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The evolution of Digital Transformation

The evolution of Digital Transformation

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Digital Transformation is the incorporation of computer-based technologies into an organisation’s products, processes and strategies. Industry pundits tell Intelligent CIO Africa, how CIOs are leading their organisations to succeed with Digital Transformation, business benefits, digital technologies and processes that can enable organisations to adeptly respond to customer demands in the present and as demands continue to evolve at a rapid pace.

Given that Digital Transformation is the incorporation of computer-based technologies into an organisation’s products, processes and strategies, enterprises undertake Digital Transformation to better engage and serve their workforce and customers and thus improve their ability to compete.

Often large in scope, a Digital Transformation initiative can require an examination and reinvention of all facets of an enterprise, from supply chains and workflows, to employee skill sets and organisational charts, to customer interactions and value proposition to stakeholders.

Successful Digital Transformations yield ongoing business benefits: digital technologies and processes enable organisations to adeptly respond to customer demands in the present and as demands evolve. Digital Transformation also builds the infrastructure and skills required for taking advantage of fast-evolving technologies that could confer a competitive edge.

A Digital Transformation strategy positions organisations to survive and thrive in a future where technology is the key economic driver.

According to MarketsandMarkets, the global Digital Transformation market size is expected to grow from US$469.8 billion in 2020 to US$1009.8 billion by 2025, growing at a compound annual growth rate (CAGR) of 16.5% during the forecast period. MarketsandMarkets states that major growth drivers of the market are the increasing penetration of mobile devices and apps, and the increasing adoption of cloud services.

Shabhana Thaver, SA Specialist Bank IT Head, Investec, said Digital Transformation is about organisations rethinking and reinventing themselves to enable smart services, products and operations for better performance.

Thaver said this does mean a shift in business model by placing technology at the heart of the organisation. “It encourages the way you conduct business or operate from a people, digitising processes and embracing technologies perspective to add superior value to the customer and responsive to change by enabling agility and pace,” she said. “In Africa, the digital landscape stimulates an innovative economy in which organisations can offer new forms or ways of doing business digitally, interconnecting across the world and accessing a wider client market than physical presence would. Digitalisation will assist in improving amongst others our health and education systems and allow for economic expansion.”

Nicholas Durrant, CEO, Bluegrass Digital, said with the current digital acceleration taking place within Africa, multiple drivers have been identified as a necessary means to digitally transform, one of which includes managing rising customer expectations. Durrant said Africa’s unique socio- and geo- economic challenges has led to innovation in mobile tech, mobile wallets and cashless payment solutions where you can argue that Africa is leading the way. “As the majority of companies are optimising their digital offerings, customers have increased their expectations of how well the brand that they’re interacting with performs digitally,” he said. “As a result, African customers are now examining functions such as user experience, speed, data security and so forth. If organisations fail to digitally transform their business activities, they are at a greater risk of losing customers.”

Digital Transformation trends

According to research firm Gartner, by 2025, over 50% of equipment manufacturers will offer outcome-based service contracts that rely on IoT connectivity, up from less than 15% in 2019. Seen in the light of these projections, it is not surprising that the global state of emergency the world all entered into last year has driven companies to adopt a ‘remote everything’ mindset, even those far outside of traditional service provision, whose businesses are servitised by design.

Emma Murray, Chief Operating Officer, APJMEA, IFS, said the disruption of the pandemic has brought fresh urgency to business decisions that will influence how people live and work for years to come.

Murray added that businesses must completely rethink how they use digital tools and how they can better help them to approach their customer, employee and user experience. “The 2020s will be defined by the way organisations transform their businesses to address changing circumstances – becoming nimbler and securing their longevity in the process,” she said. “Business turns ‘remote everything’ as servitisation comes to the fore (again): The interest among manufacturers to transform their traditional products into services isn’t a new trend. However, the Covid-19 pandemic has given new urgency to servitisation among decision-makers in the manufacturing sector and elsewhere.”

CIO challenges

With momentum around Digital Transformation initiatives garnering momentum across the continent, what are some of the challenges CIOs face when implementing Digital Transformation strategies in their organisations?

Gavin McDougall, Senior Solution Architect, Red Hat, said considering the current context of working from home (WFH), security and data protection, the skills gap especially in the African context and aligning culture with the digital strategy poses a huge challenge to any successful implementation of Digital Transformation. McDougall said while organisation leaders understand that Digital Transformation is critical to on-going success, research demonstrates that only one in five decision makers surveyed rate their transformation strategies as effective. “Red Hat helps companies of all types with their Digital Transformation journeys,” he said. “Along the way, we have identified five areas within an organisation that must commit to change to affect long-term success: leadership, product management, development, architecture and operations.”

Investec’s Thaver said in order to achieve scale and quality at pace, legacy, heavily integrated and monolithic application estates create great challenge. “This hinders adoption. The aim should be building a composable, elastic technology estate,” she said. “In order to shape the future of the organisation it requires the right skillsets to drive and support the technologies, infrastructure, processes, products, services and people.”

According to Thaver, examples of Digital Transformation successes in business in Africa include M-PESA, a FinTech platform that changed the dynamics of e-commerce with its mobile money solution. “It transformed the landscape in which it operated. It allowed for payments across the continent. At the time, it was a new business model adding superior value to the banked and unbanked through digital means,” she said.

Digital Transformation goals

Andreas Bartsch, Head of Service Delivery, PBT Group, said at the heart of Digital Transformation lies the adoption of technology to transform services or businesses which implies the need to become a data-driven business. Bartsch said this requires a systemic approach that extends beyond using the latest technologies.

“Digital Transformation is therefore less about ripping and replacing what has already been put in place and more about managing the transition into a cloud-enabled environment,” he said. The COVID-19 pandemic and resultant lockdown conditions have put new focus and awareness on the need to adopt certain technologies to survive in the new operating environment. “Each organisation will have unique business drivers requiring CIOs to become more agile in their thinking and internal systems and processes that are flexible in adapting to the changes required. To this end, the business benefits and challenges of the cloud must be understood and discussed at a boardroom level and a comprehensive review of the data the organisation has at its disposal must be undertaken.”

According to Marilyn Moodley, Country Leader, South Africa and West, East, Central Africa (WECA), SoftwareONE, Digital Transformation goes beyond technologies and involves processes. “For example, businesses need adoption and change management to ensure that new ways of working and new concepts are implemented,” she said. In addition, as cloud complexity increases, the trend towards using FinOps – also known as cloud financial management – will grow. Moodley explained that FinOps bring together technology, business and finance professionals in a way that helps them better understand cloud costs and make more informed decisions regarding the cloud – inherently increasing its business value. “The major business outcomes include improving accountability for cloud spend, fostering a culture that examines IT resources through an operational and financial lens and encouraging data-driven decision-making,” she said.

Going forward, Red Hat’s McDougall noted that Digital Transformation goals differ from organisation to organisation, but some of the common goals the company shares are enhanced customer experiences, speed and agility, reduction of costs, enhanced human performance and of course, competitive advantage. “Even at a global level, the role of the CIO is becoming that of the business strategist. Gone are the days where the CIO focused solely on technology. Today, the CIO’s focus is on improving business outcomes, transforming business models, while being able to deliver real value to customers with enhanced experiences,” he said.

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