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OF YOUR BUSINESS:
A 7 STEP APPROACH TO DIGITAL TRANSFORMATION
CONTENTS
What is Digital Transformation? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
What digital business means in practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. Changing user demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. Changing competitive landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Changing technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The barriers to Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7 steps to a successful digital business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Step 1: Formulate your digital strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Step 2: Make people as important as technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Step 3: Transform legacy architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Digital transformation checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Step 4: Modernize legacy processes and attitudes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Step 5: Use mobile as a catalyst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Step 6: Harness the power of APIs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Step 7: Stay secure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The last word . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2
WHAT IS DIGITAL
TRANSFORMATION?
Digital technologies are creating new business designs by blurring the boundaries between physical
and virtual worlds. Like the industrial revolution of the 18th and 19th centuries, which changed our
way of life with machines, digital business will disrupt all manner of organizationsmaking prior
models obsolete and creating incredible opportunities for those who can visualize the possibilities.
3
WHAT DIGITAL BUSINESS
MEANS IN PRACTICE
Rather than simply enhancing and supporting traditional methods, the use of digital
technologies should enable brand new types of innovation and creativity. However, most of
us have grown up with rigid, legacy technology-based business systemsprocess-oriented
and mostly built around predictable, repeatable steps. If this sounds familiar, your business
DIGITAL LEADERS ARE MORE model may now be under threat from digital Darwinisma tipping point caused by digital
LIKELY TO HAVE: technologies and downstream market effects. Or perhaps nimbler, lower cost-base competitors
Revenue growth over 10% are about to overtake you with a more innovative approach, better use of data or smarter use
of technology. In this climate, business as usual is certainly no longer good enough.
Profit margins higher than the
industry average
DIGITAL TRANSFORMATION INVOLVES:
A CEO who understands digital Shifting your business from a legacy mind-set to a digital by default way of working and thinking
opportunities and threats
Ending the segregated mentality
A CIO who is a digital master or
digital coach A strategy and program that touches every function of your organization
A clearly defined digital vision Fostering innovation through experimentation and learning
and strategy
New business models that incorporate digitized assets
Digitally proficient leaders at Increased use of technology to improve the experience of your employees, customers, suppliers,
multiple levels
partners and stakeholders
Source:
Driving Digital Transformation. This eBook explores the forces that are driving digital transformation, the obstacles that are
Harvard Business Review, 2015.
preventing organizations from making the leap, and the tools and techniques that you can
start applying to your own business models to ensure survival of the fittest.
4
1. CHANGING USER DEMAND
CUSTOMERS
Customers believe they can use complex products to live simpler, more convenient lives.
Accustomed to getting answers on demand from search engines, customers expect similar
responsiveness from enterprises.
DIGITAL NATIVES who grew up with (and are therefore comfortable with) digital
CHANGING TIMES
Digital business transformation is
DIGITAL IMMIGRANTS who have crossed into the digital world
being driven by different aspects
DIGITAL VOYEURS who cautiously recognize the digital shift at arms length
of change.
DIGITAL DISENGAGED who have given up on digital and ignore its impact
5
2. CHANGING COMPETITIVE
LANDSCAPE
Size, which was once a competitive advantage, is now becoming something of a liability.
Technology is levelling the playing field for businesses of every size. Cutting out the middle
man is a growing trend in markets that are not over-regulated, stripping out transaction costs.
And not only the technology sector is witnessing upheaval. A growing number of industries
value innovation much higher than tradition.
Its no longer enough for retailers to build apps or e-commerce websites; they are under
pressure to keep pace by making brick and mortar venues mobile-friendly, accepting mobile
payments and using location technology to engage customers. Also, many brick-and-mortar
stores are closing and main streets are facing desertification because their retailers dont sell
a unique product or have clear brand value.
A successful business is the
hardest organization to change
ARE YOU LEAVING THE DOOR AJAR FOR AGILE COMPETITORS?
Professor Jerry Wind, Few established businesses have a single view of the customer. Ignorance of the customer
The Wharton School,
journey and order history is no longer acceptable in the digital ageeven in the B2B sector.
University of Pennsylvania
These knowledge gaps presents opportunities for aggressive new entrants or born-digital
disruptors to move in quickly with a more customer-centric, service-based approach.
6
3. CHANGING TECHNOLOGY
CLOUD
Cloud is a growth engine for businessnot least because it enables organizations to align their
resources and strategy to dynamic forces in the competitive environment. Cloud supports
business model innovation by allowing risk-averse organizations to experimentand failfast.
Profit-making parts of the business, such as sales and customer service, gain greater influence
and involvement in technology decisions and selection, while IT can continually optimize the
performance of operations and applications at a cost that scales with growth.
MOBILE
In everyday life, we keep our mobile devices close. Companies must recognize this reliance, and
do whatever it takes to meet users in the digital spaces where they live, play, work and shop.
Organizations have already enjoyed varying degrees of success by mobilizing workflows and
providing anytime, anywhere access to back-office systems. But as a piece of the larger digital
transformation puzzle, mobility needs to be recognized for its ability to create interactions with
things, data, people and placesnot just apps. An analysis of app usage can help organizations
understand contextual needs, preferences, and behaviorsin essence, what users are doing
with their devices, when theyre doing it, where theyre doing it and how much time they spend
doing it.
INTERNET OF THINGS
Sensors and networking technologies are now allowing objects to share data with other objects
and systems. As the cost of these technologies has fallen dramatically in recent years, almost
any aspect of our environmentnatural systems, humans systems and physical objectscan
potentially connect and interact. Among the challenges this creates is the need to manage
the data explosion generated by connected devices, and convert it into actionable, real-time
7
insights at a massive scale. Organizations that can put right-time information and decision-
making capability into users hands can transform their ability to work effectively from any
location, accomplish business tasks more efficiently, and proactively manage operations and
the supply chain.
OPEN SOURCE
Open source software is at the heart of the digital revolution, and even proprietary software
providers are realizing the benefits of employing open source components. Widespread adoption
is making open source technologies more scalable, adaptable, and affordableall necessary for
digital transformation. Open source will play a major role in producing the next generation of
high-performance computing clusters that underpin big data analysis and applications, parsing
massive volumes of data. With the relative decline of the desktop, open source is increasingly
serving as the foundation for enterprise-grade mobile management, allowing developers
to build and launch products quickly and at scale. Additionally, open source programming
languages, databases, middleware, and other tools continue to fuel mobile development.
8
THE BARRIERS TO DIGITAL
TRANSFORMATION
If digital transformation is an inevitability, whats stopping organizations from taking the first
44% step? The recent Harvard Business Review study, Driving Digital Transformation, yields
41% some valuable insights, which well examine in turn:
36%
Organizational silos ORGANIZATIONAL SILOS
Todays customers expect interaction based around them, not on a companys products
43%
and services. Connectivity is the new path to revenue, but this requires previously siloed
42%
databases and applications to be opened up so that data and functionality can be accessed
34%
Legacy processes
across organizational or global boundaries. IT development teams may be able to move fast
individually, but find their work hampered by a lack of support from less agile business units
30% or misalignment with changing enterprise priorities.
43%
44% LEGACY PROCESSES
Cultural resistance to change
Monolithic, inflexible architecture, combined with an ageing application estate (often comprising
24% home-grown systems) can make digital transformation feel like trying to upgrade the London
39% Underground or New York Subway: its hard to make structural improvements while keeping
41% the trains running. Many businesses are also shackled by legacy technology management
Lack of innovative thinking processes outdated project approval cycles, design and development methodologies with
throughout the business pages of requirements that become irrelevant before a line of code is even written, and a
18% history of two change windows a year, which no longer matches the needs or speeds of todays
42% users.
57%
Lack of digital leadership
9
CULTURAL RESISTANCE TO CHANGE
Many organizations are experiencing frog in boiling water syndrome waiting until technology
trends actively threaten their business or even until their balance sheet shows visible signs
of suffering. Some are simply risk-averse, perceiving that while digital transformation yields
valuable new revenue opportunities, it could divert attention from their core business and
competencies.
10
7 STEPS TO A SUCCESSFUL
DIGITAL BUSINESS
STEP 1: FORMULATE YOUR DIGITAL STRATEGY
The ability to digitally re-imagine a business is largely determined by a clear, coherent digital
strategyalbeit one that is subject to regular review.
Early stage (less digitally mature) organizations tend to focus on individual technologies
and have strategies that are decidedly operational in focus. However, digital fluency doesnt
demand mastery of technologies, but the ability to articulate the value of digital technologies
to the organizations future and work backwards from there.
OUTPACE CHANGE
Remember that while the digital landscape shifts rapidly, changes to regulation and corporate
policy are rarely as swift. However, you only have to look at the gains made in highly-regulated
industries such as telecoms, financial services, and healthcare, to see that digital innovation
can still flourish. Successful initiatives require multi-disciplinary engagement across the
enterprise, and an emphasis on interoperability. connectivity, delivery, and rigorous change
management.
11
MEASURE YOUR WINS AT EVERY STEP
Note the concrete benefits at each stage of the digital transformation journeyrather than
wait for pay-off in the indefinite future. Digital transformation is a continuous business
improvement, one that that organizations should undertake as a matter of course to stay
ahead of new entrants to the market.
12
STEP 2: MAKE PEOPLE AS IMPORTANT
AS TECHNOLOGY
The role of a digital leader is about much more than technology. Not everyone in the
organization will adapt readily to digital transformation. There may be inertia, defensiveness
or internal politics to overcome. Here are a few pointers.
13
GIVE SOCIAL A GREATER VOICE
An organizations social footprint is a key part of its digital strategy. Flexible learning
opportunities should be provided to cultivate social media skills among the workforce. As
social media becomes an increasingly important means of communication in the workplace
and not just in peoples personal lives, organizations need to tap into its potential to promote
greater collaboration and enhance their knowledge base in new ways. This creates some
interesting challenges in terms of redefining privacy, internal communications and employee
engagement policies based on social networking services. Reputation governance needs to be
more dynamic and transparent than ever before.
14
STEP 3: TRANSFORM LEGACY ARCHITECTURE
Unlike businesses that are born digital, traditional companies need to build an architecture
designed for the digital enterprise on top of a legacy foundation.
As such, most organizations will create a hybrid architecture, managing transactional platforms
for scalability and resilience, while optimizing other systems for customer experience. This
construction should be underpinned by:
15
DIGITAL TRANSFORMATION
CHECKLIST
n open software architecture that connects applications, services, and devices
A
while controlling service deployment and versioning
n enterprise application platform that allows you to quickly develop and deploy
A
applications and deliver new products and services to partners
latform as a Service (PaaS) that provides the tools and services your IT team
P
needs to develop and deploy applications to a cloud environment
16
STEP 4: MODERNIZE LEGACY
PROCESSES AND ATTITUDES
THE 80/20 RULE APPLIES
Around 20% of digital transformation is about improving existing channels. The other 80% is
about understanding the changing ways in which your customers and associates use digital
channels to access information. If you want the benefits of design thinking and agile software
development, track user feedback using cross-touchpoint metrics.
17
STEP 5: USE MOBILE AS A CATALYST
With almost everyone becoming a mobile user, youll want to take advantage of mobile to
run, grow and transform your business. With a focus on innovation and integration, mobility
initiatives can act as the gateway for further digital enablement.
18
POWERED BY I.T.
Secure, centralized and repeatable back-end connectivity essential to any mobile value
proposition. Incorporate data distribution technologies within your development cycle that
intelligently assess data, ensuring only the most up-to-date information is sent instantly. Be
agnostic when it comes to devices, operating systems, app approach (native, HTML5, hybrid or
web) and platform. Use analytics to support storage, scalability, user access, and management
of all mobile application assetsand feed usage information back to developers to further
streamline apps for usability. This will lead to better retention and improved revenue-generating
opportunities.
19
STEP 6: HARNESS THE POWER OF APIS
For organizations that crave stability, digital transformation may seem synonymous with
upheaval. Application programming interfaces (APIs) offer a way to change your business,
adapt your legacy environment, and eliminate standalone components with minimal
disruption.
APIs can help large, traditional enterprises act like smaller, nimbler firms by increasing their
agilityor conversely, enable start-up organizations to expand their presence rapidly across
new territories. APIs can motivate digital transformation by speeding up the creation of web
and mobile-based apps.
20
By securely unlocking data from back-end systems in a repeatable way, APIs can play a critical
role in B2B or B2E application development such as:
Extending customer reach and value by offering existing services via new devices and
platforms
API projects are typically owned by business units whose focus is on revenue generation, while
meeting the needs of application developers. Programs should focus on user adoption, and
design decisions should clearly set out the core strategic business aims, the key metrics that
will be used to measure success, and the ongoing tasks that will allow the program to continue
to meet its objectives.
21
STEP 7: STAY SECURE
The adoption of social, mobile, analytics, cloud and IoT technologies can potentially make
organizations bigger targets for cyber threats and damage to brand reputation. But the
threats facing digital businesses are not much different from those faced by traditional
enterprise networkshackers, security breaches, unpatched code, unexpected inputs and
errorsjust on a much greater scale.
Shield sensitive enterprise IoT data and assets from the wider network of connected devices
Maintain a trust but verify mindset when managing network devices and harden the IoT
gateways that connect devices to back-end systems
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THE LAST WORD
Digital transformation is prompting a rethink of software architecture,
technologies, development methodologies, business processes, roles,
and responsibilities to achieve success.
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IS DIGITAL TRANSFORMATION
IN YOUR FUTURE?
To learn more about how Red Hat can support your digital business strategy
contact our specialists today.
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