Opinion

Fortune will favour the brave in a new wave of digital transformation

"Digital transformation" means more than just adding a lick of paint. For many businesses, it's difficult to know where to start. One thing's for certain, do nothing and you will get left behind, writes Adam Barty, managing director, Revium.

While the phrase digital transformation is nothing new, it has become increasingly misused over the past decade. It has become a catchall to describe any type of incremental digital ecosystem change or refinement. Why? Well it’s a great way to try to convince people that the changes being made are far more meaningful, and impactful, than they actually are. This is not only frustrating, it has obscured a very real, very significant opportunity for Australian businesses.

We have already gone through a number of waves of digital transformation – we just didn’t necessarily describe them that way. These waves date back to the 1950s when microchips came into existence, and extend through to the wider adoption of computers in business first, then personal life and beyond.

Over the decades digital transformation has delivered seismic societal shifts as governments and businesses evolved from paper to pixels, and both staff and customer experience have been reshaped by mountains of code and a sea of databases.

Now, we are entering a new wave of digital transformation that works at a whole-of-business level – and there’s nothing gradual about it. Because of this, very few domestic businesses currently have the capacity, leadership or internal fortitude to tackle it. But those who are brave enough to take the first leap will more than likely lead their industries over the next decade or more.

The current “digital foundations” of most larger Australian businesses were likely laid over a decade ago as the internet and smartphones became mainstream and SAAS platforms became the accepted norm.

In that time technology has rapidly advanced. To prove it, let me throw out some buzzwords: machine learning (ML), artificial intelligence (AI), personalisation, automation, zero party data, GDPR, .Net 5, IoT, 5G, ransomware as a service, RPA, low code – the list goes on and it seems to grow exponentially.

It is logical businesses want to leverage these technological advancements as they rush to meet the well-documented shift in expectation of customers and employees, who are demanding an experience focused on their unique needs, wants and perspectives.

If a business started from scratch and built a new digital ecosystem using the technology available today, it would not only be able to satiate its customers’ and employees’ needs, but it would likely exceed them, as impossible as that may seem.

Unfortunately, however, the ageing foundations that most businesses have built their digital infrastructure on top of are not set up to take advantage of new opportunities. In many cases it’s down to either the way data is stored – with fragmentation and complex relational ties – or the way it moves through various systems internally and externally. This means seemingly simple changes can be extremely difficult, disruptive and expensive.

In other instances, years of tacking on ad-hoc functionality and capabilities leads to a digital infrastructure that looks like a patchwork quilt. Making any significant change in these instances is akin to playing a round of Jenga and risking the whole thing toppling down with each move.

When faced with these challenges, almost all businesses will opt to do what they can within their existing constraints. In other words, without having to confront the fundamental issue of their digital ecosystem’s shortcomings.

Inevitably this also means that when a technology or platform with powerful capability is added, only a small percentage of its potential can be put into practical application. The stakeholders involved get to spruik the addition of a new technology, safe in the knowledge that it will take a few years before it becomes clear that, at best, it will have only made slight incremental improvements to business objectives. That’s if anyone bothers to actually do any retrospective analysis of its ROI – they often don’t.

The hurdle to doing things differently is, of course, upfront expenditure. While the long-term ROI is exponentially improved by embracing wholesale digital transformation with a ‘start from scratch’ approach, the expenditure in the short-term can be incredibly daunting.

With an ever-growing list of challenges confronting business, it’s hard to know what to prioritise. In today’s business environment taking big risks requires more internal fortitude than ever before, but history has shown us fortune favours the brave.

Being brave in this instance may actually be a lot less risky than first imagined. If you factor the costs to continue to run, patch, support and add to existing legacy digital infrastructure – as well as the opportunity cost of potential growth your business is missing out on – the equation may look more favourable, especially if you look over a five to 10 year span. In fact, you may discover that rebuilding now instead of waiting is going to be the more cost-effective option in the long term.

Of course, this is easy for me to say. It requires significant commitment financially and otherwise for a business to completely replace all of its legacy tech. But the future is moving at a blistering pace and it’s only getting faster. There is a very valuable and very real early mover advantage available for Australian businesses willing to take the leap and realise the benefits of digital capabilities modern businesses should have at their fingertips. Those that don’t may soon be permanently stuck in the past.

Adam Barty

Adam Barty, managing director of Revium: an independent, full-service digital agency with 50 staff, based in Melbourne.

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