Chris Fox
Senior Vice President, Digital Transformation Services, NTT DATA Services
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As we all come up for air after the past few years, the motto for most businesses is really ‘digitalize or die’. Certainly there is strong evidence that businesses which focused on delivering digital during the pandemic – especially small and medium sized businesses – were more likely to survive and thrive coming out of the upheaval. Our own research, however, in the form of the Innovation Index, shows that leaders are preparing to move from survival to resilience and growth, adopting a more proactive approach to digitalization.
But this transformation is not without its barriers. Innovation Index respondents felt that the biggest barrier to digital technology investment was a lack of budget funding (41%), and lack of organization-wide strategy was next in line (35%). The biggest barrier to innovation, they said, was inadequate or outdated technology (57%).
And many of our clients are asking how they can make an investment in digital transformation at a time when the economic and political environment is so challenging.
Hurdling the barriers
The real question is how to lower these barriers, and foster growth through digital transformation. We have found that there are two approaches: one is bottom-up, and the other is top-down – or an IT led-approach and an experience-led approach respectively.
An IT-led approach is the traditional approach many have used to transform, i.e. ‘We’ll move to the cloud. We’ll gain agility and have more capabilities at our disposal.’ This is true, but one difficulty with this approach is that it assumes that optimizing one layer, the platform with IaaS or PaaS services or a few select applications with SaaS for example, is all that’s required.
An experience-led transformation asks ‘How can I improve our products, their capabilities and the overall experience of my customers, employees and partners?’ and takes a more holistic view of improving the chain of events and systems.
The other approach looks at the problem from the user’s point of view. An experience-led transformation asks ‘How can I improve our products, their capabilities and the overall experience of my customers, employees and partners?’ This approach to transformation reviews the products and services we provide and the systems, processes, and analytics that are used to deliver them. Of course, a mix of cloud, data, people, and process are pulled together to provide it. However this approach takes a more holistic view of improving the chain of events and systems used to differentiate our products and experiences.
For example, when retailers want to simplify their omnichannel experience – besides moving customer data to the cloud to ensure anytime, anywhere access – they need to identify the bottlenecks in the experience, and use these to prioritize what, and how, to transform. Improvement efforts might be focused on reducing or automating process steps, creating new and immersive user interfaces, building new analytics to drive personalization, and leveraging new cloud platforms that can scale as needed.
LEAP into experience-led transformation
We can also tackle barriers to transformation with an approach we refer to as ‘LEAP’. Within LEAP, L is focused on lowering the cost of how clients do things. These may be legacy applications, infrastructure, development practices, processes, etc. We’ve found many paths to unlocking 20-40% of cost from legacy. This unlocks the money we need to transform. This step has helped customers charge forward even in very difficult economic times.
E is for energizing co-innovation. We use the unlocked funds from legacy to build new products and experiences. Since it can be tough to find talent with skills to build on the new platforms, many customers decide to co-innovate to build competency while releasing new innovation faster.
The A is our ability to accelerate outcomes, based on what we call the NTT Digital Business OS (operating system). Having worked with so many clients across so many industries, we have established many strong partnerships. We’ve created a layered approach to looking at the enterprise from the very top – where we have strategy, experience, and business model – down through analytics, applications, platforms, and even the network itself.
And then the P stands for not only prioritizing, but promoting the wins we achieve. As we embark on this journey of continuous transformation, we’re going to have successes along the way, and we’re also going to have a lot of new ideas coming in. So, how do we prioritize what the right thing to do is? And perhaps focusing on the experience first is really a key piece here.
But the second part is promoting the wins so that your clients, customers and others see how much you’re moving forward and improving what they need from you. There’s also a talent piece to this: it actually helps in the talent game, because people see that you’re on the offense, and really taking into account how to change. This helps in the hiring process, as well as with retention.
Begin with products and experiences
Approaching digital transformation needs to begin with the products you want to offer and how to create differentiated experiences. When we work with clients, our goal is to not just to help with strategy, but to deliver fail-fast wins. The key is to shorten the ideate-to-execute cycle. The faster we can iterate on new experiences, the faster we can get them to market and test assumptions. We also continue to review the overall strategy to determine what products they need to bring to market to disrupt their industry.
The key is to shorten the ideate-to-execute cycle. The faster we can iterate on new experiences, the faster we can get them to market and test assumptions.
We’re also helping clients adapt business and operating models. Transformation involving technology helps enhance platforms, but new business models are needed: whether that’s advanced subscriptions, subscription-based pricing, or a completely different entry into a new tangential or adjacent market – or something else entirely – they are starting at the strategy level, and looking at how the business should change.
Once they know where the new realities lie, they can determine what products and experiences they can use to actually enter that market. What people will they need, and what technology needs to change to deliver it? From there, it all becomes a lot easier to focus and decide on which analytics and applications they will utilize, or the types of omni-channel experiences they want to create, as well as the platforms and networks required to deliver these. This also helps us identify the most important metrics to track to ensure we’re improving.
Moving IT from a cost center to a profit center
Experience-led transformations fundamentally change the way the CIO or the CTO operate within the company’s top structures. If every company is becoming increasingly digital in nature, the roles of the CIO, CTO, and the CDO also change. It’s not enough to just ‘run the business’. The focus is now on how to ‘change the business’ by providing art-of-the-possible ideas to the business and implementing the changes with them.
This digital-first mindset is needed since the CIO, CTO, and CDO understand what’s possible – and are in the best place to bridge the business and IT systems into one. This means that IT becomes a profit and innovation center, and less of a cost center.
We’re finding that top-down, experience-led transformation is netting the best possible results. This approach is helping clients prioritize the end user as the north star.
At NTT DATA Services we help companies to implement both IT-led and experience-led approaches to transformation. We execute both styles, and our clients are moving faster and growing their businesses. We’re also finding that the top-down, business and experience-led transformation is netting the best possible results. This approach is helping clients prioritize the end user as the north star. This ultimately helps IT and business understand the changes needed to create the best products, the best experiences, and what’s needed to enter new markets faster.
And at a time when most leaders – 51% of respondents in our Innovation Index survey – have asserted that growing the business is their top priority, this increased alignment between the business and IT will further accelerate the pace of change, resulting in faster revenue growth and greater strength now and in the future.
