TechBeat: Digital transformation—delivering on the promise, with quality
22 September 2017 | 0
Digital transformation is high on the agenda of every business in country, with dire warnings for those who do not get on this particular trend. Or is it?
TechBeat, in association with Comtrade, polled 133 Irish IT professionals to see where Irish organisations are on digital transformation journey, and what it means for them.
The survey was conducted in July and August this year.
There was a broad spread of respondents from various industries, but the largest single section was IT companies (27%), followed by government and public sector (16%), education (8%), financial services (8%) and manufacturing (6%).
The first question was to establish if organisations had a formal or official approach to digital transformation. A small majority (52%) said yes to 48% who said no.
This was somewhat surprising, as the benefits of digital transformation have been discussed frequently in all manner of media, with numerous studies showing that those organisations that fully engage in such transformation are more profitable and better able to compete in today’s rapidly changing markets.
“Approaching and planning digital transformation can be difficult,” said Dejan Ćušić, business director, Ireland and UK, Comtrade Digital Services, “and it’s possible that businesses are approaching digital transformation in a staggered fashion, rather than seeing it as one overarching business strategy.”
“The best plan for embarking on the journey is a flexible one that follows three steps: probe, sense and respond. Businesses need to investigate what their requirements are and what the current and future market will demand. Based on those findings, they can then get to work on conceiving and implementing their digital transformation projects, always allowing for them to fail. Only then can they respond accordingly with the best solution for their business.”
Respondents were asked about their most important goals when it comes to digital transformation, listing all that applied. The leader was improved business processes (68%), followed closely by improved customer experience/satisfaction (65%). Some way back were improved employee productivity (47%) and increasing revenue (44%), and some way after were new digital services/products (27%) and shorter time to market (22%). In the other category, pure cost reduction was specified by some.
“As the digital revolution takes hold,” said Ćušić, “systems and processes are very quickly becoming outdated, so it makes sense that businesses will want to improve and streamline their internal processes. Digital transformation helps them to improve the agility of their organisation and therefore the ability to quickly and effectively roll our new digital products that focus on the user experience.”
“That leads to the second-most cited goal: customer satisfaction. We are living in a transparent world and if a customer isn’t happy, then word spreads very quickly. Businesses simply cannot afford to risk that reputational damage.”
When it comes to inhibitors, the respondents were even more mixed in their responses. Financial concerns or limitations was highest (56%), but closely following was lack of knowledge or in-house skills (53%). These were followed by management or board-level support (41%) and security concerns (40%), with lack of the right technologies coming in at 32%. Among the other category, user buy-in/adoption was also mentioned.
“Financial considerations often inhibit change,” said Ćušić. “However, the digital age is now at the point where businesses simply can’t afford not to digitally transform. Being competitive in today’s world means consistently being the first to roll out new, cutting-edge technologies and services. There is no denying that digital transformation is costly but if you have a business case for it, then it is a must.
“Unfortunately, a lack of knowledge or skills can mean that companies don’t know how to make a business case for digital transformation, or how to navigate and lead that change. That then affects the ability to secure management and board support.
Businesses need to look at how they can upskill their existing workforce while also keeping the day-to-day work going. That can be difficult when you’re running a business, but it’s necessary.”
Addressing the issue of cost, the survey asked about intended budgets for digital transformation projects over the next 12 months. More than a third of respondents (34%) said between €10,000 and €100,000, with almost a quarter (24%) indicating between €100,000 and €500,000. More than a fifth (21%) said up to €10,000, while the higher reaches, between €500,000 and €1 million, was 8%, with around 10% indicating more than €1 million. Just 3% said there was no budget for the period.
There was an almost even split as to whether respondents felt their respective organisations were doing enough to embrace digital transformation. However, some 43% said that their organisation’s profits had been boosted by digital transformation, compared to 27% who said they had not. Nearly one in three (29%) said they had not yet begun their digital transformation journey, and just one respondent said they would not embark on such.
Ćušić said this is in line with what he is seeing in the market and believes the figure for those that have seen profits rise will increase.
“While there are initial costs,” he said. “digital transformation is an extremely effective way to boost customer satisfaction and therefore increase the bottom line. Financial controllers and senior management must remember that it is an investment in the future of the business.”
Digital transformation is not an easy task, and its implementations are as individual as the organisations undergoing it. Therefore in-house skills are vital to guide such plans. Only 15% of respondents were confident that they had the necessary skills and workforce to embrace digital transformation, though nearly three quarters (74%) said they were lacking in some areas. Some 11% acknowledged they do not have the necessary skill resources.
“Businesses need to educate their workforce, hire internally and hire consultants where necessary,” said Ćušić. “Digital transformation isn’t just about changing IT systems and processes—it’s changing mind sets and skillsets. A significant proportion of digital transformation budget therefore goes on people and skills.”
As well as pure technical skills, the nature of digital transformation means that in many instances, the likes of a quality assurance team or manager is necessary to oversee implementations. This is especially so given the number of IT organisations among the respondents. However, nearly a third (32%) said they do not have such a role, with more than a quarter (26%) saying it was not relevant to their company. The rest (42%) said they do have a QA team or manager.
The survey went on to ask if such a resource existed, at what point they were engaged in development processes. While nearly a third (32%) said it was not relevant to their business, slightly more (36%) said from conception. Some 13% said once engineering work starts, while 11% said from when first demos/prototypes are produced. Three per cent of respondents do not engage QA until the end of the project and 5% said that while they do software engineering, they do not have testers or a QA team at all.
“Today, if a user encounters just a few seconds of confusion when using a digital service, they will abandon it and seek out the service of a competitor,” Ćušić warns “Businesses must be sure that customers are positively engaged with their platform right from the first millisecond. That means involving quality assurance and testing personnel from the moment a project is conceived. They must be there to question, and contribute to, every step of the development process, acting as a conscience to the entire team.”
Transformation projects must be across the entire organisation if they are to be truly effective. The survey asked about the extent of platforms and application programming interfaces (API) for which organisations were responsible. Almost a quarter (24%) said none, but 20% said 3-5, 19% said 1-2, and 18% said 6-10. One in 10 said 11-20 and a combined 9% said 20 to more than 50.
With so many organisations gathering and now making more use of large volumes of data, the survey asked how much of organisations’ key decision-making was reliant on artificial intelligence or data analytics. Almost a quarter (24%) said none at all, but a quarter said up to 10%, while almost the same (24%) said 11-20%. A strong 15% said in the 21-40% range of decisions, while a combined 12% said 41-80%. One respondent said that almost all decisions were so guided.
To add context to this, respondents were asked about the perceived effectiveness of artificial intelligence versus human intelligence in guiding key decisions for the organisation. The vast majority (89%) favoured human decision making, while 11% favoured AI.
“It’s interesting that the majority of people still favour human to artificial intelligence,” Ćušić observed. “Decisions based on data and analytics are less likely to be swayed by bias and are instead based on facts and statistics. I think we will start to see more decisions based on machine technology in years to come.”
Finally, the survey asked about likely technological developments in the wider world, though to be implemented in Ireland, giving insights into the perceptions of not only the pace of developments, but also the likely success of current trends.
Unsurprisingly, connected fridges that will order your groceries were seen by most (74%) as the most likely development within the next five years, some way ahead of drone deliveries (63%) and intelligent robots in the workplace (56%).
Despite the current efforts dedicated to them, driverless cars were only seen by half of respondents as likely in Ireland in the time frame, though this was more (38%) than for intelligent robots in the home. Prosthetics with a sense of touch was seen as likely by 49%, while the possibility of 3D printed foods was seen as an outsider with just 16%, this was some way beyond the mere 6% countenancing space tourism or holidays.
“The Internet of Things is starting to influence everything in the world around us and we can see this when looking at IT leaders’ predictions. IoT brings untold opportunities and Ireland must ensure it embraces this,” said Ćušić.
In all, the survey results certainly seem to support the notion that digital transformation is high in the consciousness of Irish IT professionals. However, when it comes to implementation, it would seem to support the notion from Sci-Fi writer William Gibson that while the future might already be here, it is not evenly distributed.
While the level of organisations that are already benefiting from digital transformation speaks for itself, the proportion for whom it is not seen as relevant or is not well supported at senior level, is a concern for the development of organisations in Ireland in general. Despite awareness being high, understanding, it seems, is lacking and there is a job to be done convincing people of the efficacy, benefits and now the necessity, of the digital transformation.
If the last question seems somewhat facetious, there is perhaps, a different way to look at it. As Ćušić observes, taking the expectation that developments based around the Internet of Things are most likely to come true, think how long that concept has had to become accepted. If the same is applied to digital transformation in the enterprise, we can infer that there is some way to go yet, and yet, the early adopters have already stolen a march.