Stepping Up Your Digital Transformation Game: Are You Ready?

Gauging An Enterprise's Digital Maturity

Esther Shein

Is your organization at Digital 1.0 or 2.0? Perhaps a definition will help you decide.

Digital 1.0 is about improving speed of response as a primary strategic imperative, according to Jamie Snowdon, chief data officer, at HfS Research. For a transaction to be “digital,” it must be immediate enough react to a customer’s inquiry in real time, via interactive tools and smartly automated processes, he explains in the report Are You Ready to Move Your Digital Transformation Into a Higher Gear? For an organization to be “digital,” on the other hand, it must be able to answer most customer queries in real time, and cater to customers’ needs as they happen.

“Digital 1.0 is also about keeping the customer informed with live data to reassure them that the parcel will arrive, the taxi will come, their plane is on time, which part of the mortgage process their application is stuck,’’ he says.

Typically, there is a perception that organizations that have achieved Digital 2.0, with mature operating models or disruptive technologies.

“However, what is becoming clearer is that organizations are forging their own paths with digital, prioritizing elements that would be last on the list for similar businesses,” Snowdon notes. “For example, if personalization is core, then driving the speed to insight is important. If it’s a consumer service, the key is keeping the buyer informed. Innovation cycles for a video streaming service are going to be shorter than for an insurance company. We simply don’t believe that the digital evolution will be a simple process.”

Are Enterprises Embracing Digital Changes?

To date, 22 percent of organizations have undergone what Snowdon refers to as “existential change,” meaning the business model of an organization or part of an organization has to transform, according to recent research HfS conducted with KPMG. In contrast, 26 percent have undergone “significant change” and 7 percent have had “little change.”

By 2020, HfS’ numbers aren’t projected to increase all that much: the research found 27 percent will have undergone existential change; 31 percent, significant change; 32 percent some change; and 8 percent, a little change.

Why are many still lagging? Snowdon attributes it to the fact that “many organizations feel they are in a state of constant change, so I see it as an acceleration from a ‘some change situation’ to more significant and fundamental change over the next two years,’’ he says. “Even if it is small, the state of change is not slowing, and it is likely to increase.”

The focus for digital thus far for a lot of traditional businesses has been on trying to create the ability for existing business operations to sell online as a new channel with some operational changes. However, that is “essentially a papering over the cracks to enable a new way of customer engagement: focusing on getting up and running quickly rather than digitizing the whole process,’’ he adds.

An example might be an organization that digitizes the customer-facing aspects of the business, but using a new billing system that is not integrated with the rest of the organiation — then re-integrating the data into the old system in batches, he says.

Speed of response, Snowdon believes, is “the number one organizational imperative,” along with the transactional information flow to provide information to customers in the absence of a physical relationship.”

What Is Digital Maturity?

He likens digital maturity and organizational imperatives to different car speeds: “single speed” correlates to speed of response/speed to transaction. “Multi-speed” would be speed of insight and speed to market; and “automatic” would be speed to anticipate and speed of evolution/innovation.

“You cannot achieve maturity simply by shifting to the right via an accumulation of components, although this will happen within each of the digital strategic imperatives," he says. “True maturity is achieved through an accumulation of maturity across the imperatives.”

The report cites four levels of Digital 1 maturity in speed of response time:

Level 1: A customer makes an online food purchase and receives “superficial” information about how long it will take until the food is delivered, “but the live data is not real.”

Level 2: The customer makes an online food purchase and receives some credible real-time information, such as that the driver is out for delivery.

Level 3: The customer makes an online food purchase and is given accurate, real-time information, including a real-time map showing where the driver currently is.

Level 4: This includes better delivery time predictions and tailored recommendations, “shifting into automatic when it anticipates customer needs and helps the organization respond.”

“Having the right data to anticipate customer needs and support decisions that serve customers ahead of time delivers significant digital competitive advantages,” Snowdon says. This means, for example, being able to predict when demand for pizza delivery orders may spike outside of obvious events such as the Super Bowl or the finale of “Game of Thrones,” he notes.

When organizations have data on how effective different forms of advertising are when tailored to a specific product, they can enhance their marketing efforts, he says, such as profiling users on LinkedIn who might spend $200 on a laptop bag.

In part two of Stepping Up Your Digital Transformation Game, Snowdon discusses the role of a software-defined enterprise and what it takes to reach Digital 2.0