The push for digital transformation can come from the CEO, the CIO, or some other area, but regardless of where the spark ignites, IT will need to change because this much is clear: To be successful, IT’s inwardly focused reactive model will have to give way to an outwardly focused stance that involves taking more risks and positions IT as a true enabler of digital business services.
The stakes are big and getting bigger. International Data Corporation (IDC) says spending on digital transformation technologies crested $1.2 trillion in 2017, up 18% from 2016, and forecasts a compound annual growth rate of 18% going out to 2020.
Transformation efforts can include everything from finding new ways to improve customer experiences to turning the organization upside down in an effort to disrupt a market—or to avoid being disrupted by someone else.
Prominent speaker and author Brian Solis, a principal analyst at Altimeter, describes digital transformation as “the realignment of, or new investment in technology, business models, and processes to drive new value for customers and employees, and more effectively compete in an ever-changing digital economy.”
That digital economy is constantly morphing, in part because companies are finding new ways to extract value from data they are amassing. IDC estimates that “revenue growth from information-based products” is growing twice as fast as “the rest of the product/service portfolio for one-third of all Fortune 500 companies.”
Getting digital transformation right, however, is a multidimensional challenge, and one of the core tasks is to shift IT culture and structure to support a digital business model. Companies that get it right are no longer “building software or running IT for cost savings and operations, but rather IT has become the primary driver of business innovation,” reports the Enterprisers Project, a community of CIOs. “Embracing this shift requires everyone in the company to rethink the role and impact of IT in their day-to-day experience.”
Other challenges include:
- Ensuring IT employees possess both technological savvy and in-depth knowledge about the business and its markets
- Ensuring core data sets are in sync, clean, up to date, and accessible
- Making sure the infrastructure can keep up with the new digital demands
- Defining new key performance indicators (KPIs) that align with new goals
Regarding the latter, today’s reactive metrics focused on, say, the efficiency of infrastructure, will not adequately reflect the business objectives of digital transformation. New metrics will typically involve outcome-oriented paradigms—such as the number of new products launched or the rate of innovation—that effectively track the success of new IT business-oriented services.
KPIs will also have to take into account service levels because the best digital transformation strategy in the world will fall flat if you can’t ensure that digital services supporting the initiatives are operating properly. It’s the old, “All the green lights are on, but nothing is working” syndrome, only the stakes are exponentially higher given that, with digital transformation, the service is the business and you’re typically talking about the customer experience, not the user experience.
Meeting the new requirements will generally involve building on existing reliability and availability metrics, and adding service assurance measurements that align with the expected transformation outcomes.
That is easier said than done, of course, given the complexity of IT environments today. Digital services involve long delivery chains that depend on the performance of everything, from applications on multiple containers, myriad integrated microservices, databases, networks, storage systems, and much more spanning on premises, cloud, or both.
If something goes wrong with the services anywhere along the way, the core of the new transformation efforts will either turn belly up, or worse, degrade incrementally. The result is disillusioned or frustrated customers, a catastrophe in the digital economy where even a fraction of a second makes a business difference. What’s more, it leaves IT with the job of trying to bird-dog the cause of the problem by manually correlating information from a hodgepodge of logs and other sources of system data. This is where 'mean time to innocence' takes precedence over customer experience.
The key is to be able to understand what is happening end-to-end across the service chain in order to build a holistic view of the health of the service, even if it spans multiple domains. That pervasive visibility into dynamic, highly integrated environments is vital to maintaining digital service levels and keeping customers happy, but it will require some changes to today’s approach.
Look for comprehensive operational solutions that offer pervasive visibility into complex hybrid IT infrastructures. This will enable you to efficiently collect, organize, and analyze large volumes of data in real time, and use the resulting insights to confidently support multi-tiered digital services that support your transformation efforts.
Another critical capability to look for if you want to truly understand what is happening with services in dynamic IT environments is service dependency mapping. Seeing how one service hiccup ripples through other services helps drive root-cause analysis, and reduces the mean time to knowledge, and, in turn, speeds corrective action, ideally before the glitch becomes noticeable to customers.
Together, these service assurance technologies deliver the proactive insight into service performance required for enterprises to achieve their targeted business outcomes.
Solis from Altimeter has identified six stages of digital transformation necessary for enterprises realize their transformation aspirations. In the fifth stage, he says, “The new infrastructure of the organization takes shape as roles, expertise, models, processes, and systems to support transformation are solidified.”
Having the tools in place to actually verify the transformational digital efforts are working as intended should be in place by this critical juncture, because trying to bolt them on after the fact will be hard and risky. Customer loyalty in the digital economy is fleeting. Innovation happens fast and if someone is doing it better, you can lose the edge in a mouse click.
While digital transformation requires IT to take more risks and be accountable for new outcomes, the one risk IT should avoid is launching digital initiatives without the proper service assurance tools in place to ensure everything is working as advertised.
~Written by John Dix. John is an IT industry veteran who has been chronicling the major shifts in IT since the emergence of distributed processing in the early ‘80s. An award-winning writer and editor, he was the editor-in-chief for NetworkWorld for many years and an analyst for research firm IDC.