Why Digital Transformation is not an IT Transformation

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BusinessandITAdvisory,©AllRightsReserved
Why Digital Transformation
is not an IT Transformation

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BusinessandITAdvisory,©AllRightsReserved There are four different categories of IT driven Transformation. 1st three
categories are relatively well known and, adequately managed using
traditional sourcing and delivery approaches
• Business-as-usual change:
• Delivery strategy: Business- as-usual IT releases done fully in-house or
using vendors, depending on lower cost of delivery. Example:
Incremental changes to existing applications or addition of small new
applications to a stable IT landscape
• Commodity transformation:
• Delivery strategy: Traditional (prime) contracting model with an
established supplier (typically a large systems integrator or large
software vendor). Example: Multi-business-unit, multi-country ERP or
CRM rollout
• Pilot or controlled experimentation
• Delivery strategy: Contract with technology owner and execute on an
“incremental,” prototype-based design. Example: Travel company
piloting dynamic packaging technology with one small business unit
• Innovative:
• Delivery Strategy: Take strong control of technology owner (through
joint venture or buyout) to ensure control over innovation and to
manage risks effectively. Example: Cross-country rollout of smart
metering services
IT Transformation
Spectrum
Low High
Low
DemandSide
Challenges
High
Commodity
BAU
as Change
Supply Side
Challenges
Innovative
Pilot/Controlled
Experimental
Source: Booz & Co

3
IT Transformation
Core Components
Strategic
Alignment
Transformation
Capability
Agile IT
Architecture
Execution
Excellence
Source: Booz & Co
Four key components must interact with and inform one another,
leading to a smooth transformation process and repeatable capabilities

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Transformation
Capability Maturity
Prog. Mgmt.
Governance
Performance
Mgmt.
Lacking Ad-hoc Competitive
Best-in
Class
Differentiated
Transition
Mgmt.
Vision &
Strategy
Design &
Develop.
Technical
Readiness
Stakeholder
Mgmt.
Change
Mgmt.
None
Business
Readiness Source: Booz & Co
Stewardship
Ownership
Building
Capability
Building
A company must ensure that it has the right set of drivers and capabilities in place
to carry out the transformation. The drivers, which can vary from company to
company, demand careful consideration, as they will determine the ultimate success
of the transformation. Following is a generic template for transformation capability.

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IT Transformation
Enterprise Architecture
Application
Architecture
Business
Architecture
Source: Booz & Co
Infrastructure
Architecture
Data/Information
Architecture
Design and
Architecture Principles
Operating Model, Program of work, Road Map
EnterpriseArchitecture
Agile IT
Architecture

6
IT Maturity
IT Transformation
IT Maturity
Business Silos
Standardised
Technology
Optimised
Core
Business
Modularity
PercentageOfInvestment(0–100%)
HighFlexibilityLowFlexibility
Source: 2005 MIT Sloan Center For Information Systems Research
Global
Flexibility
Local
Flexibility

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Transformation
IT Enabled
Source: Booz & Co
IT Transformation projects are massively complex and highly disruptive to long-standing business processes and their end-users,
and can span years and cost hundreds of millions of dollars. Success of such large scale transformations projects on all agreed
objectives in the beginning is quite low.
Why such projects fail is presumably well understood:
• lack of user involvement,
• weak support from top management,
• unclear business objectives and so on, the list is long.
What is required
• Companies must align the transformation with overall corporate strategic and business goals, and all stakeholders must buy
into the future vision.
• they must settle on the necessary transformation capabilities, and fill any gaps in current capabilities.
• Third, the transformation team must work to create an agile interim architecture that can see the company successfully
through the transformation, maintaining business continuity while enabling the planned changes.
• Finally, successful execution will require the creation of a transformation operation model and appropriate progress
monitoring and governance procedures for guiding the program to completion

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Transformation
Digital Transformation is not an IT Transformation
Digital Transformation is :
• Front-office, customer-facing, and demand-generating or generates
Revenue. They're the business's brand.
• Digital demands move at the pace of the market, competition, and
customer expectations rather than the upgrade cycles of IT vendors.
• Digital transformation drives or can drive the IT Transformation, but
not the other way around.
IT Transformation is :
• Back office, customer enabler, fulfils demand or an OPEX control
measure. Its about operational efficiency and optimisation.
• IT demands move at the pace of technologies lifecycle and the upgrade
cycles of IT vendors.
Source: HBR.
Cost Revenue
Fulfillment
Demand
Side
Generation
IT
Transformation
Economics
Digital
Transformation

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Source: BCG
Digital Transformation
Impact on IT, Relationships and Stakeholders
Applications
Speed&
Cycle Time
Methodology
and Tools
Skills
Customer to
Business
Business to
IT
IT to IT
IT to
3rd Parties
Industrial (non Digital) Speed Digital Speed
• Mature technologies with long life cycles • Emerging, short life time, built on fast changing
technology with legacy technologies
• Release cycle of 6 to 12 months driven by
planned business needs
• Quick cycles (<1 mth) from idea to deployment,
driven by rapidly changing users needs and comp.
• A hierarchical organisation using established
frameworks and standardised approaches to design
• Self organising teams using agile tools, fast
evolving SDK and automated
• Individuals with specialised skills
• Jack of all trades who combines upto date
knowledge of technologies and business
• Predictable demand via established channels,
products and processes
• Unpredictable demands due to evolving trends,
technologies and channels
• Siloed and Fenced driven by mid and long term
strategies
• Highly collaborative and constantly changing
• Siloed and Fenced, vertically integrated, tech stack
is stable
• Collaborative and horizontally integrated, tech
stack is constantly evolving
• Buyer – vendor relationship, IT controls the pace of
interaction
• Participating in 3rd party ecosystem, the ecosystem
sets the pace

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Disruption Led
Disruption across industries by digital evolution is swift and deadly
• It is operating at the speed of thought
• It turns assets into liabilities
• It comes from any firm of any size and from anywhere
Digital Disruption is driving fundamental shift in Business Model. This shift has led to deep impact on organisations operation,
structure and, their culture. Its low barrier to entry is driving constant innovation and opening doors for non digital business.
Source: Disruptors Handbook, Forrester.com 2012

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Social Mobile Big Data/
Analytics
Cloud
Driven by Technology - SMAC
• Four major technology drivers aka SMAC (Social, Mobile,
Big Data Analytics, Cloud) is driving the major
transformation themes across Business Model, Customer
Experience and Operations.
Business
Model
Customer
Experience
Operational
Process
New Digital Business Model Driving Revenue with Global Reach
New Touch Point across Customer Experience Mapping
New Digitised Process and Workflows across the Value Chain

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Driven by Internet of Things
Stage 1
Internet
&
Dot Com
e-Commerce
with
Control &
Choice
DriversOutcome
Stage 2
Mobile
Device
m-
Commerce
Anywhere,
Anytime
Stage 3(Today)
Smart Device
with App
Stores
Cashless
Commerce,
User Exp.
&
Ubiquitous
• Ubiquity of internet has led to Digital
Transformation across vertical industries and
merging the gap between physical and digital world.
• Consumers driven by customer experience are
adopting new platforms and technology.
• Owning the digital ecosystem (like app stores) has
become a vital channel for customer engagement,
retention and revenue generation.
Credit: Banking 2.0

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Convergence Led
• Emergence of Social Platforms like Facebook,
Twitter and Linkedin has redefined how
customers are engaged in a digital world.
Customers used these as a learning, sharing
and collaborating platform.
• Emergence of Smart Mobile Device(incl.
Tablets) with superior and engaging UX has
led customers to use this as a preferred
platform for commerce and service
consumption.
• App Store led Commerce and Services in
digital world is increasing in double digits
(yoy).
• Owning the digital ecosystem (like app stores)
has become a vital channel for customer
engagement, retention and revenue generation.
• Emergence of GPS enabled devices have
allowed localised targeting of services.
• Convergence of SO, LO, MO is driving digital
disruption across every industry.
Source: TOP MOBILE INTERNET TRENDS , KPCB, 2011
Social
Local Mobile
LO MO
SO
Transformed
Superior and
Engaging Customer
Experience
Anywhere,
Any device,
Anytime

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Value Proposition
Different organisation require different approach for leveraging benefits
from digital transformation in their evolution.
• Pure Digitisation leads to expansion of core business to digital
platforms.
• Pure Transformation leads to change in traditional business model
to a new type of business model.
• Combination of executing Digitisation (services and platforms) and
Business Transformation (culture and business model) in parallel is
less agile and difficult task to achieve. However this is the best
option, executing either option individually or sequentially will not
give the desired outcome.
Core Business Diversification
OrganicGrowthInorganic
Digitisation
Transformation
Sweet Spot

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Attributes
• Simple
• Ubiquitous – universal access to services and apps by consumers and enterprises
• Personal
• Affordabiltiy – pricing to make them affordable
• Speed – extent to which digital services can be accessed in real time
• Usabiltiy – ease of use
• Empowering
• Skill
• Reliability – quality of available digital services

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Challenges
Finance
(Transactions)
Customer
(Engagement)
Internal (Ops.)
Learning,
Culture
&
Infrastructure
Rapidly Changing Customer
Desire and Needs. Digital
generation is always on the
move.
Increase the top line and bottom line growth with seamless transactions
Business process are
fragmented, need to digitise
all, leveraging new digital
platforms.
Resistance to Cultural
Change, Fail Fast is Missing.
Lack of unified Marketing, and
fragmented Channels.
Old operating Model.
Lack of Analytics and
Intelligence on Digital
Operations.
Ageing infrastructure
and Information Overload.
Ad hoc strategy to leverage
and integrate social and
mobile ecosystems. No well
defined KPIs.
Lack of Customer Centric
Services. Most services are
functionality driven and aren’t
intuitive.
Lack of collaboration and Silo
based Approach hindering
Boundary less information
flow.

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Why It’s Difficult
Source: Creating Corporate Advantage , David J. Collis & Cynthia A. Montgomery
Structure,
System
&
Procedure
Linkages
&
Alignment
Intro Growth Maturity Decline
C
C
Drives
Behaviour
People Shapes
Culture
Time
Culture Shapes People
Culture is the biggest
challenge for any
transformation to be
successful.
For matured organisation cultural challenge
is magnified enormously as it drives the
behavior of people. Any change to that is
resisted vigorously.
Cultural

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Core Components
Digital
Strategy
User
Experience
Design
Services
and
Meaningful
Content
Channel
Integration
Operations Governance
Digital
Infrastructure

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Capability Maturity
Source: UQ and EY, Digital Capability Maturity Framework. 2013
Strategy
Digital
User
Experience
Low Moderate Considerable High Extreme
Design
Services and
Content
Channel
Integration
Operations
Governance
Digital
Infrastruct.
None

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Summary
Digital transformation is an end to end business
transformation which drives or can drive IT
Transformation. Its not only transforming the
industries but laying a new foundation for corporate
IT. It’s still early days..

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Advisory Services
Catalogue
Business Advisory
• Business Strategy
• Go To Market Strategy
• Competitive Analysis, Wallet Share Analysis
• Profiling, Alliances, Pricing, Positioning
• Market Watch
• Distribution Channel Analysis
• Sales Enablement
• Value Management and Articulation
• Messaging, Buyer Profiling (360 degree view)
• Pipeline and Account Management
• Industry Trend Executive Briefings
• Telecom, Media, FMCG, FSI
• Market Research and Feasibility Analysis
IT Advisory
• IT/Business
• Alignment, Business Case Development (Val2.0)
and Value Management
• IT Assessment
• Due Diligence, Current and Future State
Assessment
• IT Strategy and Architecture (EA) and Portfolio
Analysis
• Technology Assessment & Enablement – Digital
Transformation, Mobility First, Cloud Fitment,
Analytics and Reporting, Social Media Strategy
• Operating Model Review and Design.
• IT Economics
• CFROI, TCO, ROIC, IRR, ROA
• IT Sourcing - Insourcing/Outsourcing/Offshoring
• IT Cost Allocation/Chargeback/Cost Reduction
• IT Performance Management and Portfolio Management
• IT Governance/Compliance/Risk Management - COBIT

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Telco 2.0 – N Sided Model 2010 Cloud IT Services Model 2013
NBN Impact Aussie Indus. 2011What is Value Management 2013
Mobile Industry Analysis 2011
Social Media Strategy 2012
Digital Transformation Framework 2013
Facebook Strategy 2011
Insight Driven Sales Model 2013
Cloud For Enterprise IT 2009
Australian IT Industry 2013 GTM - Services Company 2013
Value Based Relationship 2012
Big Data - 2013
Value Based Relationship
Advisory Services
Work Samples

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To Know More
Contact
Name: Vishal
Email: info@sharmavishal.com
Twitter Handle: sharmavishal
Linkedin : http://au.linkedin.com/in/sharmavishal01/
Web: http://www.sharmavishal.com
Mobile: 0468-675-566 (From overseas + 61- 468 - 675 - 566)
Fax : (03) 9381- 4459

Why Digital Transformation is not an IT Transformation

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