Digital technologies can fundamentally change an organization’s value proposition by opening new avenues for production, delivery, and service solutions. But to succeed in a digital economy, organizations first need to digitize – that is, they need to shift from legacy, manual, unautomated processes to more automated, intelligent, connected, and digital operations. This means they need to get their digital tech in place first. What’s the best way to tackle digital transformation on an enterprise scale? Dr. Jeanne Ross, a Principal Research Scientist from the MIT Center for Information Systems Research (MIT CISR), shared her two decades of research insights on the status of enterprise digital transformation at this year’s PegaWorld. The results are eye-opening.
A majority of companies are not ready or have not progressed far in their digital transformations.
As Dr. Ross’ research shows, true digital transformation happens in two parts:
- Digitization of the enterprise – Using new technologies related to operations, security, data integrations, and process management to increase efficiency, improve reliability, or provide better experiences. Essentially, improving the operational backbone of the enterprise, with a goal of achieving operational excellence. This is the first essential transformation – and it’s now table stakes.
- Becoming digital – The second phase of transformation is using new technologies such as mobility, cloud, big data, analytics, IoT, and Agile to foster rapid innovation and inspire the creation of new solutions for new needs; ultimately translating into new offerings that serve previously unmet customer needs – and of course, new revenue opportunities.
MIT CISR research found that only 14% of studied businesses have an operational backbone robust enough to support the second phase of transformation. Another 30% are making good progress in their first transformational phase but have a long way to go. This means 56% of businesses have a system and process environment that is limiting their innovation and excellence.
Enterprises need to accelerate their pace of digital transformation
The reality is that most enterprises really need to accelerate their pace of digitization. The ones that are ahead have successfully established an efficient operational backbone that orchestrates mission-critical processes and they are on their way to building out a separate platform for digital solutions.
Many enterprises try to transform but fail to achieve success at the envisioned pace. Typically, such organizations are attempting to build out a combined operational and digital solution platform without distinguishing the different needs – this creates problems. Enterprises are complex. A combined platform that tries to transform both mission-critical operational capabilities with rapid, innovative, agile solution development capabilities is often ill-equipped to the simultaneous complexity of both needs of the business.
Designing a company for digital
“Digital technologies are game-changing because they deliver three capabilities: ubiquitous data, unlimited connectivity, and massive processing power.”
To transform successfully, enterprises need to be aware of a number of influences – especially three important capabilities:
- Ubiquitous data gives us the ability to know, discover, or learn almost anything.
- Unlimited connectivity gives us the ability to access that ubiquitous data anywhere and anytime.
- Massive processing power gives us the ability to process all that data more quickly and efficiently than ever before.
Today’s digital heroes are considering the opportunities those three capabilities present in terms of new customer offerings and business models. Digitally savvy executives will lead teams to consider how the data, connectivity, and automation enabled by digital technologies can help empower cross-functional teams to develop innovative solutions; or in what new ways will digital technologies enable the business to solve for a need and make their customers’ lives better. Complicating this process is the unexpected. The only certainty is that the future of business will be fundamentally different from the past.
While the need and urgency of the digital journey are clear to most, the capabilities needed to achieve success in digital are not
Dr. Ross’ research identifies critical building blocks in both technology and organization that form the foundation for digital transformation. The order and timeframe in which enterprises implement these building blocks depend on variables, including existing capabilities, new product or service goals, and leadership.
Watch as Dr. Ross and Pega’s CTO, Don Schuerman, discuss these building blocks, and learn how to develop a roadmap for successful digital transformation that best fits your enterprise’s need.
- Watch our webinar replay on “Designed for Digital” and get research insights on the best strategies for digital transformation.
- Order the “Designed for Digital” book from the MIT Press.
- Watch this PegaWorld video excerpt on the “Two types of digital transformation (MIT CISR)” to learn what your enterprise needs to do to jumpstart your digital transformation.
- Explore more research on digital and organizational change from MIT CISR.
- Find out how the Pega Infinity™ portfolio of software is designed for digital transformation on an enterprise scale