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Seven Myths of Digital Transformation Debunked

Roland Alston, Appian
December 11, 2017

(This post was originally published on December 11, 2017 and updated on November 28, 2018).

"ÖWhere I see digital transformation failing," says Lisa Heneghan, Global Lead for KPMG's Technology Consulting Practice " ... is when it's treated as a technology implementation."

"You could have the best digital systems in the world," says Heneghan. "But if you don't have an organization that also has the employees, the capability, the processes, culture and mindset to leverage that technology, you'll never realize the benefit of it."

Something else to consider:

Over 50% of senior execs blame IT culture and cross-functional disconnects as the biggest roadblocks to digital transformation.

So says data from Appian's recentFuture of Work survey.

But here's the thing.

Myths about organizational dysfunction can do more to impede your digital transformation journey than any other factor.

Many senior execs, for example,believe that cultural change is a "soft" competency.

And, yet, experts like Forrester call this is one of the biggest roadblocks to digital transformation success.

To help you separate fact from fiction, here's a quick roundup of digital transformation myths and why you shouldn't believe them.

Myth #1: Digital transformation is a technology challenge.

Perhaps the biggest misconception is that the high casualty rate for digital transformation is a technology problem.

But the hard, cold, truth is that people problems pose the biggest barrier to digital transformation success.

That insight comes from a series of eye-opening reports from Appian's recentFuture of Work survey.

Other data from the survey shows that organizations are struggling to keep up with demand for enterprise software.

The situation is serious. A jaw-dropping50% of enterprise applications don't get deliveredor fail to meet expectations.

And the opportunity cost of this "technical debt" is huge:

    • Increased customer frustration

    • Slower responses to competitive threats

    • Missed business opportunities.

"You have to start with developing a future-facing view of your industry," says David Rogers, author of The Digital Transformation Playbook: Rethink Your Business for the Digital Age.

"Think about how emerging technologies, such as robotic process automation and artificial intelligence, will impact your industry" says Rogers. "Start with that, then come up with strategies for how your company can leverage these trends to remain relevant in this new world."

"But, getting people to work differently than they did before? Enabling them to work across silos the way they didn't or couldn't do in the past?This is where the real value of digital transformation is."

Myth #2:Digital transformation is about optimizing your business processes.

Better to focus on rethinking your business model, not just optimizing your processes.

There's nothing wrong with making incremental process changes.

Research shows that 55% of organizations prioritize Business Process Management (BPM) for their business. But 48% say they are vaguely familiar or have no clear understanding of BPM, according to researchers at AIIM Market Intelligence.

The trick is, don't let process optimization get in the way of doing something bigger.

"Digital transformation is about changing from a caterpillar into a butterfly. It should make you faster, more agile, and closer to your customers. It should give you wings so you can fly."

So saysGeorge Westerman, author of Leading Digital: Turning Technology into Business Transformation

"Unfortunately, too many companies talk a good digital transformation game. The problem is, they're just thinking like a fast caterpillar not a butterfly," says Westerman.

Myth#3:Traditional companies can't adapt to operating in the digital economy.

The research says otherwise.

It turns out that a lot of investment activity is happening with traditional companies in the digital space.

In fact, total spending on digital transformation will grow at a rate of 17.9% through 2020, to an incredible $2.0 trillion, according to IDC.

The most successful traditional companies are transforming operations and the customer experience.

They see the big picture. They're not just thinking incrementally about the mobile project or the AI project, or the customer experience effort.

These digital masters are re-imagining how their companies might work in the future. And then they figure out the right technology to make it happen.

On the flip side, experts warn traditional industries will be hit hard by emerging technology in 2019 and beyond.

"The next digital wave, because it involves transformation of knowledge tasks, is going to be even more dramatic," says Stephen Andriole, Professor of Business Technology, Villanova University.

"The gap between startup and mid-stage companies will shrink faster than ever," says Andriole."Which means the days of casually tracking technology are over. Cloud availability has forever changed this.You can create an Uber now in 2 or 3 years, not 8 to 10."

"That kind of potential disruption is a big change, says Andriole. "...So, if you're running a big, established company and you think that you're insulated from disruption you're not."

Myth #4:The best place to start your digital transformation journey is in the front office.

Many companies talk about digital transformation as a way to validate their focus on the customer experience. Why? Because it's easy to see.

But a better place to start is with back office automation, including robotic process automation (RPA) and artificial intelligence (AI).

The thing is, if you've got a messy back office, it's really hard to get a unified view of your customer.

The best digital transformation efforts start with the back office first. Because, if you get that right, amazing things can start to happen, that just weren't possible before.

Myth #5:Customers want personalized service, not automation.

Amazon recommends books based on books you've bought in the past. Netflix recommends movies and TV shows based on content you watched before.

Smarter, faster, better recommendations powered by AI can lead to higher sales and more subscription renewals.

The astonishing evolution AI will allow organizations to improve customer experience in all sorts of ways.

There are plenty of misinformed assumptions out there about what customers want. And one of them is that customers want people to provide them with service not automation.

The truth is, customers want personalized service. And, they don't care whether they get it from a robot or a person.

One way to personalize service is with powerful Business Process Managementsoftware that allow you to orchestrate a broad spectrum of data, processes and automation technologies across your entire organization.

The benefits of personalization are huge.

According to eMarketer, total retail sales will hit $5.68 trillion by 2021.

Meanwhile, the experts at Accenture say there's a $2.95 trillion opportunity for companies that leverage digital transformation to personalize the customer experience.

So, if you're not using automation to deliver a personalized customer experience, it's time to make a change.

Myth #6: When it Comes to Tech Adoption, It's Better to be perfect than early.

Not when innovation is happening faster than anyone ever imagined, not when change is increasingly seen as the norm, and not when there are fewer barriers to entry.

Just cranking up efficiency in your core operations won't cut it anymore.

It took 30 years for electricity and 25 years for telephones to reach 10% adoption but less than five years for tablet devices to achieve the 10% rate, according to the Harvard Business Review. It took over 60 years for telephones to penetrate 40% of the market.

Compare that to smartphones, which reached a 40% penetration rate in just 10 years.

Here's separates digital leaders from the rest of the pack. They understand that the economics of the digital world are different than the economics of the physical world.

Many of the digital giants have benefited from first mover or early mover advantage winner takes most.

In other words, it's more important to be early, and less important to be perfect.

Myth #7: Digital automation is a job killer.

Experts are divided on whether digital automation is a job killer

Something else that is misunderstood is the anxiety that has been focused how AI will kill jobs.

But jobs aren't the issue so much as the economic equality and inequality debate.

"So, the point is not: Are we going to have jobs?" says AI expert and Prediction Machines author Avi Goldfarb. "The point is: Are those jobs going to be good jobs?"

"And are the benefits of AI going to be distributed in a way that people think is fair and just? And that's a much harder question," says Goldfarb.

It turns out that the rise of automation is a tale of two trends jobs lost and jobs gained.

Yes, automation will cause workforce disruptions, as automation moves up the workforce stack.

By 2030, 75 million to 375 million workers (3 to 14 percent of the global workforce) will need to switch occupational categories or upgrade their skills, according to a recent report by the McKinsey Global Institute.

On the other hand, if you look at history and the waves of technology, it's also true that new technologies tend to create more jobs than they displace.

The question is, how do we manage the transition? And this calls for making some hard decisions around workforce training and investment.

Here's the bottom line. The secret to winning your face-off with disruption is to enable your entire organization to get involved in digital transformation and digital innovation.

That's the power of modern low-code app development.

It takes the friction out of IT and business collaboration by making it easier for non-developers to get involved in building solutions and test them out with customers.

The opposite approach is to put a handful of IT people in charge of innovation. But this could create a bottleneck and and turn digital transformation into just another buzzword.

"It all comes down to focusing on the customer experience, and using process automation to deliver a better digital experience by connecting the front end of your organization with the back end," says Clay Richardson, Co-Founder & CEO of Digital FastForward."

"It's essential that digital transformation not just be about process, but also about freeing up people to do high-value work," says Richardson.