The 3 Paths for Digital Transformation
There's a lot of talk about digital transformation these days. I think undoubtably this movement - transforming as many processes from analog to digital - is going to be the heart of value for business for at least the next 50 years into the future. That said, there three major ways for companies to "go digital":
- Broad market technology
- Industry specific technology
- Leap-frog technology
- Broad market technology - CRM (Client Relationship Management), CMS (Content Management Systems), etc. - is tech that solves needs across multiple industries because they solve major business needs. The value here comes from external technical evolution and expertise is most valuable when it is in the technology, industry experience is less relevant.
- Industry-specific technology, which is adopting solutions specifically tailored to an industry. This is often simply moving to "industry standard" which can change over time. These systems tend to come with many of their own processes and require companies to adapt to their way of doing things to see the maximum value from them. They can be incredibly high in ROI if they are priced properly (not too high or too low), but are often poorly maintained so they typically age quickly. Implementation in these systems is almost always done by the product creator as the industries are generally too small to create a competent group of Systems Integrators that specialize in that tech. It's incredibly important that a good technology consultant is brought in to gather business requirements and map them to both what is being sold by the product - and to separate what is real from what is vaporware.
- Leap-frog technology is the most exciting software, but requires significant commitment from the client in both believe in digital and being a leader in software in their industry. In this case a technology vendor is brought in to create an ideal solution that either provides a competitive advantage at scale (Daimler's approach) or can be resold or spun off to underpin a broad cross-section of the industry. These engagements are never worth the ROI directly but are investments to help companies pivot into become digital market players. This is generally only ever successful in large industries.
Companies should evaluate the right type of transformation that they are ready for, generally in the order they have been presented. Broad market tech provides the best ROI, but at the end of the day is simply a move to keep up with other companies in the same industry. Ignoring this need is safe as long as other companies are also resistant to change.
Any company looking to be or continue to be a leader in their industry, must invest in a leap-frog technology strategy. If not they will eventually fall victim to the now old adage: disrupt or be disrupted. The time for digital transformation is now.