2016 State of Digital Transformation, are we there yet?

Can Digital Transformation Move Beyond Buzzwords?

By Noreen Seebacher | Sep 20, 2016

CHANNEL: Digital Experience

Brian Solis draws some startling conclusions in his latest research on digital transformation — and all of them are likely to lead to sleepless nights for the strategists and executives tasked with leading change within their organizations.

"When it comes to digital transformation, we're just not as far along as we think we are," Solis, principal analyst at San Francisco-based Altimeter, a Prophet company, told CMSWire.

"There's very little digital maturity."

The 2016 State of Digital Transformation Report

Solis’ new research, The 2016 State of Digital Transformation concludes, "Companies are still facing significant challenges operating in a digital economy."1

Indeed, Solis finds that most organizations haven't evolved their efforts appreciably from the date of Altimeter’s previous industry overview two years ago.

Solis, a digital analyst, anthropologist, author and futurist, released his latest industry snapshot on digital transformation today.

The report, based on interviews with 500 digital strategists and executives, examines how companies are changing and the challenges and opportunities they face while undergoing their digital transformations.

Age of the Customer or Age of Confusion?

Despite the ubiquity of words like "omnichannel" and "seamless customer experience," most companies are still operating in siloes, without a clear strategy to provide personalized experiences to segments of one.

Positive customer experience (CX) — the cornerstone of the so-called Age of the Customer — is more aspirational than actual.

Companies continue to prioritize technology ahead of customer-centricity2 and investing in front- and back-office solutions without a clear understanding of customer expectations, preferences or values, Solis noted.

And while CX remains a top driver of digital transformation, only about half of the companies studied have mapped — or are mapping — the customer journey.

CX is still "more about words than actions3," he concluded, noting one of the top enterprise challenges remains "getting to know our customers."

Digital Change Leadership Gap

What's more, Solis added, "no one owns digital transformation." In some companies, digital transformation is led by the CMO (34 percent). In others, it falls to the CEO (27 percent), the chief information officer or chief technology officer (19 percent), the chief digital officer (15 percent) or, in a small but growing instance, the newly titled "chief experience officer" (5 percent).

These corporate change makers "often operate in isolation simply because of the nature of everyday business" — at least until they "realize they can make quantum leaps ahead by partnering with those leading separate efforts."

Eventually, Solis predicts, CMOs, CEOs and CIOs will all assume CX-related responsibilities, making the role of a chief CX role unnecessary.

What Is Digital Transformation Anyway?

Like "big data," "disruptive" and "game-changing innovation," digital transformation is a concept in search of a definition. In reality, the meaning depends on the person you talk to within the enterprise ecosystem.

"Digital transformation is one of hottest trends in business today but the term itself means different things to different people," he said.

As Solis told CMSWire earlier this year, "Digital transformation is one of the most important movements in business today. But at the same time, it’s also one of the least understood and consistently debated across the enterprise and throughout the industry."

Short Definition of Digital Transformation

Solis has continually adapted his definition of digital transformation to reflect its current state and direction. In this report, he defines it as:

• The realignment of or investment in new technology, business models and processes to drive value for customers and employees and more effectively compete in an ever-changing digital economy1.

The Quest for Digital Transformation

While digital transformation may be a nebulous term, the idea of evolving for the digital era is undeniably important.

The concept is a key strategic objective, and it's pushing businesses across departments and functions to collaborate, innovate and design new business models and processes … at least in theory.

Unfortunately, Solis observes, "Digital transformation doesn’t in and of itself say what we should do and why." And just 29 percent of companies have a multi-year roadmap to guide to digital transformation evolution.

Grappling With Customer Experience

The quest for better CX has thrust digital transformation into the enterprise spotlight and CX remains the top driver of transformation efforts today.

In fact, about 55 percent of those responsible for digital transformation cite “evolving customer behaviors and preferences” as the primary catalyst for change.

Yet the number one challenge facing executives (71 percent) is to understand the behavior or impact of customers, Solis noted.

Interestingly, even though they don't fully understand customer behaviors and expectations, both marketing and IT consistently influence technology investments to address them.

Yet, "fear of disruption" — a hot topic from boardrooms to conference keynotes — has little impact in driving digital transformation. Only 19 percent of those surveyed cited it as a major reason for digital transformation efforts.

Digital Transformation Drivers

Although CX is still tightly linked with digital transformation, new objectives such as innovation, agility and the pursuit of digital relevance are now driving companies along the digital maturity model.

Solis explained, "For executives and senior leadership, the need to accelerate innovation (81 percent) was at the top of the digital transformation agenda. Right behind it was the need to modernize the IT infrastructure with increased agility, flexibility, management and security (80 percent). And the third priority for enterprise transformation is improving operational agility to more rapidly adapt to change (79 percent)."

Through these priorities, he added, businesses are "developing a roadmap that helps them compete for the present while building a next-generation business model to compete for the future."

Other Digital Transformation Highlights

Solis' 26-page report contains a wealth of data on the state of digital transformation. Other highlights:

1. Only 20 percent of leaders surveyed are studying the mobile customer journey/behavior.
2. More than 70 percent of leaders defined understanding the behavior of connected customers as a top challenge — up from 53 percent in the last survey in 2014.
3. 63 percent of leaders surveyed believe changing company culture is a top challenge facing digital transformation.
4. While digital transformation is challenging, it pays off: 41 percent of leaders surveyed said they’ve witnessed an increase in market share from digital transformation efforts, and 37 percent cite a positive impact on employee morale.

Speeding Digital Transformation

Solis conceded, "Digital transformation is young, and businesses are still learning where and how to change."

But he stressed that companies are all sharing the same challenges, and struggling to understand customer behavior and competitive pressures. To succeed, he suggested, companies should invest in best practices:

• DCX: Study and map the digital customer experience
• MOBILE: Study and map the specifics of the mobile customer journey
• RESEARCH: Invest in ongoing customer research to better understand digital/mobile behaviors
• ROADMAP: Develop a digital transformation roadmap
• TOUCHPOINTS: Update/innovate customer-facing technology in digital AND mobile
• OMNICHANNEL: Drive strategies that engage and guide customers seamlessly through digital, mobile and real-world journeys
• PROCESSES: Improve processes/operations that expedite change
• IT: Build an agile, integrated and scalable technology infrastructure
• LEADERSHIP: Executives appoint someone to lead and pave the way for digital initiatives (budget, resources, culture) as well as manage expectations among shareholders, stakeholders and the board
• TASKFORCE: Form a working team to drive initiatives, coordinate activities/resources, and be accountable
• METRICS: Establish new metrics that measure progress and track new outcomes

(If you'd like to hear more about digital transformation, Brian Solis will be speaking at CMSWire's DX Summit in Chicago on November 16. Find out more here.)

Title image by Joshua Sortino

http://www.cmswire.com/digital-experience/digital-futurist-brian-solis-can-digital-transformation-move-beyond-buzzwords/