Can you outsource Digital Transformation (DX)?
Let's set this off in the right direction. What people think digital transformation is, often isn’t. Adopting the latest feature is not digital transformation, and neither is a basic migration or new functional enhancements made to a site.
Yes, these are aspects of a digital transformation (DX) initiative, but in themselves, just optimizations of what’s already there—not a holistic, strategic move toward a metamorphosis.
It’s greater than the sum of its parts, and it has to be in order to be DX.
While these terms are sometimes used interchangeably by the marketplace, digital transformation is not the same as digital optimization. One deals with refining some aspects of the whole, and the other deals with the whole itself.
What is digital transformation, really?
Start at the core. Digital transformation begins with the core business model and works its way outwards, attempting to question and recreate everything from the ground up, in ways that make the enterprise faster, better, and more efficient. DX touches the entire organization. The impact of real digital transformation can be felt at all levels across an enterprise.
DX is hard to get right. It’s a big, unwieldy subject.
Broadly and in context of enterprise, DX can be defined as: “the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers.”
But because each enterprise is different, DX works differently for each.
While it leverages technology, it’s grounded more in process than technology. Legacy systems and old, suboptimal processes extract a heavy cost from enterprises across industries, eating into huge portions of the IT budget and stalling innovation. The future demands agility and creativity—which can only be achieved through automation and reducing technical debt.
Even more, DX has to be a cultural shift. Enterprises that might have been doing things in a certain way for decades now need to have agility and responsivity built into their DNA. This requires buy-in from all levels of staff, which takes far more than a simple technical upgrade. It’s a change in mindset.
There are a lot of different reasons why an enterprise may seek DX: to accelerate change and create competitive advantage, to enter new markets, to improve customer experience, for digital technology integration, staff enablement, etc.
But when it’s not done right, most digital transformation initiatives fail. In fact, seven out of every eight DX initiatives fail, according to Forbes. This isn’t a choice for enterprise. No, there’s nothing fair about necessity.
Despite the difficulties, DX is the future. It’s how enterprises can create differentiation going forward. Therefore digital transformation is a question of survival and thriving. A failure to transform digitally is a failure to evolve, which can only mean one thing, and that’s extinction.
What does it take to bring DX to the enterprise?
DX begins with mapping the journey to long-term success. It’s not achieved by chasing after the latest technology, abrupt changes in direction, or a lack of adequate foresight. It’s achieved by knowing the enterprise’s end goals and staying focused on them in spite of distractions and challenges along the way. Primarily, it takes three prerequisites:
1. It demands a singular focus on the end customer. What do enterprise customers need? Digital needs to be woven into their journey at each step of the way.
2. It takes the right talent. A successful digital transformation initiative requires experienced product managers, data scientists, DevOps engineers, etc, to be on the same team working towards the same goal. Building a team with such talents takes time and effort.
3. It requires staff buy-in. Any attempt to modernize an enterprise on a large scale will be met by at least some resistance, and will require effective change management and staff buy-in to be successful—particularly from senior management. Therefore, DX is ultimately a people issue.
No, enterprises can’t transform themselves.
Digital transformation is a huge undertaking. Often, these are multi-year initiatives that demand changes to the leadership structure, operations structure, and organizational culture, as well as all internal systems and functions (including ERP systems, HR workflows, finance, etc)
Enterprises do have their own in-house development teams, but often these are teams dedicated to working on projects, websites, internal ERP systems, etc. Members of these teams typically do not have any experience undertaking DX initiatives at such a large scale.
So then you can outsource digital transformation?
With the number of discrete functions that make up an enterprise, and the typical size and scale of such organizations, specialized expertise is required to make DX a worthwhile undertaking for them.
But DX is not something that can be outsourced in-full to a third party vendor in-full. DX is about transforming an entire ecosystem from the inside. It needs to begin inside the enterprise, starting with its business model, and extending outwards across operational aspects and the organization’s culture. This takes an internal amalgamation, not a singular motion of outsourcing.
Such an initiative needs people close to the source, those who are familiar with the organization, its culture and processes. Anyone attempting to transform an organization while looking at it from the outside in would be missing important aspects.
Agencies can lead enterprise DX initiatives. But not alone.
Digital transformation for the enterprise requires capable system integration partners to help enterprises plan and launch multi-year initiatives successfully.
A DX team comprised of agency partners with the right mix of capabilities (across strategy, core technology, culture, digital experience design, marketing and sales, etc) can help enterprises think through potential challenges, and enable meaningful transformation across platforms, verticals, and geographies.
What about us?
We support agency affiliates in the digital transformation of their enterprise clients with key ownership of fundamentals, but we’re not a one stop shop for metamorphosis, an agency of record (AOR) for DX at large. There’s no such thing.
Agencies, their affiliates, and enterprises need to work together and align to achieve enterprise digital transformation. Working together with the right capabilities to effectively support digital transformation initiatives is possible. That’s the way to success—and that's much more complicated than outsourcing.