Is Digitization The Same As Digital Transformation?

This article is coauthored by Manoj Bhargaw (LinkedIn: http://www.linkedin.com/in/manojbhargaw) and Lawrence Dillon (LinkedIn: http://www.linkedin.com/lawrencedillon).  

No.  Here is why…

A fascinating, well-written article titled "Time To Accelerate Digital Capabilities In Life Sciences: Is Your Digital Strategy Road-Ready?” by Chris Zant, Principal at Deloitte Digital, Deloitte Consulting LLP, (full article can be found here: Deloitte's Article), shared by Dan Kinsella via LinkedIn, inspired us to share our take on what is “digitization” and “digital transformation”.

Let’s begin by saying that Zant's article provides a strong introduction for non-specialists on digital transformation. Our view, however, reflects the challenges companies face when they decide to invest in digital technologies or create a Digital Strategy, but are not familiar with its intricacies involved in the execution and roll out.  Zant fails to warn the reader that adopting digital technologies is no different from embracing the other "magic bullet" technologies that took decades to deploy efficiently.  

Our view, built from experience as corporate executives and global consultants supporting clients across multiple industries, is that businesses must avoid the pitfalls of branding a project or group as "digital" to create marketing hype.  Companies who embrace enterprise digital transformation, experience revenue growth, cost savings, and enhanced customer and supplier relationships.  Our clients experience greater or lesser impacts related to these categories depending on known or unknown areas of opportunities.

The catalyst that digital technologies provide in modifying a business model, in order to obtain the opportunities, may be a cosmetic solution and should not be viewed as a magic bullet or quick fix to structural issues. Putting a digital technology on a broken process will cause more problems and additional costs while creating quality degradation to the target audience.  Enabling seamless and efficient customer engagement is difficult, expensive, and time-consuming.  In our experience, the biggest obstacle to achieving the expected benefits is the cultural change, not the processes and technologies.

Digitization

Corporations' efforts focused on the conversion of analog items into digital (i.e. digitization) even with a digital strategy, are performing a digital replacement for an analogy activity or subprocess. For example: "...using artificial intelligence to deliver timely patient services..." or enabling a car to pay for a parking meter using mobile communications through your cell phone. These are taking a single activity or subprocess out of a manual effort and applying new technology tools to automate it. It is evolutionary at best and only if it works.  In 1995-1999, big business did not understand the internal impact that would result from leveraging the Internet.  Most companies put marketing materials on the web with no expectation of performing order or transaction management until competition sprung up from unencumbered start-ups with no legacy business structures.  
  
As Zant's article highlights, many companies believe that digitization of an activity or subprocess is externally triggered, and hence, an externally focused transformation. The competition is doing it or there is a need to drive innovation to win over customers with a new app. Buried in Zant's article are brief insights worth pulling out. Internal requirements of a company to improve quality, improve the speed of addressing stakeholders needs, and the need to be cost effective are also catalysts. Below is an excerpt from the article that introduces these internal requirements for consideration.  

"...whether through using the Internet of Things to change the ways in which clinical trials are conducted and monitored, or in using artificial intelligence to deliver timely patient services…"

 

So why are we writing when we mostly agree with Zant? We believe Chris’ article is a strong introduction to Digital Transformation but lacks substantial information surrounding the ease and cost of execution to achieve the desired and expected benefits. He did not point out that a facade of inefficient processes and systems is where companies overspend on false starts, inadequately defined scope, and unrealistic deadlines. A partial, albeit flashy, solution often results in the failure to deliver the promised bottom and top-line impact. Project execution success is challenging enough without missing critical scope considerations as highlighted by The Standish Group’s 2015 CHAOS Report.

Our experience shows where Digitization meets business capability is where Digital Transformation must occur to achieve the promised benefits.

Zant suggests the need for transformation early in the article and clarifies later as he introduces the impact to the organization as a whole (see the excerpt below). We agree with Zant on several points in this article as other business leaders and consultants probably do as well.

"Now that advanced digital capabilities are gaining momentum among life sciences – in some cases sparking real transformation – leaders at these companies have to sustain it, guiding this momentum with care."

However, the overall impact on any given company appears to be where we differ with Zant. Our experience is that the transformation of a company from analog to digital is more revolutionary than Zant highlights. To get a business to become digital, all the way through the organization requires a total re-architecting and redesign of the business often referred to as Business Architecture.  Business Architecture entails process, organizational structures, reporting relationships, cross-functional interactions, metrics, and how people think and behave.  

The biggest challenge of achieving the benefit from transformation technology is NOT the new technology itself. It is the cultural change required to embrace and leverage new technology in ways that differentiate your business.  We help change everyone's "mindset" and individual beliefs to affect the cultural change required to see the promised bottom line benefit.  IT focused consulting firms concentrate on the introduction of a new app, technically innovative product, or service that causes functional or process disruption within the business, which results in upset or dissatisfied customers.  

In referencing the AI patient service example used by Zant, consider that there are always more patients than medical staff in hospitals. AI might accommodate some level of priority, but the organization structures, laws, and potential regulations in place for decades will inhibit AI decisions. This would require modifications to allow the AI system to call in specialist doctors, or those on vacation, that today requires processes to validate requests for approvals to mitigate risks or unnecessary costs.  The takeaway? Transformational technologies over the last 30 years have proven that without an updated Business Architecture and organizational design, new technology will cost more and increase the risk of missing expectations.  

Picture how the life science company referred to in Zant's article would measure the employee's' performance related to clinical trials or those performing the regulatory processes during and after the transformation Zant highlights? Do those metrics and processes change once or twice? Is there a plan to evolve them, thoughtfully, ahead of the actual act of changing the clinical trials or regulatory processes?  Did Zant overlook HR or legal (often involved in regulatory processes)? What processes in HR change, if any? Do the systems in HR have to change as well? If so, should the other business groups change to align with the new HR systems, processes, and metrics?

Does an AI triggered change in the execution process of clinical trials require Marketing to explain to the doctors, patients, and scientists what the change is and the need for the modification before it can be deployed? How is innovation implemented when conceived and driven by an AI system? Is the traditional New Product Development (NPD) Stage Gate process still relevant?  What other groups are impacted and how do you know and incorporate them?  Over the last 18 years, the evolution of Business Architecture has been all around these topics.  

Business Architecture was created to help companies scrutinize similar questions related to how to use the Internet. Zant accurately points out that it may be time for a Digital Strategy, yet he abandons the point and does not introduce the difficult part - how does a company design the business groups and roll out that design so they can efficiently achieve the Digital Strategy's goals and objectives?  That is where Business Architecture comes alive.

Consider the other disruptive technologies that were expected to transform one part of a business and promised to be implemented with ease.  These include, but are not limited to laptops, EMR, Client/Server, World Wide Web, ERP, MRP, IP, FI/CO, Internet, E-commerce, Cloud, SaaS, Big Data, and mobile.  Many of these are still driving transformations today.  We believe that Digital Transformation needs to occur for companies to gain the benefit of Digital technologies including, but not limited, to mobile, big data, real-time product creation, and process automation. Where we disagree with Zant is that the transformation is not about technology, it is about business structure and cultural change to support what the new technology can provide. Without transforming how a company works to embrace Digital, we will see and hear about Digital Transformation failures similar to the ERP and the Dot.com failures of our past.

ENKI has helped architect, design, and deploy changes to Fortune 50 and small companies.  We found that even little functional or business unit changes intertwine with the rest of the enterprise. If you change only one of them, the ripple is felt everywhere and is often unknown or underestimated until it is too late. However, companies have a need to increase the speed of change to drive increased customer satisfaction, complicating the need for digital transformation.  

We unearth the complexities and impacts quickly, and we design and execute the build. We continually deliver iterative improvements in digital capabilities along the way to keep up with the competition. We are the only company that combines real-world licensed building architects, trained and experienced with business architecture, with our clients' organizational design experts to create plans and projects that are designed to deploy change efficiently to achieve the strategic vision. We embed the knowledge of the touch-points and interdependencies ahead of time to ensure cross references and validations.  Our approach, experience, and skills ensure a smooth transformation within the business to support the desired outcome.  We are experts in technology and business.  We have run companies and created innovative technology.  We have solved complex problems and can help your business because we have walked in your shoes.  ENKI is the key to your success.