Plan for change: Why Digital Transformation is About Strategy, Not Tech 

Digital transformation isn’t successful for most Australian organisations – often because they lack the strategy to do so. We explore the ideal approach for success.

The digital era has introduced a never-ending progression of new technologies and services. But it has also ushered in a new competitive environment. 

Organisations find themselves battling competitors that didn’t exist a decade ago – and many of these upstarts are based on remarkably different business models to those of the incumbents they challenge. Startups use the latest digital technologies, can enter new markets and scale-up with ease, and deliver a superior service experience. 

For established businesses, the pressure to meet the challenge of these new digital rivals is intense, and the obvious response is to use the same digital tools to transform themselves. 

The result of this thinking has become known as ‘digital transformation’, and it has swept across Australian business with a fervour not seen since electrification 100 years ago.

But as many leaders are learning, transformation is not a project, and there’s a vast difference 

between using a tool to change a process and using that same tool to change an organisation. 

So how many Australian organisations are gaining genuine value from digital transformation?

Australia’s digital transformation performance

Numerous reports show Australian organisations are not fully embracing digital transformation. 

Gartner, for instance, found that just 8 per cent of Australian organisations are getting results from their digital transformation activities, and are lagging behind the rest of the world. 

In 2018 the International Institute for Management Development (IMD) ranked Australia 15th out of 63 nations for digital competitiveness. 

If digital transformation was easy, more organisations would be doing it successfully. The data shows most aren’t, either because they are unwilling to commence transformation, or they are failing when they do. These challenges include: 

• Legacy technology: Organisations often rely on systems that are several generations old and lack the flexibility needed to easily integrate with the newer technologies that underpin digital transformation. 
  
• Lack of vision: Seeing six to 12 months into the future is difficult enough, let alone when preparing for new competitors that play by different rules. The need to focus on immediate problems can further restrict a leader’s ability to define a clear path beyond just maintaining business-as-usual.
  
• Lack of time: Organisations face constant challenges simply to remain operational. Leaders may find it difficult to free up enough time to even develop a comprehensive transformation strategy – let alone implement it.
  
• Accelerating transformation: Developing a skills framework transformation requires an infusion of new skills, but these skills are in high demand. By determining what skills an organisation needs and mapping that against the skills they have, leaders can determine which roles can be filled through training and which can be achieved via hiring.
  
• Lack of skills: Tight funding also makes it difficult to hire those additional skills organisations may need to develop and execute an effective transformation program.
  
• Unwillingness to change: The leaders in mid-tier companies have achieved their status through years of solid performance. If digital transformation requires them to operate in a significantly different way, this sets the proposed strategy at odds with existing business practices.
  
• Lack of urgency: For many industries, the threat of competition from digital entrants simply remains a problem for the future. Australian retailers, for example, had two decades to prepare for the arrival of Amazon; most did not invest in new systems and processes until it had set up onshore. Some are yet to do so!
  
• Lack of investment funds: A tighter budgetary position means mid-tier companies can’t invest in a large-scale technology refresh or development programs.
  
• Insufficient scope: Organisations often approach digital transformation as a series of sequential projects. This has the attraction of offering quick returns, but failure to devise an overarching transformation strategy can lead to a series of point projects that only transform specific activities and lack integration.
  
• Management turnover: Any transformation program must be able to outlast the tenure of the executives driving it. For the transformation strategy to succeed, it must be agreed at the highest levels and embedded in the overall strategy of the business.
  
• Setting a vision: No vision for the future will be perfectly realised. Rather, the organisation will ideally set a vision to be more flexible and adaptable. This enables it to start quickly, saving time that might otherwise have been devoted to extensive scoping studies.
  
•  Ensuring team alignment: Tearing down barriers between the technology team and the business units it serves is essential for enabling all parts of the business to become clear regarding their objectives and the roles they play in reaching them. This will ensure that the vision is well understood by all parties it will impact.

As a strategy-led ICT consultant, Tecala believes the first step in overcoming the barriers to digital transformation is to remove the emphasis on digital and to focus on the transformation itself. 

Our ICT consulting experience has shown that when digital transformation programs fail, it’s because some of these strategy steps have been overlooked. Only after these foundations have been defined should the transformation journey begin, as they provide a framework to assess which projects to tackle first. Facilitators can then be secure in the knowledge these investments will align with the long-term vision.

Beyond digital transformation 

The idea that an organisation can rapidly adopt the tools that are being used against it and emerge 

stronger is compelling. But focusing on the digital aspect, without first investing in the foundation work of strategy and supporting infrastructure, means that such projects are likely to fail. 

At Tecala, we believe the real question is not whether an organisation will succeed or fail in its digital transformation, but whether it will invest in building the solid foundations that ensure it retains the ability to transform and grow well into the future. This will put it on the right footing for any kind of transformation.

You can further explore a clear six-step guide to accelerated digital transformation in our free resource, The Digital Transformation Myth, or speak with our team about business ICT solutions to help drive your transformation strategy.