From XU Magazine, 
Issue 19

Business survival depends on digital transformation

Kurt Cagile, Contributing Writer at Forbes Magazine, sums up the whole area of the Digital (Transformation) journey perfectly:
This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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“Organizations run on data, and in the twenty-first century, your organization needs to be able to take advantage of all of that data to remain competitive in the marketplace. By transforming your company to work more digitally, all of that data can be leveraged to gain a deeper understanding of customers, markets, competitors and trends. This digital transformation is something that every company needs to do to not only survive but thrive in the new economy”

Digital transformation, or ‘DX’, has been happening for many decades. You may think of milestones like Apple’s first iPhone release in 2007 or when you first heard the term ‘cloud’, IOT (Internet of Things) or AI (Artificial Intelligence) as occasional leaps forward. The reality is the changes have been continuous and it’s the digital developments in between that have largely gone under the radar of mainstream business.

DX is about thriving. If you focus on disrupting your business from within, you avoid the need to react to external disruptive forces to survive.

Cultural change

DX requires focusing on cultural change in organisations. Replacing or leveraging human processes with more efficient and effective digital processes is a mindset that all businesses need to embed into their DNA; the thinking, strategy and functioning to make digital transformation work. This doesn’t necessarily lead to redundancies; in fact, it’s likely to reduce staff turnover because DX should allow time to repurpose staff to more beneficial, and most likely more interesting, tasks that are not yet suited to DX.

Explosive growth of new technologies such as elastic cloud computing and IOT is happening now along with rapid advances in technologies such as Virtual Reality (VR) and Artificial Intelligence. So too are the vast array of software applications that reside on these technologies and connect them. This means the survival of businesses and careers depend on successfully navigating each journey within this digital ‘planet’.

In another Forbes article by contributor Bob Evans, he highlights the opinion of Microsoft’s CEO, Satya Nadella, who describes “tech intensity” in all business as:

“a fusion of cultural mindset and business processes that rewards the development and propagation of digital capabilities that create end-to-end digital feedback loops, tear down data silos and unleash information flows to trigger insights and predictions, automated workflows and intelligent services”

Digital transformation impact

I recall the first time that Rod Drury said to Xerocon Australia that changes are happening to the financial accounting profession because of Xero and attendees should assess and evolve areas of their profession to manage the impact. Xero and its marketplace apps have advanced even further in the years since Rod made his comment and these apps are making easy work of tasks that were once ‘billable hours’.

But what about other industries like manufacturing, retail, construction, professional and non-professional services? All industries are affected, as are the staff they employ. If you ignore DX or choose to do nothing about it, then it’s only a matter of time before your competitiveness and value erodes.

In April 2019, Elon Musk, Founder and CEO of Tesla, announced plans he predicts will make Uber effectively obsolete in its current form starting 2020. That’s DX thinking!

Digital transformation needs to align with the goals of each business and the resources it has to achieve those goals. Businesses need to take stock of their resources and how they can be used more efficiently, continuously replacing or enhancing what’s inefficient with digital solutions.

This is a cultural mindset, not a one-off exercise. It may start with a digital ‘stock take’ but must be repeated at regular intervals to keep leveraging digital technology as it evolves; as new products and technologies are released and as external impacts demand.

Why data is key

In 2017 The Economist published an article titled “The world’s most valuable resource is no longer oil, but data”. While this article talks a lot about the power of companies like Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft, the message is clear that making decisions on quality, analysed, data is now core to business longevity and growth. Leading businesses are likely to have embraced a quality DX approach that underpins their future success. Cloud datacentres are currently being built at incredible rates by Microsoft and Amazon to cope with this ‘silent demand’ of storing and processing information driven by digital transformation.

Each digital journey ‘map’ must be able to pinpoint the key focus areas across the entire operations of a business at any point in time. The DX journey is like any other journey; determined by the quality of the map, the quality of the ‘local knowledge’ gathered, and advice given by sound, reputable authorities. In other words, the direction each business ‘points’ throughout its well-considered DX journey is costly if it’s not taken. The right team is critical to a DX journey that’s satisfying and rewarding.

Choosing an advisor

Most businesses wouldn’t claim to be digital technology experts, so choosing a trusted DX advisor is key to a successful digital transformation journey. But it’s not easy. Does the advisor using the ‘trusted’ badge have the full range of skills and experience to assist with the specialist area of digital transformation? An ‘advisor’ who makes blind recommendations of a mix of cloud software products that seem to work well for similar business types does not make them a DX advisor. Ask, “Would that advisor be qualified and respected within Microsoft, Apple, or Google to direct their respective DX journeys”?

To set a business on a DX journey and advise it along the way, the DX advisor must possess proven expertise to assess top-down business goals and capabilities and provide effective digital solutions. This is likely to include the selection of supporting third party (digital) managed services. The advisor must have empathy and a full understanding of their client’s ecosystem; its environment, stakeholder needs, budget, ethics and values. The advisor must also be expert in data management and cyber security to ensure the business is not left vulnerable to specific operational, regulatory, reputational, or financial risks and how those risks might affect business continuity. Processing orders, manufacturing, distribution and ensuring projects keep running without disruption all depend on data security and are part of the DX journey.

Business Intelligence (BI) and the aligned area of AI, robotics or VR in some business sectors, must also be assessed along the DX journey. For instance, what reporting, or automation can detect potential risks to be mitigated or opportunities to be explored? Detecting patterns, including fraud, once relied on samples of data sets as it was too economic or impractical to work with all data. Now analysis of entire ‘big data’ sets stored in the cloud make statistical sampling progressively redundant. Sampling error is no longer a factor because the results are complete and in real time.

DX is a must, not an option

Digital Transformation is not a simple, one-off exercise. It can start simply but must be part of a strategy and planned outcomes. Controlled experimentation is a healthy element of DX. A piecemeal approach is likely to fall short of solving the DX issues at the lowest cost and in effective timeframes. Rework is costly. Similarly, delaying DX indefinitely is a risk to business survival.

Why leave it there?

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