Opinion

Digital transformation: What businesses can do to break through the barriers

5 min read

16 August 2017

Cisco's John Chambers once said: “Most companies will be digital within five years, yet the majority of digital transformation efforts will fail.” This is startling, especially since this failure is due to current enterprise technologies not being designed for the reality of business today.

In this world, if your software vendor presents you with a ten-year roadmap for a digital transformation project, then it is likely to be gazing into a crystal ball and making educated guesses about what the next few years will bring.

This, coupled with the enormous global dynamics currently surrounding the topic of digital transformation, means it’s not surprising that businesses have struggled to keep up. Yet if we can’t predict the future, we can at least build for it with the right technology.

For example, the cloud has transformed this landscape. The idea of businesses adapting to change, and putting the responsibility back onto technology vendors to create software that can be rapidly updated to stay in tune with evolving business needs, is still a relatively new one. Coupled with ever-increasing processing power, falling storage costs, mobile computing, and the consumer internet, this has created catalysts for transformation.

These developments do not complement the old-world enterprise systems that were not built for change. They are painful and expensive to manage, and update, and require extensive customisation. In short, they were designed as monolithic systems to meet specific needs, and in these systems scaling up as businesses grow is a long and drawn-out process. This leaves little room for businesses to think about innovation.

The finance software that comes from this era tells a similar story. It was created to report a very limited amount of data and for a small set of business stakeholders, and was designed to do the very specific jobs of automating transactions and accounting. So at the time it was very effective. But nowadays it is unsuitable for the demands of today’s businesses. Both finance and business managers need systems that can quickly and efficiently bring together actionable information around both their workforce and financial operations.

Driving innovation and digital transformation

Legacy technology continues to hold organisations back, yet many are understandably wary of a “rip out and replace” approach, due to the significant investments that are made in them. However, new systems need to be put in place to effectively manage digital transformation of a business.

This dichotomy is summed up perfectly by McKinsey: “More connected consumers, automated processes, and sophisticated analytics place unprecedented demands on IT functions. Many companies are struggling to cope, and they seek to deliver on new demands by adding piecemeal elements to their existing operations.”

This “piecemeal elements” approach is championed by legacy vendors that are unable to adapt to changing requirements; they have tried to bolt-on any missing capabilities to their current technology stacks in order to keep up.

As a result, these finance and HR applications became a mess of acquisitions, connections, and middleware, and whilst these “add-ons” can address specific functional gaps, they simply can’t support business transformation. Overall, they make contending with rapid change near impossible, and they are not compatible with how people actually work.

When thinking about digital transformation, companies need to wipe the slate clean and start afresh with their thinking. It’s affecting everyone in all industries, but if businesses are kept too busy maintaining a hodgepodge of systems, they will not be able to take on the overhaul that is required. This is obviously quite a daunting prospect, especially for companies which have investments in legacy IT infrastructure.

But when speaking to our customers, I’ve learned that even some of the most established global brands which have their roots in the legacy world, have succeeded when they were willing to challenge their own assumptions and embrace technology transformation and self disruption.

Businesses like this have three things in common: cloud computing, an understanding of the importance of real-time access to data and the of use agile systems that can support changes to business processes and needs. Embracing disruption head on is an opportunity, and is not something that will just go away over time if ignored. Those that can weather the storm will not only survive, they’ll succeed.

Leighanne Levensaler is senior vice president of products at Workday