Sunday, February 28, 2021

Roadblocks On the Way to Digital Transformation

The benefits of digital transformation (i.e. IT modernization) are increased efficiency, greater agility, more accurate customer insights, and increased profits. Considering that the great enabler of digital transformation, the Internet and related technologies, has been around for decades, why isn’t digital transformation well into the rear view mirror?

It Don’t Come Easy

The reason is that for established companies the hurdles are significant, and the risks great. One needn’t look far on the internet for horror stories of large IT modernization projects that end in massive cost overruns or outright disaster. And the risks just begin at implementation. They continue through system maturity and evolution.

Key to, and preceding other concerns, is the evaluation of return on investment. Digital transformations can be extensive, and expensive in the short term.  The more arduous the transformation, the bigger the risks, and the bigger the anticipated payoffs must be. This analysis, which will vary between companies is the first step in establishing a company vision for the transformation, which is key to motivating the company at large.

There are two main obstacles (once the decision to transform has been made) to digital transformation: cultural and technical. Both of these are manifestations of vested interests. The more mature the company, the greater the resistance.

The resistance is natural and generally beneficial. That is to say, it’s reasonable, at least at first blush. The business and technology organization are optimized for some criteria, and presumably those criteria have produced a valuable company; not something to mess with trivially.

That’s the healthy resistance to change. The unhealthy resistance to change is more inwardly focused, striving to remain in a comfort zone, until more efficient competition arrives. Organizations must strive to overcome the first kind of resistance by delivering a compelling vision of a streamlined digital future that appears inevitable, and that it needs to break out of a local maximum. The second kind of resistance can be defeated both with the positive vision of the digital future that will benefit all, and also with the darker vision of being crushed by rivals.

Tech and Culture

These concerns, cultural and technical, are not unrelated. To the contrary, the cultural change must be informed by the technological change. One of the main aspects of modern digital reality is acceleration of change, and early action. We see this in the agile software movement; a practice that values incremental change and radically high visibility over master designs and top down control. These concepts are readily adapted to business, and in fact you might say that agile business, first exemplified by the Japanese Kaizen practice was a major inspiration behind agile software.

To leverage modern technology is to embrace incrementalism and radical visibility beyond technical teams.  The iterative process is constantly uncovering and adjusting to new information whether from industry, customers, competitors, or technological developments.  The business itself must be prepared to reorient continuously as well to take full advantage of new opportunities.

A 2018 McKinsey survey found that business culture was a prime impediment to digital transformation. Digital transformation tends to be more widespread and revolutionary than other kinds of change, and harder for established cultures to absorb. These changes include:

● Radical customer first focus

● Rapid change/adjustment of processes

●  Embracing risk and fail fast mentality

●  Breaking of silos (more on that below)

Key to success is a clear executive vision, a focus on communication, and the incorporation of leaders familiar with digital technologies.

On the other side are technical obstacles. Existing technologies may be woefully obsolete. There may have grown technology silos that have developed over years that are not practical for the new vision.

The antidote is encouraging a culture of continuous learning, innovation, and de-specialization.  Like the business itself, technical teams must be able to respond to rapidly changing markets and competition.  Planning and expecting change is a key practice, and can benefit greatly from adopting open source (avoiding vendor lockin) frameworks for things like development, messaging, data storage and orchestration.

The Peril of Silos

Silos, or isolated concerns, typically exist at all levels in an organization.  Silos are one of the key barriers to widespread change.  To some degree, they are unavoidable in even medium sized companies, particularly those experiencing growth.  The mitigation of silos at the management level is well covered elsewhere, and is an ongoing process across all functions of a business.

A typical recommendation for mitigating silos is a strong standardization practice.  From the technological perspective, this means “pick a stack and stick to it.”  At least at the technology level, skills will be transferable, and actual implementation will be comprehensible between teams. This old school approach will lead to a technological “local maximum,” and probably the dreaded and expensive vendor lock-in.

Alas, this approach conflicts with the agile approach to using best of breed tools. It also runs against the natural tendency to staff with highly specialized experts. In the world of rapidly evolving technology, continuous learning and adaptation are more valuable than specialization.  This applies both to team members and technology itself. Rather than selecting a technology stack and riding it to oblivion, a sounder approach is to adopt a standard framework into which best of breed tools can be combined.

The highest value in a constantly evolving technology landscape is adaptability, both in people and frameworks. Selecting a framework or frameworks that support a pluggable integration model will provide a common substrate for different groups to use, and future proof against technological change.  Obviously the framework itself can’t be closed or controlled by a vendor or you simply have another black box to be locked into; look to open source solutions.  Adaptable frameworks will enable a gradual ( as possible ) transition from existing technologies to newer ones, provided they supply suitable abstractions and/or are extensible.

Conclusion

Transforming a business into a modern, data driven, agile enterprise is very challenging. The key, after establishing the return on investment (which should be significant), is communicating a clear vision and fostering a culture of learning and continuous change.  Technologies must be carefully chosen to avoid vendor lockin, and must support adaptability to support the adoption of new technologies as they arise. Such technologies support an incremental transformation that doesn’t require a disruptive departure from legacy technology, but rather enables a smooth as possible transition.

Author Bio

Nati Shalom is the founder and CTO of Cloudify, a serial entrepreneur and thought leader in open-source, multi-cloud orchestration, network virtualization, DevOps and more. Nati has received multiple recognitions from publications such as The CIO Magazine and YCombinator and is one of the leaders of Cloud Native and DevOps Israel groups. Nati is also a frequent presenter at industry conferences.

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