If you know about digital transformation as a core and have a fair idea that it is not the technology but it is a strategy, just jump to the “big barriers for tech companies”
Somewhere around 2016, organizations across the globe started talking about Digital transformation and trying to depict that it is beyond digitization and digitalization. Lots of organizations started talking about digital transformation and esp. technology companies started leveraging this buzzword.
Organizations believed that you would get quick results from digitizing your services and some of the statistics were in favor of it too:
- 79% of consumers have made a purchase using a mobile device in the last six months. (Outer Box Design)
- 56% of CEOs said digital improvements have led to revenue growth. (Gartner)
But then the problem started surfacing – lots of so-called digital transformation projects started falling apart. In fact, 70% of the digital transformation initiatives fail. (McKinsey)
- Of the $1.3 trillion spent on digital transformation in 2018, an estimated $900 billion was wasted when initiatives didn’t meet their goals.
The fundamental of the change requires proper strategy in place – this was forgotten in case of Digital Transformation. Some of the organizations started filing lawsuits against technology companies. One such example is – Hertz filed the lawsuit ($32 m+) against Accenture claiming the company failed to deliver when Hertz hired it to redesign its website and mobile apps (ADWEEK).
One thing is clear to clients who are also called as an “outsourcing organization” that Digital transformation doesn’t mean digitizing the things. It is also not about technology, rather it is a strategy that would help to transform.
Big Barriers for Tech companies
Outsourcing organizations (clients of technology services companies) have learned their lessons in hard ways. This has created a barrier for technology companies to claim themselves as a real digital transformation service providers.
This barrier impacts severely to the engagement level. For any of the digital transformation initiatives – clients have understood that it is a strategy and not the technology – they simply started ignoring the technology companies. An engagement level – they are invited late in the game or when everything at the strategic-level has already been defined.
So, how to improve the engagement level?
If the technology services companies take care of following important points, there are high chances that their engagement level can be shifted from delivering technology to delivering digital transformation.
1. Practical Roadmap:
A roadmap for the digital transformation is beyond a Gantt chart or digital initiative divided into sprints. It must be the strategy that would play a guiding principle to each team member on which direction we are heading to. It must talk about why are we doing it, what are the benefits (short-term and long-term), and which are the anticipated business process changes. Lastly, it must be a live document. The objective is to update it based on market feedback.
2. Conceptualizing Capability:
Agility plays an important role here. Technology companies have adapted the agile-scrum or other agile processes but it is limited to execution. When it comes to blueprinting and conceptualization of an idea/modernization of products or services – they fail miserably. Technology companies must have the ability to quickly understand their client’s digital transformation needs, client’s grand vision, and areas/products/processes that would be impacted by the digital transformation. If a technology company can showcase the future state of the product/process/idea in a much effective way and with utmost agility, it ensures the success of the digital transformation initiative.
3. Evidence-based Suggestions:
Suggesting the features/ideas/process improvements are considered as a new value-add. But value can’t be generated from suggesting any random improvements – thinking on your desk (or at home in this COVID-19 situation) nor it must be influenced by the kind of skillset or resources you have on the bench. It’s the client’s business that would be impacted heavily by the suggestions. If it has been implemented without gathering evidence or proper research, it would become a disaster. One of the prime reasons for costly digital transformation failure is giving something to your clients that are not needed. So, one must ask:
- If it is your business – do you really care about the suggested feature in the proposal? or
- Do you really think my customers would love this? or
- Is it really solving my customer’s problem?
4. Ability to Test a Hypothesis or Idea:
The key to success in this highly competitive market is to test the ideas quickly in the market as it saves lots of effort and money. Instead of wasting on the idea that has NO idea-market fit, money can be invested in the idea that would help your client to transform its business digitally and grow in the market. Technology services companies are evaluated on value-based outcomes and one of the biggest values it can provide is by saving the money by testing the hypothesis. In the world of technology, glittery innovations sometimes make you believe that the future is only this – but when tested on ground – sometimes that is not the case.
5. Ability to derive Digital Business Model:
Any digital transformation would induce a change in the thought process of everyone – your client’s customers (end-customers who would be using/benefiting), client’s employees, and client’s partners. This opens new possibilities, new challenges, and of course – new ways to do the business. Being a technology services company – do you help your clients to derive the new business model for the discussed digital transformation initiative?
6. Cultural Change Activities:
Many digital transformation initiatives fail because of the non-adoption of the new system/process. Even though it had been developed by the best brains by putting tireless efforts and investing lots of money. Generally, technology services companies pay very little attention to the post-delivery of the digital product/solution. Any transformation at the client’s organization requires assistance towards overall change and your roadmap must have included this cultural change. There are different levels at which assistance can be provided. A very basic level is to train and help the users/employees on the newly developed digital initiative. Advanced level is to build the solutions that would boost the cultural change, understand the behavioral psychology, and motivate them to stick to the new process/solution. So, figure out the ways to help your clients for cultural change activities.
7. Matured Processes:
Technology services companies understand that agile methodology is ruling in the current era. So, everyone is claiming that they are champions. Even in the agile team when they receive the client’s feedback it has not been considered as feedback to improve the digital initiative, rather it is considered as “one more change”. A mature process is a process where each team member understands what’s expected from them and how seamlessly tune themselves towards the success of their client’s digital initiatives. This means – supporting the client in a) Its demanding phase by going to extra-mile and b) confronting the client when the team feels that the digital initiative is going in the wrong direction. In the end, the ultimate objective of a client is to hire the experts and not the workers (who do what’s been told them to do).
8. Solution Expertise:
Though it is in the last, but it is the most important point from a value-add perspective. Most of the technology service companies pretty much know the technology and have expertise too. The key differentiators are – can you build the solution for clients using the technology? A solution to a problem might require utilizing multiple technologies. Sometimes you don’t need technology to solve it, rather utilizing the simple non-technical solutions work. (see this example – https://www.youtube.com/watch?v=ccM8RLLKasw). You don’t need sensors and huge investment – rather it can be solved easily by a balloon with branding. Similarly, in digital transformation where a change from the state-a to state-b is required – a technology company that can help them by providing cost-effective solutions would win the race. Your clients would know over a period of time that the solution you provided is worth their investment or not. Once the client sees a similar organization like itself, doing similar business, has employed a light-weight, simple, and cheaper solution – this would pose a serious question to the expertise of the technology company.
(I have assumed that other elements like technology expertize, costing, and timeline is at its optimum level.)
If the above-mentioned eight-points are taken care of while positioning your offerings to the client for their digital transformation needs, I am sure, beating the competition would be the last thought in your mind because it has already been taken care of.