Digital Transformation vs. IT Projects
In our fast-paced world of technological explosion, trends can come and go within a year. The sheer volume of terminology and acronyms associated with technology can overwhelm us, and often leads to misuse and overuse.
A good example of this is “Autonomous Robotic Delivery” in the likes of Amazon Scout or Fedex Roxo, which spiked during the pandemic but are scaling back their investments as we get back to normalcy.
In this short article, I aim to demystify the difference between Digital Transformation and IT projects, with the aim of restoring their true meaning and enabling their effective application in everyday business contexts.
IT projects, according to standard pedagogical articles, is defined as a type of project that deals with IT infrastructure, information systems or computers. Examples include web development, software development, mobile app development, network configuration, software implementation, hardware installation, and database management.
A shipping company turning a manual excel based model which does ship route optimisation into a web-based tool with real time rule-based notifications to its users fits what we mean by an IT project here.
In essence, an IT project acts as a vehicle for digitising the conventional methods employed across various industries.
Typically, these projects adhere a loose structure of 6 phases: Initiation, Definition, Design, Development, Implementation and Follow Up.
For the longest time, IT Project Managers, the "orchestrators" behind these initiatives, employed the Waterfall method to navigate the complex web of tasks assigned to their teams. However, as the complexity of such demands evolved over time, more efficient methodologies like Lean and Agile emerged and became utilised by the front-runners of innovation (evidenced by Tesla's 12-fold market cap increase compared to Ford and Apple's rise as the leading watch manufacturer).
Then, what exactly is Digital Transformation?
TechForum aptly calls it the "buzziest buzzword" in today's tech lexicon. To truly grasp this widely hyped and often misinterpreted term, we must dissect its two constituent parts. The word "Digital" encapsulates the rapid pace of change permeating the business world, driven by the widespread adoption of technology.
Cleverly harnessing ‘Digital’ can position companies as winners, while failure to do so can swiftly render them irrelevant. However, the true weight of the term lies in its other component: ‘Transformation.’
Transformation is the strategic journey of planned organisational changes underpinned by the right leadership and a fearless culture of innovation, enabled by technology or “Digital”.
This is where companies who digitise their existing services often mistakenly believe they are digitally transforming.
Rather, it is just the tip of the iceberg. Focusing solely on this aspect often leads to an inability to sustain a competitive advantage in the marketplace.
At Alumni, we have identified five critical dimensions that serve as building blocks for companies to embrace the potential of ‘Digital Transformation’ and drive impactful change.
1. Digital Strategy
The journey starts with a blank sheet of paper, where organisations craft a cohesive and integrated set of choices that positions the company to win in the playing field of their choice.
It is crucial not to mistake a plan for a strategy. Initiatives such as launching a new product, hiring additional resources, or building a new manufacturing plant are examples of plans.
Designing and executing a plan can be comforting, as the company has control over the key building blocks, such as costs. Unlike a plan, the key building block for strategy which revenue is not entirely within the company's control, hence inherently it carries a sense of uncertainty and apprehension.
Lay out the logic of the strategy by thoughtfully examining ‘what has to be true’ on industry dynamics, customer needs, and competitive forces. This deep understanding will enable you to make informed choices and adjust your strategy when something does not work out quite the way you anticipated.
Once a robust strategy is in place, it will serve as a guiding framework against which a set of executable actions (or a ‘plan’) can be prioritised and coalesced around your entire organisation.
2. Technology Transformation and Delivery
As 'Digital' will be the primary enabler of Transformation, the natural next step is to identify the technologies that best support the outlined strategy.
This entails a myriad of possibilities - including migrating to the cloud, modernising applications, optimising IT services, adopting artificial intelligence and machine learning, and establishing data as the lifeblood of the business.
The key to avoid decision paralysis and make astute choices is to prioritise which technologies will deliver the best business outcome.
An effective approach is initiating small "fail-fast" Proof of Concepts (POCs) within innovation labs, gathering real-life data points to inform decision-making.
These POCs allow organizations to experiment, learn, and adjust their course based on tangible results.
Once the tech roadmap is chartered, best practices in Delivery such as program initiation, scenario planning, benefit tracking with feedback loops, dependency management, cone of uncertainty, will ensure that IT projects are delivered on time, cost, and quality.
3. Operational Transformation
While making sound choices in technology and its delivery is crucial, it is equally important to ensure that all facets of the organisation are digitally enabled simultaneously. If certain areas lag in their digital transformation, friction arises and the journey can only progress as swiftly as the weakest link allows.
To solve for this, reduce waste in your processes. Streamline workflows and eliminate unnecessary steps, consider embracing technology that facilitates hyper-personalised customer experiences, or increase visibility across procurement and supply chain operations through AI.
These solutions not only improve operational efficiency and responsiveness but ensure every band member of the Transformation orchestra is playing to tune.
4. People and Change
Undoubtedly the hardest lever to move, and often the most overlooked aspect of transformation is the human-centric nature of change.
Digital transformation requires a holistic shift in traditional ways of working, necessitating comprehensive change management efforts that are enabled by technology at scale.
This entails embedding modern organisational structures, communicating a clear vision of the transformation, implementing effective performance management practices to leverage new technologies, and, above all, adopting digital approaches to accelerate the development of people within the organisation.
The success of your transformation will rely heavily on the willingness and capability of your people to embrace change. How can you facilitate a cultural shift that values innovation, collaboration, and continuous learning?
It is vital to ensure that all transformation efforts align with environmentally responsible practices across operations and the supply chain. Balancing the portfolio of assets and initiatives to achieve both commercial objectives and Sustainable Development Goals (SDGs) is a goal that every forward-thinking company should strive for.
This involves monitoring and optimising resource consumption, reducing waste, and seeking eco-friendly alternatives in product development and delivery.
Compounding Digital Transformation
To better understand the concept of digital transformation compared to IT projects, I find it helpful to draw parallels with the world of chemistry.
Consider the distinction between a chemical mixture and a compound. A mixture is made from different elements or compounds mixed that are not chemically joined and hence is easily separable. A compound is a pure substance made from more than one type of element chemically bonded together.
Here's where the true power of digital transformation lies.
It resembles a chemical compound, where the constituent elements come together in a perfect ratio, becoming indistinguishable and inseparable as individual contributors.
In unison, they create a transformative outcome that surpasses their individual capabilities. That’s when you know it clicks. That’s when you know that the mixture has evolved into a compound.
By considering the five critical dimensions we've explored, it is evident that digital transformation encompasses a much broader scope and carries a significantly greater impact than an isolated IT project.
It is a comprehensive endeavour that touches every aspect of an organisation, fuelling innovation, efficiency, and competitive advantage.
At Alumni Services, our team of experts is well-versed in guiding organisations through this transformative journey.
We are committed to making it 'click' for you, unlocking the true potential of digital transformation for your business.
- Roger Martin – Harvard Business Review