Top 5 tips for C-level executives to overcome digital transformation barriers

Today, we are in the middle of 4th Industrial revolution - the digital era and at this point of time, digital disruption - a transformation wave, is sweeping every industry vertical - be it software, banking, automation, logistics, retail or healthcare. It is evident that to match this new IT dynamism that's leading to increased customer expectations and more competitive business landscape, organizations need to evolve.

According to a new research by Harvard Business Review Analytic Services,Winners and losers are yet to be determined in the digital economy but companies that form their strategies now, shift resources to new digital initiatives, and redesign their organization and culture will have a distinct advantage.

A successful digital business transformation requires deep alignment of business goals with the IT's efforts to supply technology to the enterprise but the road of digital transformation journey is full of challenges.

Harvard's empirical study indicates that the biggest hurdles are the inability to experiment, change management, legacy systems, a risk-averse culture, and organizational silos.

Thus, organizations are facing a digital imperative -either adopt new technologies effectively or face obsolescenceand C-level executives, being in the driver's seat, are finding themselves at crossroads

To help them better prepare their organizations for what lies ahead, we delved into what are the challenges that CXOs face during digital transformation and how they should strengthen their cultures to overcome these barriers.

Top five tips to overcome digital transformation barriers:

Barrier1. Resistance to change or fear to adapt new technologies

Digital Transformation, by its very nature, requires significant changes in people, business processes, technologies, skills, cultures, and organizational structure.

Some IT organizations are structured, staffed, or have cultures that are conducive to digital transformation but some are not and they are afraid of new things. For them, change equals to pain. It means uncertainty, a challenge to their role or identity and possibly the loss of business. Digital projects are held back with a thought that they will cannibalize other revenue sources, trouble getting funded or marketed.

Tip1. Overcome the fear of change and inflexible organizational culture

• Recognize different needs and desires of millennial employees.

• Develop a proper plan of why change is needed and understand that change is necessary, have a clear communication upfront, assemble the right capabilities and competencies, outline how digital technologies can benefit both company performance and individual teams.

• Hire digital artisans who are agile enough to support existing architectures and can adapt with newly developed tools, practices and emerging business models.

• Make sure to have someone on board who knows how people's minds have changed, and how to adapt to new business models.

Barrier2. Legacy systems that breed on outdated technologies

Legacy IT or systems that are in place for decades can't interface with new digital apps and architectures. For most of the enterprises, the legacy system is a black box of codes written by retired developers with minimal documentation of any kind, making planning and maintenance of the existing systems extremely difficult, while slowing digital business transformation efforts.

To make matters worse, critical data that is locked up in a legacy system which is technically incompatible with modern data management solutions, contributes to a lack of understanding of the business work flows. Moreover, faster application development is also hard to achieve as most old systems operate at a lower level of abstraction and their hardware and software are less open, non - extensible and incompatible with newer systems.

Tip2. Renovate the core instead of getting rid of it

To overcome the problem of inertia of the legacy systems, CXOs should employ two-way approach - they should maintain the systems that they rely on to operate but at the same time, they should start experimenting with new technologies that have the potential of replacing the legacy systems.

Understand the potential of the new technologies for your business and via proper TCO evaluation, understand what investments are worth making. Companies often switch to new technologies after assessing the value, security, long term profits and productivity they will derive out of them.

Barrier3. Inability to work across silos

By 2018, 70% of siloed digital transformation (DX) initiatives will ultimately fail because of insufficient collaboration, integration, sourcing, or project management."- IDC.

No doubt, data structures and hierarchies are necessary in enterprises as they enable them to work expertly in different areas. But these become troublesome when information gets siloed in them. This significantly impedes organizations from using digital technologies by preventing the flow of information, tools, priorities and processes within departments and thus results in interdepartmental turf wars and conflict among leadership teams.

This reduces efficiency, morale, and lead to the demise of a productive company culture. So, for an organization to work efficiently, decisions need to be made across silos.

Tip3. Smash your silos with three keys - Cooperation, Communication and Collaboration.

To break down silos, C level executives should:

• Have business productivity solutions for improved and transparent collaboration and communication between different departments.

• Create a compelling case for innovation and a completely aligned strategic innovation agenda.

• Agree to a common and unified vision for the organization and share knowledge and information among the company to build a healthy culture.

• CXOs can also opt for Jack Welch'sWork-Out Sessionapproach to get everyone on the same page.

Barrier4. Risk-averse culture

MIT Sloan Management Review and Deloitte Digital 6th annual study found thatRisk averse companies struggle with digital transformation. Furthermore, 71% of digitally maturing organizations accept the risk of failure and actively encourage experimentation, compared with 29% of early stage companies.

All organizations are not risk takers and they generally have a tendency towards risk aversion. But when they become overly risk-averse in their decision-making, they allow reasonable opportunities and enterprise objectives to get lost and make a business less competitive than it should be. It undermines a corporation's ability to learn, leverage, or innovate.

Tip4. Build a Risk-Tolerant culture

Organizations that are willing to use digital technologies should make themselves more risk tolerant, have a flexible mindset and attain the ability to synchronize talent, culture and organizational structure with digital environments.

They can use Big Data and Analytics solutions that provide transparency into market conditions by providing near real-time insights into how experiments are or are not working. These insights give CXOs more control over risks and better understanding of the market conditions. These will further help them undertake periodic strategy reviews to set direction and structure organization on the basis of analysis of their industry and the forecast of how it will evolve.

Also, figure out a funding model - capital funds to savings, as adequate funding is necessary for resources and is required to drive small experiments into enterprise-wide change.

Barrier5. Change management capabilities

"Only half of organizations say their leaders are digitally literate"- ISACA Research.

Research reported that despite the sense of urgency to embrace digital transformation across the board, less than a quarter of organizations said they believe their senior leadership is very receptive to adopting and deploying emerging technologies- AI/machine learning/cognitive tech (49 percent), public cloud (48 percent), and Internet of Things (46 percent).

Most of the organizations lack digitally relevant capabilities like customer problem solving and improvement approaches such as Lean. They are also short of effective design capabilities and gaps in them can hamper digital progress significantly. Companies need to understand customer environments and develop such solutions that are in sync with their business capabilities.

Tip5. Get hybrid talent with demonstrated differentiated capability

"It's important that the business have its own strategy or know where to partner to get to the right strategy,"says Shawn Fitzgerald, IDC's Research Director, Worldwide Digital Transformation Strategies.

Due to the rapid pace of technological change, C-level executives should look for partners who understand the particulars of their industry and the regulatory environment. This will help them compete faster and leapfrog any loopholes in their business strategy vs competitors in the industry.

So, organizations can overcome the transformation barriers easily if they have a solid digital transformation strategy and vision in place.

Do let us know which hurdles you or your organization are facing to adopt digital transformation. You can register for World Cloud Summit 2017 for further discussion on the topic with leading cloud industry players like Microsoft and AWS.