Digital Transformation Playbook For Modern Businesses

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Introduction

Digital transformation is a multi-year journey that enables an organization to modify existing offerings into digital workflows. McKinsey tersely puts it by describing digital transformation as “the rewiring of an organization, to create value by continuously deploying tech at scale”.

Several words require attention here. Rewiring is key as it fundamentally changes how operations are run on legacy applications and processes. The next thing CXOs focus is on creating value that involves opening up new revenue streams, improving current operations, or creating a differentiator by enhancing customer experience. And, all of this is possible by leveraging the right use of technology at scale.

It might appear overwhelming at first, with an array of possibilities plaguing from taking the first step. Hence, a visionary outlook with a strong business and execution mindset to go beyond the next shiny big thing and instead focus on building a data-centric culture is crucial.

You must be wondering: why am I promoting a data-centric culture in the world when everyone is aiming to become AI-centric? I will cover it in detail in this post.

The Challenge of Legacy Systems

Talking about legacy systems and processes, let’s discuss how these outdated software and hardware that may be deeply embedded in an organization’s operations pose a greater challenge when integrating with modern applications and platforms.

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Some modernization strategies focus on gradually updating components in a phase-wise manner, while in other cases, completely reengineering is the best option. Replacing legacy systems involves developing new applications from scratch that can meet current and future business requirements.

The next important part of digital transformation is the scale that comes with the cloud. Moving legacy applications to the cloud provides the much-needed scale and flexibility with additional benefits that are challenging to achieve with on-premises infrastructure, such as:

Improved performance
Cost savings
Enhanced collaboration
Advanced security, such as encryption, identity and access management, and threat detection

Overcoming Challenges Beyond Legacy

No digital transformation is ever easy. The word “transformation” implies a change that often brings resistance to change, sometimes due to a lack of digital skills. Hence, businesses must design change management and upskilling programs to promote a mindset of continuous learning.

If there is one crucial skill that we must adopt in today’s rapidly evolving world, it must be the skill of figuring out the latest technological innovation.

Data and Customer-Centricity

The effectiveness of any digital transformation program hinges on the quality, availability, and accessibility of data. A data-centric culture brings data at the core of all decision-making processes – where accurate, comprehensive, relevant, and timely information drives every decision.

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The next big obstacle impacting the rate of digital growth is data silos. As digital tools and technologies are becoming mature over time, the world is fast becoming obsessed with personalization, which is best served by having a 360-degree view of the customer journey.

It involves implementing omnichannel strategies to analyze their behavior across multiple touchpoints, which allows businesses to leverage data analytics to cater to their preferences.

Transformation in the World of AI and Generative AI

One crucial piece is often missing amid all AI rush and hype: data. Hence, building a solid data foundation is the first step to leveraging advanced analytics and AI, that helps analyze large datasets and identify patterns driving strategic business decisions.

AI fatigue is real, not just for us but also for the AI veterans. So, separating the signal from the noise becomes crucial to charter a profitable business.

To align any initiative with the strategic goal of your organization, consider asking the questions, starting with why:

Why are we doing this? Why should anyone work on this initiative over any other? Such questions will help analyze the opportunity cost and uncover crucial factors like return on investment, associated risks, applicability, and trustworthiness of the solution among others.

Next come the questions of “What”. What is needed to get there? What is the goal and the business metric to declare success?

How to solve the problem? Can it be solved through automation or would an algorithmic solution work best? Is there a way this problem is solved currently – what is the benchmark? Assess if there is a pattern in the process, what is the data required to model it? How to design the system so it integrates with the current tech stack.
If you have come this far and analyzed the right use of AI for advancing your business growth, you are on the journey of AI transformation. And, therein comes another key element most leave as an afterthought – ethics. Imagine having solved a complex business problem that was a perfect product-market fit, but you scraped the project simply because ethics were not embedded by design. Hence, it is important to build a risk assessment framework and the necessary guardrails, making the system fail-safe.

Everyone Has a Role to Play

Lastly, successful transformation is a collaborative effort that starts with building a strategic roadmap and must be communicated across the organization to ensure everyone is aligned toward the common goal

It is not a one-time project but an ongoing journey that requires continuous adaptation and evolution. Hence, the organizations must foster a culture of innovation promoting new ideas. Rewiring failures as learning opportunities encourages the teams to think outside the box, which is a must to build a future-ready organization.

Vidhi Chugh is an AI strategist and a digital transformation leader working at the intersection of product, sciences, and engineering to build scalable machine learning systems. She is an award-winning innovation leader, an author, and an international speaker. She is on a mission to democratize machine learning and break the jargon for everyone to be a part of this transformation.

Digital Transformation Playbook For Modern Businesses - KDnuggets (2024)