially amid a heightened regulation both in Australia and globally. On 25 May 2018, the European Union’s General Data Protection Regulation (GDPR) came into force, the same year that Australia updated its own data privacy regulations, which forced organisations to tighten up their compliance strategies significantly.
This is causing a headache for customers, according to Gerardo D’Angelo, chief operating officer at Mind Tattoo.
“A lot of the customers that we’re talking to are struggling even with the basic concepts of data privacy and data security needs. All these things people say that in the old days, they signed up on a system and the data was in the system and that was pretty much it.
“From a digital and data concept point-of-view, if you look at the [Royal Commission] banking inquiry as a lot of breaches, misconceptions and irregularities, you can trace back, in many instances, to specific systems and people that didn’t do their jobs right.”
“There is a lot of misunderstanding out there,” he added. “And unfortunately, the rate and the pace of change doesn’t give [businesses] time to pause and reflect upon it.”
However, as Chuong Mai-Viet, the managing director of Bluesource, argued, there is a role for the channel and the IT industry as a whole to be more vocal about the issues of data security and privacy. Indeed, he would even go so far as to say partners should take a firmer stance against clients who think “they know best”.
“I do it to my customers all the time,” he told the table. “[I tell them] ‘you’re wrong. You do need two-factor authentication and you do need to change our password for these reasons,’ and if the customer keeps saying no to you, you almost have to say, ‘you know what, you can be someone else’s problem’.”
Telling a different story
Naturally, no channel partner wants to be behind any curve and be, as Mansfield outs it, a “catalyst for change”. But in the face of these challenges in place, the channel may need to shift its selling and customer interaction mindsets, especially those coming from a legacy software background. But first of all, that requires some soul-searching for partners and, in all likelihood, some significant internal transformation.
Vivek Trivedi, MD at Exigo Tech, relayed how his company has also had to go on the same journey as its customers. “It has been quite an interesting last couple of years for us, going from experiencing the transformation journey with our clients, which has taught us a lot. So, we also have changed through this transformation process and then recognising our experience in the industry so we can be of value to them.”
Recognising the need to change also requires a deeper sense of accountability and responsibility for many of the client challenges today, believes Noel Allnutt, director of Solista.
“As sales people and business owners, we get told to tell a story and we can go and tell that story all day long and naturally we get good at telling that story.
“But there’s just not enough where the word ‘dilemma’ comes from: that the dilemma is who are we selling to? And who’s buying this? And then post-that, whose actually delivering that within the business?”
“We’re accountable for the mess of the IT and failed projects and the future are we, and the sales people motivated by selling bodies and people and not an outcome,” he added. “How much do we own the resolved purses?”
“There still hasn’t been that shift of organisations from IT keeping the lights on to technology teams doing transformation projects. That can serve as an opportunity for partners like ourselves to plug that gap and help them articulate the value.”
Outcome-based selling has been a regular buzzword of channel literature for the past number of years, but for Chuong, the shifting demographics within the end-user base means this is more critical than ever. For him, that represents a major change within the historic relationship of value-added resellers and their customers.
“[Businesses] are hiring twenty and thirty-year-olds who are very tech-savvy, know this way around a world. Most of the issue they’ll sort out themselves. When they need you, they really need you and they don’t want someone to say, ‘Log a ticket, I’ll see you in two days’. They just want it fixed and when they are getting charged out at $300 an hour?”
“I think we’re almost at a stage where we’ve got two tiers of customers. We’ve got the customers in the new world — the disruptors of the world — and also old school IT.
“Supporting a vendor like Atlassian is very different from someone like HP. The guys at Atlassian, they’re all developers and they want you to do the boring stuff that they don’t want to do. But the complex stuff? They’ll do it themselves, whereas the HPs of the world, fixing my complex stuff.
“So, I think as a reseller, if you’re in that old school model, you almost have to go: ‘I’m just going to keep my old business doing what it does,’ managing the clients that it used to manage and you almost have to speed up the new business doing something totally different and that’s where the world is going.”
Some of that mindset also needs to come from the vendors themselves. Partners can be catalysts for their customers’ change, but the vendors also need to take ownership of that, stressed Harapin.
“We changed our MSP tool and one of the key criteria was: ‘How quickly have you changed over the last five years compared to who you’re competing with?” he said. “Is that something that you’re seeing customers ask? How quickly are you moving? Is this product that I buy today still going to be the same product two years or where are you going?
“And then it’s about saying to customers: ‘We’re here to help you manage your business fundamentally differently’. And then all of a sudden, they totally shift when they get it. Being ready for that and prepared for it as an organisation is really the key.
“It’s about being set-up as a really customer-centric sales and support team where end-user success starts from the moment before you even sign the contract. Then it’s about being open so you both can enhance the value that they get out of existing investments and protected and ready for the future.”
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