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article imageFive myths about digital transformation

By Ken Hanly     Jul 12, 2017 in Technology
Stephen J. Andriole is a Professor of Business Technology at Villanova University in Villanova, Pennsylvania. Professor Andriole has addressed five myths about digital transformation that could impact how a business goes about transitioning.
Andriole participated and oversaw digital transformation both in the public and private sector. He served as the director of the Cybernetics Technology Office of the U.S. Defense Advanced Research Projects Agency (DARPA); and as Chief Technology Officer (CTO) and senior VP of Safeguard Scientifics Inc. He was also CTO and senior vice president for technology strategy at Cigna Corp.
Andriole teaches and directs research at Villanova on digital transformation and emerging technologies. He collects data about technology adoption and digital transformation trends in the course of his work, lending a great deal of expertise to his discussion on businesses looking to transition.
Andriole claims: "I’m constantly hearing about the “amazing,” “fabulous,” “terrific” and “incredible” projects under way with the potential to “revolutionize” companies and “disrupt” whole industries. But when I probe survey respondents for key details about their initiatives, I often find that there is still confusion about the process."
In order to better understand the risks that need to be managed during the digital transformation, Andriole has outlined five myths that are most common to discussions around digital transformation projects.
Every company should digitally transform
Not every company, process or business model requires digital transformation. The digital transformation process goes far beyond a simple software upgrade or improvement of the supply chain. It may be a profound shock to a reasonably functioning system.
The business must ask if the business processes can be modeled using tools that enable creative, empirical simulations. The company needs to assess if it can model its existing processes — and Andriole claims many cannot. If an organization can't create a model then it is unlikely that a company will be able to easily digitally transform all of its processes.
Even if a company could digitally transform its processes, it doesn't necessarily mean that it should. The company needs to be able to make a case in terms of profit for adopting the digital transformation. If existing business rules, processes, models and systems are working well it makes no sense for the company to digitally transform them. The transformation process can be costly and time consuming.
Digital transformation = disruptive technologies
In reality, Andriole claims that short-term transformation is often accomplished through more conventional technology. This is because in many cases the existing practices and models of business are outdated. Andriole uses Uber and Airbnb as examples. While emerging technologies may have helped them, it was existing technologies, such as mobile phones, apps and websites that were optimized for quick transactions and location tracking, allowing the upstart companies to make significant gains over hotels and taxis. These factors helped them offer comparable services to hotels and taxis at lower costs.
Profitable companies are most likely to launch successful digital transformation
Adriole argues this is unlikely to be the case. If the company is doing well with its existing processes it is quite unlikely to try out a costly, risky enterprise, that will drastically change its existing system. If some thing is working well, it might be reasonable to make some minor changes but not any wholesale digital transformation.
A more likely candidate is a failing company desperate to try anything to get back on its feet. Proponents for digital transformation in a profitable smooth running company are likely to find themselves the object of a political backlash if they try to promote digital transformation. If change is attempted and mistakes are made the promoters will soon be out of the company.
Another good candidate for digital reformation are startups with money to burn and which are willing to take risks. It is the newcomers, not well established companies, that are the most likely to adopt digital transformation.
Companies need to disrupt their industry before someone else does
Leading industries in a given market are unlikely to change their business models drastically. While such leaders may describe themselves as innovators and disruptors they usually are not.
It could be argued that unless companies do change as the proponents of digital transformation suggest, they will not remain market leaders. Andriole is only showing that the market leaders are unlikely to change, not that they may not need to in time if they do not want to be overtaken by other risk-friendly companies.
Executives are eager for digital transformation
Andriole claims that the actual number of CEOs that desire digital transformation is relatively small – especially in public companies. No doubt champions of digital transformation wish this were not so.
Andriole claims that many executives are suspicious of digital transformation and worry that the changes might effect their status within the company. They also worry about the complexity of the process and how long the transition will take to execute. Executives of companies that are doing well may be quite unwilling to radically change what is working out well.
Even executives who speak favorably about adopting the process may in practice do little to support attempts to implement it. Those within the company who are comfortable with and advocate the new technology may be seen as threats to the present executives.
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