Digital Strategy
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A digital strategy provides a roadmap for digital transformation by outlining investments in talents, processes, and customers to maximize competitive advantage. It specifies visions, actions, and tactics for becoming a digital business. Formulating a digital strategy involves three stages: defining value by gaining commitment, defining goals and investments; launching initiatives with light projects and assembling a digital team; and scaling up through organizing further initiatives, building capabilities, and adopting new operating models. A digital strategy guides a company's transformation through technology adoption and cultural shifts.
Digital Strategy
- 1. DIGITAL STRATEGY Delineate a roadmap for your Digital Transformation Digital Transformation
- 2. Intro. A successful Digital Transformation must stand on a successful Digital Strategy as its basis. Essentially, Digital Strategy is about making wise investments into all aspects of Digital Transformation, be it the talents, processes, or customers—with the end goal of maximizing competitive advantage, profits, and ultimately growth that companies expect when initiating their Digital Transformation. The concept of Digital Strategy has changed fast. A couple of years ago, it was as simple thought as “let’s build a website and an app, and it’s done”. But now Digital Strategy has grown beyond that; it has become an integrated plan that does not only involve the adoption and development of new technologies but also requires a shift in business culture and coordination across the business. While a Digital Strategy acts as a guiding star for Digital Transformation, formulating it can inundate companies with even more problems rather than solutions. The need for a well-defined digital strategy seems absolute, yet many don’t know where to start, and others fail for a lot of pitfalls when compiling it. If your company is in this same situation, this paper can help, where you find the step-by-step guide to formulating a digital strategy. Digital Strategy: Delineate a Roadmap for your Digital Transformation 01
- 3. Digital Strategy in the context of Digital Transformation. A Digital Strategy is comprehensive plans for adopting new digital technologies to achieve new business outcomes, either by building new digital products or digitizing the current process. A Digital Strategy is the roadmap for companies to become a truly digital business and the foundation for a successful Digital Transformation as it specifies clear visions, actions, and tactics that the company must adopt to enable the necessary changes. A Digital Strategy prompts changes in three major dimensions: customer experience, operational efficiency, and business models. Formulating a digital strategy is the starting point of the transformation process, and ensures that the company is using the right technology in a way that supports the larger business objectives. More often than not, a Digital Strategy is a blind embrace of exciting technology such as a new web site, new mobile application or an AI technology. Businesses can be distracted, attempts to create strategy that includes as many new technologies as possible. The correct view of Digital strategy is a plan of action designed to achieve business goals via the implementation of digital initiatives. Part 1 Digital Strategy: Delineate a Roadmap for your Digital Transformation 02
- 4. Step-by-step Guide to Digital Strategy. Part 2 Digital Strategy: Delineate a Roadmap for your Digital Transformation Acquire leaders’ commitmemt Define goals Acquire investment Begin with light- house project Assemble a digital team STAGE 1 DEFINING VALUE Build a digital culture Organize digital initiatives for quick return Build digital capabilities Adopt a new operating model 1 2 3 4 5 6 7 8 9 10 Re-organize to adopt agile operations STAGE 2 LAUNCH & ACCELERATION STAGE 3 SCALING UP 03
- 5. Digital Strategy: Delineate a Roadmap for your Digital Transformation DEFINING VALUE A company must place Digital Transformation at the core of every initiative if they were to set their digital strategy on the right course. It’s no less important to predict how employ- ees will react to this endeavor: will they go along with the strategy or not? Or if they do go along, would they be happy? To get everyone onboard, the very first step is to show them the value that Digital Transformation could bring. A company knows it’s going in the right direction if the commitment of senior leaders is acquired, investments are carefully allocat- ed, and clear goals are formulated. Acquire leaders’ commitment A digital strategy will be short-lived without the commitment of the C-level and leadership team. This may sound like a no-brainer since it seems that the dedication of senior managers is the solution to any project. However, com- mitment is not the same thing as approval. In other words, a C-executive’s job is not simply nodding and signing to everything that is proposed to him. Quite the contrary, leaders must be the evangelist of Digital Transforma- tion, who communicates clear visions and objectives of the digital strategy. They endorse the Digital Strategy as the top priority across the organization: making other top managers accountable, and making it impossi- ble for employees to neglect the transforma- tion. Define goals Major investments must be linked to clear targets. This step has three aims. First, it includes in the digital strategy the impact of digital technologies once they are implement- ed. Without such clear targets, leaders and employees will find it difficult to accept that the inefficient old ways are harmful and that the new digital initiatives have the potential to deliver new business outcomes. Second, by imposing clear targets, a digital strategy can prevent conflicts and opposition if the going ever gets tough. Third, discipline and commit- ment are enforced during the process of implementing the digital strategy. Targets can be categorized as primary and secondary. Primary targets are high-level and directly related to the benefits of sharehold- ers. They are cost reduction, operational efficiency, and customer experience. Second- ary targets are more diverse, their goals are to support the primary ones. They are the frequency of each product release, the percentage of processes that will be automat- ed, the number of test cases that will be auto- matically executed, and the degree of person- alization that can be attained. Acquire investment A digital strategy will need to deploy substan- tial investment. Typically, companies with legacy systems will likely need to double their spending and investment into IT in at least the first five years of Digital Transformation. As a result, investments related to Digital Transfor- mation will lead to lower profits in the short term. But they will bring major advantages in the longer term. Knowing this will help greatly in budgeting and planning for your digital strategy. 04
- 6. Digital Strategy: Delineate a Roadmap for your Digital Transformation LAUNCH & ACCELERATION Launching digital initiatives only accounts for half of Digital Transformation. Keeping them accelerated for lasting value is equally import- ant. More than often, businesses implement digital technologies only to see employees reject them after some time, and the legacy way of operating comes back. To make sure that the efforts are invested and momentum is built on a continuous basis, a digital strategy needs to specify which initia- tives to start first and the investments into them with the internal and external resources. Key enablers to launch the digital strategy include a full-fledged digital team, a proper organization structure, and a digital culture. Begin with lightweight projects To ensure the feasibility and profitability of digital strategy, piloting is highly recommend- ed. To pilot, companies should first launch lightweight certain projects that provide potential rewards and have manageable risk. These projects can be the redesign of certain small-scale processes or the adoption of certain tools with low impacts on the current state of the business. Assemble a digital team The digital team, typically under the manage- ment of a CDO, will be the executor of the Digital Transformation project. A digital team contains cross-functional professionals that gather different types of key expertises to get Digital Transformation up and running. At this stage, the digital strategy identifies all these roles, their duties, and responsibilities. The role of CDO cannot be overstated as he/she will be the one who governs, facilitates, and ensures communication for the team. In addition, the CDO will determine the order of the digital initiatives that need to be imple- mented, supervise progress, and ensure that the day-to-day tasks are executed as needed. The other roles will vary depending on various factors, which could be the unique goals of the company or the sector it operates in. However, there are certain critical roles: project manag- er, digital architect, tester, business analyst, data scientist, domain-specific expert, CX expert. Assembling the digital team can be a challenge due to the competition in the talent market. Most companies are still struggling to source key professionals such as data scientists or ML/AI engineers. One way is to hire a distin- guished expert in the field, who will act as the magnet attracting other talents. Re-organize to adopt agile operations How a company is organized largely deter- mines the viability of its digital transformation. However, reinventing an entire organization seems unattainable. Considering that, compa- nies can instead build an independent unit that is dedicated to implementing the digital strat- egy, such as the digital team. This digital unit is responsible for not only the implementation but also the promotion of new ways of work- 05
- 7. ing essential to Digital Transformation: agile product development or test-and-learn men- tality. This dedicated unit can also aid in attracting and retaining other experts, while encourag- ing the like-minded colleagues to commit to the strategy. Nevertheless, building a separate digital team does not necessarily solve the problems of culture or talent. For example, if a company chooses to hire new professionals altogether, these people may neglect the values of the current culture and systems. In turn, they can lead to conflicts, especially if they fail to convince the existing workers of the long-term impact of digital strategy. One solution is to onboard and integrate the digital unit with care. Mostly, it is highly advised to build a separate unit for digital transformation that will culti- vate a new way of operating that is contributo- ry to success. This unit could include agile methodologies and fail-fast mentality that promote measurable progress while still centering on customer’s benefits. Build a digital culture After a company has enabled the agile way of working and built a digital team, it needs to build an appropriate culture to nurture them. This culture has certain defining characteris- tics: a concentration on customer needs instead of processes and cost reduction, an adoption of agile methodologies, and a com- mitment to continuous testing, learning, & failing. This isn’t to say that companies must discard the traits that used to make companies successful. It only means promoting new inno- vations in parallel with modernizing their heri- tage. SCALING UP Once it has launched and accelerated digital initiatives, a company should have seen solid progress after 18 months. Now, they need to have other initiatives ready to maintain and scale the value of Digital Transformation. Organize digital initiatives for quick return By roadmapping all the digital initiatives with the goal to achieve quick return, companies may have a higher chance to scale faster. The more values a company can generate from the digital strategy as it progresses, the more scale and support it will achieve. Companies can implement all the digital initiatives at once, but this proves ineffective and also harmful to resources. To ensure success, it is advised to thoughtfully strategize for a manageable number of digital initiatives over the long run. Companies should put priority on initiatives that (1) are strategically important, (2) provide quick payback, and (3) offer solutions to urgently complex problems. But it all depends. Digital Strategy: Delineate a Roadmap for your Digital Transformation 06
- 8. Digital Strategy: Delineate a Roadmap for your Digital Transformation Whether the company wants to apply new ways of operating, adopt digital technologies, or modernize legacy systems, and so on will determine which initiatives to prioritize first. All things considered, it is important to track progress. Companies don’t need to stick to the predefined goals; instead, they can adjust targets over the course, depending on wheth- er the prototypes offer greater and lesser values than what has been forecast. Build digital capabilities To scale up their digital transformation, com- panies must think beyond investing in digital technologies. Digital Transformation is half about technology and half about talents. Sourcing new experts with digital skillset and modernizing existing systems will be essential. Most companies are still grappling with talent recruitment: How could they find hundreds of talents given that they are having difficulty building a digital team of dozens? This search for talent typically leads companies to outsourcing to third-party software compa- nies. Moreover, extensive training and knowl- edge transfer will be necessary to get employ- ees and also leaders familiar with the changes that will take hold in the foreseeable future. Finally, all people must change the way they and the company operates since the ultimate goal of digital transformation is company-wide change. Adopt a new operating model Regardless of the structure of the company, its digital transformation will mature until a point where a thorough organizational reinvention becomes vital. Silos have always been prevent- ing companies from enhancing collaboration and performance. In this digital age when there’s a driving need to transform on the fly, companies need to build a central platform that integrates every part of its business It then becomes imperative that companies shift away from the silo-intensive business structure to an agile, platform-based business model that can break down all the boundaries. This shift will enable a network business model that has a laser focus on customer values and operational efficiency. Ultimately, an agile approach will become the norm. 07
- 9. Conclusion. In our experience, top performers know that their Digital Strategy must be as agile and dynamic as the Digital Transformation that the company is pursuing. They relentlessly experiment with new ideas, develop new products, source new talents, and adapt their culture to keep up with the pace of Digital Transformation. Pioneers in digital transformation are those that can take the most advantage of all the economic changes brought about by the digital era. They do so in these 3 ways: joining the digital systems, building new digital offer- ings, and transforming the business model. Thanks to digital platforms, a new digital workplace was created, data was disseminat- ed across the company, and the network effect was enabled. Once these factors mature, digital platforms will create a digital ecosystem where all industry barriers are transcended, thus influencing the regional or even global economy at large. Digital Strategy: Delineate a Roadmap for your Digital Transformation
- 10. KMS Solutions works closely with leading software companies across the globe to bring the most advanced and innovative technologies to Asia Pacific. The focus is to help organizations achieve their business goals through world-class fit-for-purpose solutions and proven industry best practices. KMS Solutions’ success is ultimately measured by the positive impact that it makes to the client’s business. To learn more about KMS Solutions, visit kms-solutions.asia