Expect companies to scale-back their Big Bang change rhetoric in favor of a more iterative approach to innovation, a shift to product management, and renewed efforts around operational efficiency.
CIOs are suffering from digital transformation fatigue, but not just because the phrase has been overused to describe nearly any IT modernization effort. As it turns out, CIOs are finding it challenging to get sponsorship for Big Bang transformations from CEOs and boards who have little appetite for a long wait in an era of rapid-fire business disruption.
To wit, many firms — see General Electric — are failing at enterprise-wide digital transformations. This will continue to be an issue in 2019 as corporate inertia stalls lofty ambitions for change, according to Allen Bonde, a Forrester Research analyst. Bonde, who believes digital transformation requires a shift in technologies, skills and culture that helps forge new business models, says a Big Bang approach was never the answer despite the hype.
“There is some fatigue around big brush digital transformation and there is a need for tech leaders and e-business leaders to make it smaller,” Bonde says. “Executives are now saying, ‘We get it – we’re going to be disrupted, but what can we get done quickly or more practically?’”
Bonde shared with CIO.com his top five digital business predictions for 2019, as well as how CIOs can adapt to those changes.
1. Digital transformation morphs into focused innovation
Companies will transform, but at a more iterative, measured pace. Think 18- to 24-month innovation cycles instead of 5- to 7-year long hauls. Bonde cited the cases of Adidas experimenting with 3D-printed shoes and Office Depot testing digital marketing services in its stores. Consider also Metlife’s adoption of artificial intelligence (AI) software and Synchrony’s roll-out of a chatbot, each of which aims to improve service for digitally-savvy consumers.
In 2019, firms will measure a new type of ROI: “return on innovation,” with digital technologies being ranked by the benefit for the firm, Bonde says. Expect digital KPIs to play an increasingly important role here. “Transformation takes time, is far from done, and needs to get back to its roots: small, manageable chunks of innovation that deliver tangible benefits.”
Bonde advises: Look for quick wins, layer them up and enable digital leaders to build on them. “That path to doing that is sequencing, and each needs to pay for itself,” Bonde says.
2. The return of operational efficiency
A tighter focus on streamlining operations will complement the ebb of digital transformation froth and vigor, Bonde says. In 2019, firms will accelerate recession planning with a focus on digitizing operations that improve customer outcomes and deliver productivity.
While customer-focused transformation will still target top-line growth, CIOs will become more hawkish on the bottom-line costs. CIO will look to shut down executive vanity projects, and orchestrate self-service delivery wherever possible. “Outcomes matter, particularly those that promise maximum leverage by combining efficiency, customer delight, and cost-effectiveness,” Bonde says.
Bonde suggests: CIOs should focus on reducing the often unwieldy sprawl of software-as-a-service applications that ran in the course of shadow IT allowance. After all, a company only needs so many customer engagement apps. “It’s a good time to take inventory if a SaaS service isn’t generating value, the CIO should turn it off,” Bonde says.
3. Product management hits the big time
In 2018, CIOs began talking about evolving from project-based to product-based IT management, dovetailing with trends in agile development, pivots to XaaS (everything-as-a-service) IT services, and an increased focus on supporting and facilitating customer journey maps.
As CIOs’ customer obsession grows, expect product-focused roles, including digital designers, product managers and “experience managers” to become the area of intense focus in 2019, Bonde says. For example, companies must hire product managers who can walk the line and liaise between marketing and IT, mediating disputes and finding new routes to markets.
Bonde cautions: The trick, Bonde says, is to ensure the product manager doesn’t align too much with engineering at the expense of shutting our marketing, ensuring the “voice of the customer” isn’t lost, which can hurt the company. “If product management is too tightly coupled with engineering it can be difficult for market to have a partnership,” Bonde says.
4. The rise of B2B platforms and commerce
The enterprise sector has long known that the economy is becoming platform-centric, thanks to the proliferation of APIs and cloud technologies. Salesforce.com’s acquisition of API hub specialist MuleSoft underlines this trend. Companies will double down here, looking to scale platforms. “Beyond thinking of digital touchpoints as just a consumer channel, companies will look for new efficiencies in their interactions with suppliers and distributors, while these same distributors will look to package their market data and know-how as a hedge against disintermediation,” Bonde says.
Bonde recommends: As you hammer out your platform strategy, stop treating data like a “state secret,” electing instead to share it with distributors and suppliers. “They can be great data partners for you,” Bonde says. “If not, work with them even as you work around them.”
5. AI will become more embedded in the digital stack
The froth around AI is undeniable. From intelligent automation to virtual assistants to fraud analytics, virtually every enterprise is exploring AI in some form or another. But as vendors increasingly weave AI throughout their technology stacks, it will eliminate some of the experimentation CIOs feel pressured to conduct in their enterprises.
Bonde cited Adobe’s Sensei AI technology, which is making it easier for marketers to launch campaigns, as well as IBM Watson, being leveraged in anything from healthcare to weather prediction, as examples. “We can’t influence the overhype — that will play itself out as funding gets tougher,” Bonde says. “But we will see AI embedded more within digital processes and tools.” Think AI-infused recommendation engines, content management and supply chain planning systems.
Bonde advises: Ignore the hype and target quick wins. In 2019, digital leaders should work with their peers in operations and marketing to automate back-end processes and streamline the everyday work of frontline teams.
That quick hit, innovation-by-iteration mentality closes the loop for Bonde’s call for companies to scale back the scope of digital transformation.
“It’s about using agile and design thinking to inspire changes that add up to something good,” Bonde says. “2019 is the time to focus on digitizing experiences in the service of customers, using technology and partners to create short-term gains that underpin long-term ambition.”
This article originally appeared on CIO.