The makes or breaks of digital transformation

May 28, 2019



By Jeff Arndt - Chief Information Officer

The role of IT has come a long way, and success relies heavily on an organisation’s ability to digitally transform, adapt and continually perform under the pressures of today’s digital era.

Competing for, engaging with and excelling in customer satisfaction is even more challenging. With almost 70% of transformation projects deemed unsuccessful long-term, flexibility, agility and efficiency is more important than ever before when building and maintaining the mission critical infrastructure that propels your business forward. As we move to a world of hybrid cloud deployments, access to hyperscale clouds, high density colocation and skilled digital ecosystems are critical to every organisation’s success. Competition is fierce and expectations are soaring. “Always on” is a part of our everyday regimen, and business immediacy forms the baseline expectation from our customers. When considering your journey to transform digitally and the challenges it presents, is close enough good enough for your business and your customers?

Kevin Koelmeyer, Chief Technology Officer at Hybrid IT Service Provider Somerville Group says; "I see IT teams in the marketplace being put under increasing pressure to deliver IT outcomes and an ‘always on’ user experience for their organisation, with limited resources. This can be an almost impossible task when the customer’s time is largely consumed with managing day to day IT operations. However, it is here that digital transformation plays a key role, as long as it has been planned with flexibility, agility and efficiency in mind."

Whether you’re shepherding a standard technical upgrade or an organisational transformation of business tools and strategy, there are a few high-level factors that will determine the long-term success of your digital endeavours.

If you fall under these categories, listen up, because only 16% percent of respondents to a McKinsey survey on digital transformation cited their organisation as sustaining performance improvements over the long term. So, chances are you’re unknowingly missing an important piece of the puzzle.

Makes or breaks_Web-low

The answer relates to the fundamentals of your business strategy. It’s time to look beyond the fine art of digital project management and understand at a big-picture level why and how digital tech is breaking down industry silos and driving organisations to reassess how they generate value.

The successful ones are jumping onboard with the new realities of fluid business ecosystems, and Agile product development (with a capital A), and as well as the concept of business partners and suppliers being chosen as much for their new ideas as for the ABCs of corporate IT.

Factor 1. Traditional industry definitions and divides are obsolete

Digital products and services are collapsing traditional boundaries dictated by geography and rendering intermediaries between producer and consumer obsolete. Based on nearly zero marginal cost and massive economies of scale, previously separate markets and established sources of value have transcended into a host of cross-functional products and services.

Industries are converging in some unexpected and dynamic configurations, centred on an end-to-end experience for a wide range of products and services through a single access gateway. A book seller has become the No.1 provider of cloud services, and a search engine has developed into a suite of services that take care of your working and private lives. Business of all industries coexist on the one platform, using it in the same was way as their competition to actively partner, compete, and capture market share.

Digital ecosystems of interrelated services built for the end-user, like AWS and Google, now represent seven of the world’s twelve largest companies by market capitalisation. Research shows that the growing realignment of industries into digital ecosystems could represent more than 30% of global corporate revenues by 2025.

Shared platforms of services delivered online are redefining how traditional companies need to respond. Although not all businesses can operate in 100% digital form, those that have been the longest insulated with traditional practices, such as Insurance or Finance, may be most open to competition from outside their sphere. Strategies developed solely in the context of a company’s industry and without recourse to specialised tech business partners could face severe challenges.

Factor 2. Test-and-learn trumps top-down strategy

For most businesses the effect of digital change is patchy. They need to digitise their organisation and innovate through new models, but they can’t just walk away from existing capital investments. Many also face the challenge of freeing themselves from the mind-sets that have settled in operational silos.

With digital transformation projects, the relationship between the delivery of the new system and it’s intended effect is problematic – you won’t know if the new website will actually result in better engagement without building and testing it. This adds a level of ambiguity to contracting. You want your vendors to deliver an outcome that aligns with your business priorities long term, rather than just features and functions. On the other hand, the vendor knows their client’s success is dependent on factors outside their control. The result for the project often results in compromise between both the original vision and future innovation.

In contrast to industrial production where many instances of one product is not being made, in the digital world, a suite of interconnected systems are engaged and behave as one. There used to be long lead-in times and a predictable business environment, where and it was essential to get things right the first time and avoid waste. Now we’re being forced to pivot and embrace a trial-and-error mind-set, exercising rapid development and execution to keep up with your customers’ need to experiment and adapt their tech mix under the pressure of constant change and disruption.

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Adaptive companies are ready to evolve their initial ideas in pilots and refine results in real time to cut down time-to-market. They know that changing project priorities mean minimum viable product trumps a detailed, complex solution. They use a suite of digital platforms to build powerful information systems that gather data through the Internet of Things, which is analysed with the help of Artificial Intelligence.

The good news from the McKinsey’s survey is that organisations with successful transformations are more likely to use and benefit from these emerging technologies. The businesses making the most out of digital transformation will invest more in technology as a percentage of the overall budget, including digitally-related acquisitions, and are much more ruthless in applying business-model innovation.

Factor 3. Partnerships underpin project success

In a world of customer-facing ecosystems built on intense competition and immense economies of scale, companies don’t need to invest directly in infrastructure. The flexibility evoked by ecosystems means organisations can afford to outsource more services, which requires trusted relationships with partners specialised in their field. In this environment, a digital strategy needs a much broader frame of reference regarding an organisation’s choice of partners and platforms, and even where and who you see as your competition.

Craig Somerville, CEO of Somerville Group comments "We are seeing the winds of change, and after a lifetime of rhetorical terms like partnering and trust thrown around, the fact is they are intrinsically tied together. In the new hybrid IT world, shared responsibility is the new buzz word but also the new imperative - without trust, you cannot build a true partnership, and without a true partnership, shared responsibility becomes a very difficult outcome, regardless of the Ts & Cs in your Master Services Agreement."

You need to create an infrastructural and operational framework that invites a steady exchange with outside sources of information, ideas and services to fuel innovation, which includes the use of APIs. Consider recruiting an integrator, such as a telco or larger MSP, that can more effectively assist non-digital natives get up to the speed and scale as required for timely change. Once you’re past the low-hanging fruit of digital change, like back-up data and service redundancy, there’s the need for your website and essential digital services to be always available. However, it’s the less mature and variable services to do with automation that are more difficult and complex to deliver if your digital platform isn’t rock solid.

With the wide-spread adoption of public cloud, Somerville Group cite that they are seeing more customers feeling unsure about data back-up and location selection, with some experiencing unexpected and increased costs. Each public cloud provider has different policies and it is increasingly difficult for IT teams to manage these, stay compliant and keep the costs down. A shared responsibility model with an experienced MSP alleviates this, helping guide customers with their understanding of which workloads should be in a public or private cloud. Another common occurrence ICT partners such as Somerville are seeing is repatriation from public to private cloud for better management, data back-up, cost management and to deliver a more seamless end-user experience.

When it comes to customers choosing the right MSP, partners such as Somerville recommend that organisations choose a partner that enables the Gartner Run-Grow-Transform model for sustainable digital transformation that supports growth and innovation, without the burden of day-to-day IT management of network infrastructure.


Run grow transform model

Customers on a successful digital transformation journey need partners to travel that journey with them if they want long term results. An effective service provider partner is a partner who will commit to take on the shared responsibility of compliance, privacy and security. The service provider of the future builds an infrastructure ecosystem that empowers the customer to transform in real time, enables them to leverage the full power of private cloud and the public clouds such as AWS and Azure, and still manage a small yet efficient footprint on-prem. It’s about what makes sense for the customer or their application that will help them deliver their digital transformation. The digital partner of the future should offer you a secure platform in which you can transform easily, and where a positive outcome is paramount.

Factor 4. Transformation is on infrastructure

Where do you access these technologies and the experts to help you integrate them? How do you become digitally switched on and start traveling in a sustainable trajectory?

The three previous factors come together in your colocation data centre. High-performance network access to digital ecosystems and the big cloud players, as well as a world of service providers looking for your business, and an aggregation of potential customers at all levels of industry verticals. If data is the new oil, then your data centre is the refinery, collecting, moving and analysing tons of data, to enable your service to adapt to the growth of digital applications.


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If services are to be reliably delivered via application or website (with all the benefits of automation), then improved network performance through workload optimisation and reduced latency is an essential part of the mix, where a localised data centre network is needed to complement the incredible economy of centralised, hyperscale cloud infrastructure.

Craig Somerville notes; "All of these services cannot be delivered effectively without robust and redundant connectivity. Organisations should look to partners who can offer secure, scalable and redundant connectivity solutions. Our recommendation to customers is that they consider partners that offer an aggregated network with redundant links that offers access to secure cloud services."

A digital strategy based on colocation data centre’s like NEXTDC’s puts interconnection and your ecosystem at the core of your strategy, enabling you to seamlessly pull together and coordinate all the aspects of your digital business, from legacy servers to cloud on ramps and the diverse global telecommunications network. It represents a long-term solution that allows you to tick a bunch of boxes for risk and reliability before your next project even starts and discover the agility and expertise you need to become a digital champion and achieve your companies view of digital domination.

Now you understand the underlying factors that underpin your digital project success, how do you wrangle a tech project once it’s out of the starting gate?

To explore how we can partner together to help you build highly specialised and customised end-to-end solutions so you can continue to delight your customers, get in touch with our data centre specialists on 13 NEXT.


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