It is no longer enough for organizations to undertake digital transformation on a grand scale. We will in a world where agility, flexibility, and empowering your organization are imperative to growth and innovation. This report by Harvard Business Review Analytic Services, sponsored by Quickbase, surveys 400 IT leaders and CIOs on the importance of a dual-track approach to transformation.
This data reflects the importance of a dual-track approach to transformation, one that pairs large scale, multi-year digital transformation efforts with rapid-cycle innovation of processes in business units and departments that provide competitive differentiation for companies.
Dual-track transformation: An approach that simultaneously addresses enterprise-wide transformation as well as the modernization of processes that flow across business workflows and workgroups.
Rapid-cycle innovation: Also known as innovation at the edge, this strategy empowers business professionals outside of IT to propose and create new applications for modernizing existing workflow processes, with the goals of achieving quick wins for the business and supporting long-term transformation efforts.
Low-code application development platforms: This category of cloud-based software provides tools that enable business professionals or business-process managers to create their own applications and services with the oversight of IT.
The state of digital transformation
Operational agility + digital capabilities = answer to rapidly shifting customer and market demands. The Covid-19 pandemic has only intensified the need for organizations to move quickly to prepare for the future.
But why is it that less than a quarter (22%) of global executives and IT leaders surveyed rate their current digital transformation as very effective?
They know where they want to be, but they are not seeing a return on investment from these grand scale projects. Good news, is the 92% say success requires an approach combining innovation at bothenterprise and business-process levels.
This dual-track effort lets organizations expand their current enterprise-wide transformation efforts by addressing remaining gaps in culture and technology. At the same time, organizations follow a parallel track that focuses on areas often overlooked in grand-scale transformation strategies: their business's ability to rapidly improve the hundreds of essential processes that cross business workflows and workgroups and go a long way to determining a company’s success. Known as rapid-cycle innovation or innovation at the edge, this second track empowers business professionals outside of IT to propose and create new applications for modernizing existing workflow processes, with the goals of achieving quick wins for the business and supporting long-term transformation.
Understanding dual-track transformation
The first track—an enterprise-wide orientation—focuses on identifying and implementing new digital technology throughout an organization,while simultaneously attempting to change cultures and business workflows impacted by digitalization. While important, this big-picture approach is complex, time consuming, and doesn’t completely fulfill its goals until many of the associated components are in place. For this reason, benefits may take years to materialize, which helps explain why most executives in the survey are dissatisfied with the transformation results they’re seeing so far.
The second track,which is equally important because it can fill in the gaps left by grand-scale transformation plans, focuses on acomprehensive collection of workflows that run within and across business units. These workflows span two important categories: The first includes any unique processes developed to foster competitive advantage, such as call center resources that enhance customer experience by reducing problem-resolution times. The second addresses critical processes like accounts payable and receivable, purchasing, materials management, and other areas that represent the lifeblood of enterprises.
Over time, these workflows may not have been adequately modernized as new digital tools emerged to automate processes and eliminate manual steps. Because it’s more targeted and delivers incremental improvements, transformation of business workflows can quickly yield business value, or what may be thought of as rapid-cycle innovation. In addition to speed, this approach can also help business units prioritize important changes that otherwise can’t compete for resources against large-scale transformation projects.
More focused than still-important enterprise-wide transformation, rapid-cycle innovation relies
on the people who manage or use individual workflows. Their hands-on, day-to-day involvement with the processes gives them unique insights about which modernizations will yield the best outcomes. It’s important to note that rapid-cycle innovation doesn’t replace enterprise-wide transformation—each is a necessary component for business modernization.
Buy-in for dual-track
Survey respondents understand the value of promoting both enterprise-wide transformation and rapid-cycle innovation. In addition to the 92% of executives who say successful transformation requires a dual-track effort, four out of five (80%) respondents from that group strongly agree that this approach is required. And they have clear ideas about why it’s so important. More than half (55%) say increased productivity and efficiency hinges on successful transformation policies. Effective transformation also has a strong impact on enhanced customer satisfaction and the improved quality of products and services.
With so much at stake, though, why do less than a quarter of the executives surveyed say their transformation strategies are very effective?
The survey reveals a host of problems that undercut modernization goals, including shortfalls in both grand-scale transformation efforts and the optimization of workflows within and across business departments.
These two gaps, which rank among the top four roadblocks identified by survey respondents, directly speak to the need for dual-track transformation strategies: 39% of the executives say the lack of a cohesive enterprise-wide transformation strategy is a key factor when transformation strategies don’t fully meet their organization’s goals. In addition, nearly a third (32%) name outdated or ineffective business processes as a problem.
An Imperative to Succeed
When efforts don’t live up to expectations, companies experience both tactical and strategic problems that undermine business performance. Nearly half (45%) of the executives name the decreased ability to roll out improvements in productivity and efficiency as one of the top-three consequences.
Forty percent consider the decreased ability to quickly modernize or create new business processes another one of the biggest repercussions. Other consequences range from decreased ability to analyze enterprise data (36%) and slow improvements in product or service quality (35%), to decreased customer satisfaction (34%) and delays in responding to emerging market opportunities (32%).
A more comprehensive approach to transformation, one that focuses on rapid-cycle change and innovation in addition to corporate-wide modernization, can overcome these shortcomings.
59% of the surveyed executives say rapid-cycle innovation can be “very important” for enhancing customer satisfaction. In addition, 53% see it as important for a more effective use of enterprise data and analytics, while the same number point to it being a key factor for improved product and service quality. Forty-eight percent say distributed innovation is important for speeding responses to competitive pressures.
A foundation for dual-track transformation
Executives clearly understand the promise of rapid-cycle innovation for addressing shortfalls in grand-scale modernization strategies. The next step is to provide businesspeople with a tool for fulfilling that promise, namely low-code application development platforms. This cloud-based software lets business professionals or business-process managers create their own applications and services rather than relying exclusively on the IT staff to do so.
More than half (52%) of the respondents say a primary benefit of low-code platforms for rapid-cycle innovation is that they encourage business professionals and business-process managers to be more involved in innovation and idea generation.
Speed is another factor: 44% of executives surveyed say a top benefit of the platforms is helping organizations deliver business applications more quickly than with traditional development processes. The importance of this benefit may only grow as business leaders consider how the Covid-19 pandemic places a greater premium on agility and the ability to respond faster to wide-scale disruptions.
While respondents see potential advantages with low-code development, they also voice concerns.
Security and compliance gaps rank by far as the biggest worries—half of the executives fear that applications created outside the IT department may not fully meet their security and governance requirements. Nearly a third (31%) identify a related issue: “shadow IT,” or applications that don’t meet corporate security or compliance policies because the programs are created without IT’s full oversight.
These concerns are real but not insurmountable. The key is creating a framework that brings members of the IT staff together with principal members of manufacturing, marketing and sales, research and development, and any other functions that could benefit from low-code platforms.
The speed to success
A large percentage of companies throughout the world continue to give low marks to their digital transformation efforts. But a realization is emerging among executives that may help boost success rates in the future. By a wide margin, business leaders say it is necessary to expand existing grand-scale, enterprise-wide transformation programs with a dual-track strategy that also modernizes processes running in business units.