Digital Transformation Adoption: A Point-by-Point Update

We did it!

Finally, we reached peak of the hype cycle for Digital Transformation.

Congratulations, we couldn’t have done it without your help.

Thank you!

I first wrote, seriously, about it earlier this year after many years of mentioning the coming paradigm shift that would revolutionize business (not an evolution like social media and social networks).

Since then just about every Tom, Patty, and Rene has written about it (that my gender neutral version of Tom, Dick, and Henry by the way…) and taken a stance about it.  Most of those stances are — nuanced, to say it a way that is not using the words “biased” and “wrong” but at least they managed to move the needle in some direction.

I would like to take the next few minutes of your attention (about 15-20 if you believe Wikipedia) to help you understand where we are, where we are going, and what’s going on right now in the world of Organizations in regards to Digital Transformation.

Two caveats: first, I won’t link to anything or anyone else unless I see value and lack of hype in what they are saying.  If you want hype, you can Google “Digital Transformation” (yes, with the quotes) and you can get as much hype as you can stomach.  Second, I don’t have all the answers (likely don’t have many either) but I can give you some data and information that will help you feel better about this paradigm shift (read my past post to understand why this is a paradigm shift).

(note: all the content of this post is based on conversations, interactions, and work I have been doing with vendors and organizations this past year around this model; which is why I have not been able to write much about anything in the past few months)

Ready?

First: the Hype

About that hype statement above.

If you ever used Google trends you know how this works: any topic is scored on a scale from zero (no substantial amount of searches or content created around it) to 100 (top trending topic in Google searches and content found via spidering).  While I don’t know the algorithm used to compute the score, I have found them very accurate in the past.

Here is the chart for Google Trends for Digital Transformation (click on the chart to navigate to Google Trends site for more details)

DT TrendsBy contrast, here is the chart for Google Trends for Social Media (click on the chart to navigate to Google Trends site for more details)

SM Trends

And the first thing you will notice is that the both took different lengths of time to get to the top.  Which is why, as Gartner has said from the beginning, hype only serves as birddogging for early adopters (more on that below).

Second: The Progress

That brings me to the second point I want to share: this is early adopter’s time for digital transformation.

By definition-ish, early adopters are those organizations that are comfortable with managing risk and taking chances with untested technology and tools and even concepts.  They foresee a potential value that exceeds the potential damage that could occur if they were to move forward.  Of course, this is done within a framework of risk management and methodical trial-before-commitment – but that is risk management 101 and the topic for another post.

Hype Cycle for dt

 (as with every other interpretation of the hype cycle in my writings, this is not Gartner’s stated position on digital transformation; they are kind enough to let me borrow the model and I add my comments on top of it)

The reality is that without those early adopters jumping in ahead of everyone else and “testing the waters” we wouldn’t be able to move to mainstream adoption (around 30% of the overall market adoption).  There are about 5% of organizations that fit into the early adopter category – and not all topics and tools apply to all of them: thus, when I say “early adopter’s time” I mean a handful of organizations around the world actively doing digital transformation.

Which means, there are more people talking than doing this – and use that as a yardstick when someone tells you they “know how to do digital transformation”.

Third: The Management Stance

I often, read every day many times a day sometimes, get asked who is doing digital transformation? who can i point to that has done a good job and can be used as an example.

Funny thing happened on the way to this answer, everyone now is doing digital transformation… and naming CDO (chief digital officer) and CTO (chief transformation officers) along the way.

Is this the right move?  Read on.

If you need a generic statement, this is a key top-level strategic initiative that is often led by the CEO, the COO, or in very few cases someone below them.

There is no single purchaser of “digital transformation” projects – nor should it ever be (and I did mentioned this in my previous post also).  This is not a software purchase – this is about transforming your business (and that is led by executives if it is to be successful).

There is positively no way this is going to happen in a “ground-up” or grassroots way.  The fact that a lot of people in the organization know about digital, understand the impact, and (frankly) are devoted users of digital makes no difference.  There may be some lab-based projects here and there of tools and technologies – but this is an infrastructure-level, all-in initiative.  Nothing short of that would work, and nothing like that works without executive support.

Mea Culpa, I did say last year at a conference that CDO is the mix of CMO and CIO as a visionary statement together with friend Ray Wang (of Constellation Research).  Since then, we both retracted that statement (we actually did it in the same conference this year, video is forthcoming soon) and provided some guidance as to how to embrace digital transformation.

If you absolutely, positively need to point to someone that is “buying” or leading the efforts, there is another trend to consider…

Remember your CIO?  yeah, that funny person who is always worried about deploying tablets, laptops, securing and integrating and managing data, and developing custom applications for you — but that does not get it?

Guess what? They have been getting it.  Big Time.

As I highlighted in my first post, this is about infrastructure.  Cloud underlies the transformation.  Without PUBLIC cloud, there is no possibility of transformation.  Go ahead and debate me below if you want.

Who owns the cloud infrastructure? Yep, you got it. The CIO.

But, wait – there’s more! (wanted to say for a while now)…

Before you pack your bags and head to haunt every CIO in the world for budget, read a little bit more.

Business stakeholders are represented in this debate by the CMO.  A large part of that is because Gartner said that technology budgets would explode by 2017 for CMOs.  Which is likely true, except…

Except that they forgot two points surrounding that “explosion”:

  1. They did not mention that CMOs budgets are for more than just technology.  The technology portion of their budgets are not what is exploding – the expense in advertising, media, content generation, etc. is what is exploding.  And there is not a lot that can be moved from there to technology (we will argue allocation from traditional media to digital in another post if you want, but not part of this discussion).  Even if the technology budgets were to be exploding, the starting point is so low compared to IT budgets (which even if continuing their slow 5% average expansion would still crowd over CMO budgets) that the amount of spend is — well, not worth the expense to target it (as a lot of vendors found out in the last few months).
  2. CMOs had a hard time proving the use of the “expanded” budgets in social as they allocated the money in the past few years.  Let’s face it, Social was not what was supposed to be.  True, a communications evolution happened – and brands needed to be there.  But the change to consumer behaviors, the link from social to expanded revenues, the correlation between social presence (or lack of the same) and higher revenues was not there.  Promises made around the social revolution did not, for the most part, come true – and that hurt the reputation and credibility of the CMOs that lined up behind it.

So, if the CMO is not the one with budgets for digital transformation, and the CIO is the gate-keeper (but not the purse keeper) what’s going in the organization? Is this another “who owns social?” discussion.

Hardly, there is a massive change adrift – but you have to pay attention to notice it.

Enter your old, ignored friend – the COO.

Who? COO? What is that? Do we even have one?

Yes, you do – and she (or he, to be politically correct) is becoming the unsung hero for digital transformation.

There is a change in organization chart, partly driven by the fact that CMO-as-a-proxy-for-business-stakeholders were not able to deliver for social initiatives, and partly because CEOs realized that strategies don’t get implemented just because you think about them.

dt-org-chart

The new dynamic duo of the CEO and COO work in tandem, with the Executive handling the vision and strategy and the Operations chief handling tactical and implementation.  The rest of the C-level peeps end up reporting to one or the other – as need be.  Yes, even if you don’t have C-level people but SVP, EVP, GVP, or MVP – or whatnot, the concept is the same: CEOs strategize, COOs operationalize.

OK, you say, fine.  This is happening – but who is holding the budget for digital transformation?

No one.  Yet.

There is no budget yet allocated, and very little I am seeing being allocated for 2015 budget cycles, for digital transformation.  And that brings me to the next point.

Fourth: The Gurus

If no one is spending money, and few are doing it, then who do I turn to for help and assistance in understanding this paradigm shift?

Well, first of all – me.  This blog will continue to publish more and more content about this transition as we move forward.  I am always happy to extend conversations from this “printed” world to the real world anytime.

Second, turn to those that have been talking and writing about it for some time now.  In no particular order (and because I am too lazy to put them in alphabetical order) they are:

IBM (good research, but lacking field-level people IMO that can extend that research), Accenture, Ernst & Young Advisors (or just EY so their branding police don’t get me), and Deloitte are all staffed with good people that have been writing, researching, and talking about it for some time.

Their research reports, published in the past few months, are worth reading as they reflect the thoughts of executives around the world (which highlight the intent, but not the execution yet on these ideas).

These are the players in the US Market (and not so much at a global level – yet).  If you are in EMEA, then Cap Gemini has been doing quite well, and EY (see? I learn) is gaining ground as well.  Accenture had a slow start, but is gaining ground quickly there also.  My good friend Jesus Hoyos from Solvis Consulting as always has the coverage on the Latin American market.

Most of the outsourcers have been also doing quite well in expanding their presence in this field (including some of the names I mentioned above) but I will let my good friends at Horses for Sources cover that in more detail as they are far more entrenched in that world that I am.

There are many others that have been talking about it – but in my interactions with executives in all countries and of all sizes I have not heard many compliments – nor have I seen a change in their organizations to support their thought leadership.

As I mentioned above, many people talk about it (which is why we reached the top of the hype cycle), but few have actually the bandwidth and knowledge to take it to the next level.

Fifth: The Model

When I first released the “model” for Digital Transformation I challenged you to take it and improve it.  I said, this is just an idea – but it need to get better.

There were a few people that took me on it, and apparently still working on it – had limited contact since they started, but no major changes.

However, since I have been using this model extensively in conversations and consulting with vendors and brands, I came up with a few changes to it.  Look right below

DT New FrameworkI am not going to send you to the previous post (although it is linked here if you want to go there) to compare, so let me tell you some of the discoveries I made since (and feel free to add your links to the comments if you have expanded on the previous model since).

The most notable one, the interfaces layer at the top.

This used to be part of what is now the legacy pillar on the right side, but have since separated.  Why?

Glad you asked…

I used to say that interfaces and legacy were all part of one giant layer: you collected information from legacy apps, processed it, and because for the most part the interfaces were not “upgraded” yet (read, not mobile or IoT or similar) then we would just process it back to legacy.  While I still maintain that is the case for most (read again, most) situations, to future-proof the model the interfaces layer had to decouple from the legacy layer.

Once I did that, I also looked at the flow of process and information through the framework (the whole idea for the framework was to have a blueprint of sorts that could be used to manage the transformation for the organization) and in doing that I realized also that the interfaces layer must be overarching and cover direct output from analytics and direct output from legacy pillars.

In this way, there is a more natural flow that happens in this model:

  1. The interfaces layer requests an experience (regardless of the client or channel)
  2. The experience layer deconstructs the requests and determines what to deliver
  3. Queries are then dispatched to the information, analytics, and legacy layer to secure the necessary data / knowledge and / or content to build the outcome
    • If necessary, it may also use the cloud layer to obtain ancillary but remote information)
  4. All this information is delivered back to the experience layer
  5. Then it is prepared for delivery via any interface

Pretty simple flow, with lots of work to make sure it is delivered as expected.

For a deeper discussion of how this works and how it can be adapted to any situation (including how it applies to your specific situation) contact me.  That is too much to include in this post.

Phew, thanks for hanging in there…

Yes, close to 3,000 words – but it is shorter than last time, and it is still a brief summary.

I have often been told two things:

I don’t do things on the timeframe that I propose.  Yes, I know it is a shocker – but sometimes practice takes longer than intent (which is why I have been trying to write this for about 2 months now – needs time to “solidify” in my mind first).  And there is no better “push” for me to do things than committing them in public as I have you to push me to do it (and I hate to not deliver on a promise).

I need to write a book about “this”.

Thus, I am going to use this platform to tell you that I am committed (now that I said it publicly) to write the book about “this”.  What this is and what shape the book will take is to be decided in the next few weeks.  However, this will be researched, expanded, and delivered in the form of a book next year.

(note: if you are a publisher who is looking for an idea for a book, contact me, yes – this is shameless… I know)

With that in mind, I will use this medium to publish summaries of each of the layers and pillars in the model above, starting with the cloud layer.  Yes, Mr. Sameer Patel -I will finally write that post you have been pestering me about for a long time – including the one-page-summary of cloud models… Geez, the lack of patience.

I hope.

Comments? Arguments? Disagreements? Agreements?

Comments section below is open to everyone and not moderated (although WordPress will ask me to confirm if you are first time commenter; I don’t even look at the comment and I approve them).o

disclaimer: as with all my posts, here is the disclaimer. there are no vendors mentioned in this update. the consulting organizations I mentioned above are not clients, nor do they pay me for anything — heck, most I ever got might’ve been a couple of drinks at a bar late at night and some lunch or dinner here and there.  these are my opinions, and will forever continue to be my opinions.  if you think one of those consulting firms will either hire me or want to work with me because of this post then you need to understand better how they spend their money.  I will continue to get those drinks and meals, but it won’t affect my judgement as it have not done yet.

5 thoughts on “Digital Transformation Adoption: A Point-by-Point Update”

  1. thought provoking post, Esteban. As always, the key is “who drives the initiative” and your take that the COO will be entrusted with DTx is highly likely.

    by the way, love this line
    “CEOs realized that strategies don’t get implemented just because you think about them”

  2. Thanks for reading and kind words 🙂 i tried to say it nicely… apparently it worked 🙂

    if the COO is not entrusted with it, then we will have holy wars and political despair across corporations in the land.

  3. I burnt my fingers with the previous hype cycle around social.

    For most it was about putting out even more content across even more channels and hoodwinking consumers by aping the new social behaviors of likes, follows, mentions, hashtags and whatnot.

    But for me it always was to look at how the business models change, how the business processes change, how the business structures (hierarchies, roles and responsibilities, etc.) change to get the most out of social (which obviously cannot be thought without the cloud, mobile or big data). And this, as I understand, has been termed as Digital Transformation, if my understanding is right.

    And I did not want to jump onto the DTx bandwagon until I was convinced people got it right too. I was done with enough preaching from the pulpit and did not want to waste my energies yet again in trying to convince people to think straight about it. I had to ‘do’ to keep my sanity. And that’s where I have been chipping away.

    I had to experiment across the spectrum – from design thinking, jobs to be done, lean startup, hackathons on the one end to TOGAF, ITIL, QE&A, etc. on the other end. I think I am getting it now. Things seem to be falling in place. The world has also seems to have sorted itself out or is on its way there.

    And I still have to see a single person holding the key to the funds BTW.

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