May 11 2021

What Digital Transformation Really Means

Tech isn’t just enabling business outcomes, but increasingly is the outcome, according to new research. How should CIOs respond?

Most IT leaders I meet are old enough to remember the bad old days when their departments were considered obstacles to business success. “The IT department doesn’t know how businesspeople do their jobs” was a common refrain a decade ago. “The IT department is an obstacle to achieving business outcomes, not an enabler.”

I don’t think that charge was ever entirely fair, but how times have changed! Today, not only would it be wrong to characterize IT as a barrier to business success, but also it wouldn’t go far enough to acknowledge the tech department as an enabler of success. The truth is that, during a time of mass workplace closures and major upheaval to business models, a business’s success is fundamentally defined by its IT departments.

That dynamic is likely to continue well into the future, as new research points out.

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Looking at Long-Term Transformation

Much has been said about businesses’ digital transformation efforts accelerating during the pandemic. IDG’s recent “State of the CIO” report fills in the details: 82 percent of tech leaders say they have implemented new technologies, IT strategies or methodologies due to the pandemic. In addition, even as many organizations faced significant revenue declines as a result of the business disruption, 37 percent of CIOs increased their IT budgets last year, proving the necessity of tech for business growth and maintenance.

Those numbers certainly align with what I was hearing in 2020. Perhaps more important, though, is what’s coming next. Far from seeing last year’s increased activity as an event-driven aberration, most tech leaders think it was the start of a long-term cycle of tech-driven innovation. No surprise, then, that half said their budgets would increase further this year.

“CIOs are tasked with the creation of new revenue-generating initiatives,” IDG observed. “Actions that have increased in importance include automating business and/or IT processes, interacting directly with customers, and developing a customer journey.”

In other words, what IT leaders are doing is not merely enabling the business with tech; they’re literally driving it. Digital transformation works not because the business figured out how to use tech to make some process more efficient but because IT and business leaders have successfully r­eimagined the business itself for the modern world.

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Real-World Examples of Smart Transformation

How does that play out in the real world? Consider the automotive industry, a business not previously known for digital innovation.

When the pandemic hit, one national retail tire company completely reinvented its sales process, not just making it easier for customers to buy tires and make installation appointments online, but also creating a touchless experience at more than 1,000 locations around the country.

Among other things, that included positioning staff outside to greet customers and check them in as they arrive, which in turn required equipping employees with handheld devices and deploying outdoor Wi-Fi in all its parking lots.

A national preowned-auto retailer, meanwhile, saw sales decline by as much as 70 percent in the early days of the pandemic, so it accelerated its plans to move the entire customer experience online, from product s­election to financing. Today, business is booming.

Neither of these businesses has any plans to return to its old customer experience models. On the contrary, they will seek even more ways to make it seamless, simple and digital. The pandemic may have moved up their timetable for change, but their transformations are centered on what customers want today — and in the future.

That is the charge now for CIOs around the world. Imagination and technology are what make it possible.

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