Digital transformation has become a watchword for organizations seeking to improve their business strategies. Digital transformation uses technology to enable new business processes and reshape business practices. While digital transformation is a concept, executing new ideas and realizing new business models requires an enterprise infrastructure.
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Enterprise architecture provides the foundation for digital transformation. The enterprise architecture connects technologies and provides a business context to achieve the desired business outcomes, so digital transformation requires an enterprise architecture mindset.
Successful digital transformation hinges on the adoption of enterprise technology at scale. It also demands careful strategic planning to map technology capabilities to business objectives. And it requires a deep understanding of:
- The needs of your stakeholders, especially your customers
- The market your company is targeting
- The regulatory environment
- The technological landscape, including emerging technologies
Once you understand the business capabilities needed, you can begin planning your digital infrastructure.
Understanding digital transformation
Digital transformation is the use of technology to change business processes. It's helpful to appreciate the difference between digitization and digitalization to understand digital transformation.
Digitization is the conversion of analog information into a visual format. For example, converting an audiotape to an MP3 file or an old VHS-format videotape to MP4 is an example of digitization. Scanning paper documents to make them machine-readable is another form of digitization.
Digitalization is about adapting business processes with technology using digitized information. Digitalization will look different depending on the organization, but the common goal of digitalization is to improve business processes, significantly improving the customer experience. Technology should break down the silos of digitized information so that all teams can access that data to align with customer needs.
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Three essential elements of digital transformation
During a recent webinar, we polled the IT leaders in the audience to see what they considered their biggest barrier to digital transformation.
- Thirty-five percent of the IT professionals said that the company culture and mindset is the biggest obstacle to executing digital transformation. Senior management must be committed to technological advancement for any digital transformation strategy to succeed.
- Twenty-nine percent said it was a lack of a digital transformation strategy. Having the enterprise architecture infrastructure in place is a starting point, but it only has value if you have a plan to ensure the architecture aligns with business objectives.
- Budget constraints and the need for complex tools and technology were tied at about 12% each.
- The remaining attendees said they didn't see any roadblocks to digital transformation.
Considering all the potential obstacles that prevent a successful digital transformation, you need three critical elements. Each element requires adjusting your enterprise architecture mindset.
The question of spending should not be, "What is our budget?" Instead, the question should be, "What is required to deliver maximum value to our customers?" For successful digital transformation, you must look beyond creating projects and setting budgets for milestones. Work needs to be organized with a focus on customer value. That doesn't mean unlimited spending or eliminating the concept of budgets. Instead, it's about finding the right solution to promote customer satisfaction. Organizations spend too much effort focusing on costs when they should focus on what adds value.
Finding the right technology tools is part of the challenge. However, focus on what those tools enable rather than looking at the tools as a solution. For example, data visualization, collaboration, and project organization are essential features for any digital transformation tool because they make people more efficient and help them achieve their goals. Tools are valuable only when they empower people.
People are responsible for implementing digital transformation, but people resist change. It's no wonder that company culture and mindset are the biggest obstacles to the digital transformation process. Digital transformation requires more than digitalizing business processes. It requires reshaping business systems. You need to improve communications and collaboration and break down silos across the organization. Breaking down any hierarchy requires dramatic change and therefore is challenging, but it's a necessary step for digital transformation. That's why it's essential to align teams around common goals.
[ Building your digital transformation team? Learn the 4 essential roles. ]
Enterprise architecture is a living thing
While change can be frightening, there is an even greater risk in failure to change. Inertia means your organization will fall behind the competition, the market, and your customers' needs. Your enterprise architecture continually evolves, and your digital transformation strategy should guide that evolution.
Different types of risk will affect various parts of the organization. Each department will have its own concerns about modernizing business processes. But that's the point. Digital transformation is about restructuring and breaking down silos so that everyone strives toward a common goal: giving customers the best value.
Digital transformation strategy may seem to be a discrete project with a completion point, but it is never-ending. Digitized business processes must change to accommodate new market conditions and customer expectations. Improvements to the enterprise architecture provide the means to deliver on the promise of digital transformation. Still, without a digital transformation strategy to guide those improvements, your enterprise architecture may evolve without direction.
[ Check out Red Hat's Portfolio Architecture Center for a wide variety of reference architectures you can use. ]