A perfect storm of the COVID-19 pandemic, heightened customer demand, supply chain disruptions and corporate survival concerns has accelerated digital transformation plans and subsequent investments in advanced technologies. New business models are being hatched because old business models no longer work.
"After the events of last year, nearly every company had to become a tech company to survive. The pressure is still on," wrote advisory and consulting service BDO in its 2021 Technology Digital Transformation Survey, which reported that 92% of technology companies are in the throes of formulating a digital transformation journey. "Critical industries and processes are counting on tech companies not only for resilience but for growth."
Yet digital transformation means different things to different businesses. Clearly defining what can potentially be a massive technological transition permeating every aspect of operations will determine the degree of success. And in the fast-paced, highly competitive digital universe, there's little margin for error.
"The number one mistake we see customers do is not clearly and crisply identifying where they want to go. What do you want to achieve, and how do they measure it?" said Yoav Boaz, head of product management at ServiceNow during an interview with TechTarget's Sabrina Polin. "The second [mistake] is around lack of executive support. … By definition, digital transformation will cross over different business silos, and the only way to … get to your goals is to have executive sponsorship. … But that's definitely an area we see where companies fail."
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In this video, Boaz and Polin discuss an evolutionary versus revolutionary business transition approach. They also cover ServiceNow's seven steps to a successful digital transformation journey, including identifying business outcomes, establishing key performance indicators, measuring a company's level of process maturity, tracking progress and reassessing desired goals.
Sabrina Polin: I'm Sabrina Polin with TechTarget, and I'll be talking with Yoav Boaz of ServiceNow, about the basics of digital transformation and how it happens. To learn more about digital transformation in the enterprise, click the link above or in the description below. Digital transformation has become a catch-all term for an assortment of things companies are doing to improve how they do business. These efforts ranged from the digitization of paper files to sophisticated automation of business processes. Yoav, how do you define digital transformation? And who's responsible for it? Who's in charge?
Yoav Boaz: Absolutely, thank you, Sabrina. I would say here we have too few misconceptions in the space. One, I would like to separate the notion of digital transformation from technology transformation, because we see many customers kind of being confused between the two. Technology transformation, and we'll talk more about the role of technology and digital transformation, is an enabler to digital transformation.
When you talk about digital transformation, there are two types that we see with our customers. One, we call it an evolutionary approach -- customers taking their existing business model and existing business processes and simply modernize them with the help of technology. And we'll see a few examples around that. The other is a revolutionary approach: How do you disrupt your existing business model and look at your business completely different. And I'll give you an example. And I'm sure Sabrina -- at least in my family, in the last year and a half went to a doctor or tried to go to a doctor with the kids. So evolutionary approach, saying I can schedule an appointment with my doctor, I can cancel the appointment, everything [done on] the web. And that can vary with an evolutionary approach. And this is what we did with the kids and so on. But then when the pandemic hit, and it was kind of the top, we went to a revolutionary approach. The revolution was around telehealth. Literally, we had the doctor appointments over Zoom. And the doctor asked us to take pictures and videos of different bruises or scratches the kids had, so they can see what's going on and prescribe kind of medicine for the kids. So that's -- I would call it one step in the revolution.
The second step is we know healthcare companies can be much more proactive than they are today. Think about remotely, for example, measuring the glucose level in your blood to let you know whether you need to take a treatment. So today, there are technologies today that literally are much more proactive, and healthcare providers can reach out to you and tell you, "Hey, there is a problem, or you're going to have a problem." So these are the two differences between an evolutionary approach and a revolutionary approach.
Polin: And Yoav, you mentioned businesses having to change their business models. Where does digital transformation begin? What advice would you give companies just starting their digital transformation?
Boaz: Absolutely. So, within ServiceNow, we identified a seven-step process to get you to your digital, through your digital transformation journey. First and foremost, and this is what we see a lot of, the failures in identifying the desired business outcomes. You know, as was written in Alice in Wonderland: 'If you don't know where you're going, any road will take you there.' But what do you really want to achieve? Why are you trying to do digital transformation? And we see many customers have different reasons to do that.
The second: Map and measure your KPIs to the service and processes. So, if you have a target you want to get to, you need to measure all the time to see whether you're heading in the right direction. The third phase is to measure the kind of the maturity that you already have within the different processes, because not all businesses and views within your company have the same maturity level. You can quickly identify and assess, and that's kind of the fourth phase. Where do you need to invest first or where do you need to invest the most? The fifth phase is around recommendations. How do you make progress toward your strategic priorities? And where do you need to do that? Second is around tracking. So how do you have a system that can help you track your progress? And this last phase is around execute, measure and reassess. All the time you are doing that reassessment and whether you're tracking to the desired goals that you set at the beginning. That's kind of the right way we've seen it. And we'll talk about failures next, but that's the kind of prescription to follow.
Polin: But what are some typical challenges and roadblocks as companies try and start their digital transformation process? How can they avoid those pitfalls or even navigate them?
Boaz: Sure. The number one mistake we see customers do is not clearly and crisply identifying where they want to go. What do you want to achieve and how do they measure it? Because companies talk about, 'I want to bring products faster to the market, I want to improve my customer satisfaction, my NPS score.'
So there are different ways or different whys, in a sense, on why you're doing it. So if you not crisply define it and make everyone aware that this is where you want to go, you're doomed to a journey that will not be successful. I would say that's kind of the first reason. The second is around lack of executive support. By definition, digital transformation will cross over different business silos, and the only way to do that in a way to get to your goals is to have executive sponsorship. And we'll talk about who is the right person to drive it. But that's definitely an area we see where companies fail.
And the third is the mindset, is the perception, specifically with people. If you're not training enough of the people and making sure they are with you, or all of them are with you on that journey, people might get the wrong perception, like, 'They want to automate me out of my job, or my job is getting redundant' and so on. And that's not the case. From what we've seen, all of those digital transformations improve the company's efficiency and how they operate. And that, in a sense, helps the company grow and hire more employees.