IT – From just an Enabler to Digital transformation

From marketing, sales, and planning, to managing operations and customer service, all functions are envisioned with digital technologies in mind. It is safe to conclude that digitalization is no longer a mere enabler for business; now, business has become digital by nature!

The use of IT laid the foundation for what we call digital processes today. It is time to move on and accept IT as an integral part of business, not just a siloed function!
Just how far have we come with digitalization? Let's see the initial uses of IT in businesses and the problems they generated.

Initial use of IT

When IT systems were introduced into the business scene, they were typically developed and maintained in-house. The cost of owning and using them was high; hence, they became a tool used for only specific functions and some parts of business operations. 

The low labour costs and fewer IT personnel prohibited the proliferation of IT installations in the early days, and this limited adoption of IT and other digital channels.

Evolution of IT to Digital Transformation

The turn of the century brought about the introduction of the internet and associated software. With the ever-expanding business operations and an increase in IT-skilled personnel, organizations began to see IT systems as an alternate solution to constantly increasing their workforce. 

In no time, businesses realized the benefits of having IT systems to "enable" processes and better manage their operations. 

However, these IT interventions were still pointed toward "pain points" in the value chain. Thus, the proliferation of IT and digital channels in business came with its disadvantages. 

It led to broken processes and resulted in people working in silos. With more and more functions adopting point solutions for their pain points and use cases, business operations began to have lots of isolated processes. This isolation created what we call the Silo Mentality.

The Silo Mentality

The Silo Mentality occurs when different sectors of the same organization are unwilling to work smoothly with one another. IT can be considered as one of the root causes of this silo mentality.

This mindset can become so deeply ingrained that certain departments refuse to share information with other departments, creating an us-against-them scenario in organizations.

Operational Silos

IT played an all-important role in the creation of operational silos. The evolution of IT systems led to concentrated growth in specific areas of operations within an organization called "silos". This resulted in operations with incoherent and broken processes across the organization. 

While operational silos don't look so damaging at first glance, they inadvertently undermine overall productivity, lower employee morale, and erode a positive work culture. Operational silos don't necessarily occur because staff are trying to make life difficult; it simply occurs when staff prioritize their team members and getting work done over all other members of the organization. Subconsciously, this builds up, and silos arise in several sectors of the organization.

A cohesive leadership team will foster empowerment, build trust, and help managers shift from a mindset of "my department" to one of "our organization." 

Any innovation or technology, no matter how ground-breaking, must still function in a connected, integrated, and flexible environment.

Let's look at different expressions of operational silos

Process silos arise when communication and information barriers arise across departmental processes, leading to slow turnaround times, resulting in rework, and creating animosity among employees.

As more processes go digital, the complete process value chain is disconnected, allowing different processes and sub-processes to become isolated and misaligned. 

A good example of process silos can be seen in the finance departments of many organizations. While employees know this department exists, they usually do not know exactly what goes on in there or the KPIs this department measures to boost company productivity.

It is often in tight schedules or deadlines that employees ask questions about where to submit a particular document, the people to be notified, and the duration of the process. This obviously leads to a slowdown of work that could have been managed much more effectively. 

A simple, straightforward process that is regularly communicated and supported by a guided, self-service work system can lessen this confusion. These transparent, automated systems reduce silos by making organizational procedures clearer — Everyone knows what to do whenever they need anything.

People Silos often arise from process silos. Business processes are not designed to operate in a human-system environment. Prior to disruption, processes are designed for people-to-people interaction. When the processes become isolated, so do people. Over time, people become disconnected and lose the agility the business expects in changing times.

A good example of people silos is the "it's not my job" mentality that many employees have, causing them to ignore company goals in pursuit of more department-oriented results.

People silos are typically the result of a myopic leadership team, and providing leaders that carve out unified goals and vision helps to reduce these problems.

Data Silos arise from the constant and automatic build-up of data within an organization, often without being noticed.

Unlike the early days when data was not considered valuable to businesses, the era of digitalization has brought the numerous uses of data in business operations to the fore. Organizations then began to face the challenge that data captured for specific functions wasn’t visible to everyone.

For example, so much data can be gathered for the financial department of an organization, with so much of the data being irrelevant. Where is this data stored, and what are the requirements for sifting through it? No one seems to know.

Soon, this data stacks up somewhere to the point where it becomes difficult to glean the necessary information for the organization. At this point, it becomes a problem.

Data silos often arise quickly and unintentionally. Every stakeholder must be on deck to prevent data accumulation and ensure information clarity.

While it is true that IT started as an isolated solution for specific business challenges, today, it offers way more than that. IT is not about supporting certain areas of operation in businesses; it is now about revolving the entire business model around it. It's the digital age!

Organizations fail to understand that digital transformation is beyond installing a new IT solution to fix a specific problem. Sadly, this siloed mentality still exists in most organizations because they still see IT as an isolated solution to optimize and automate current operations. It's like focusing on the trees and missing out on the forest. This approach gives short-term relief but does not address the larger transformation businesses must undergo. Eventually, it leads to further silos and disconnected operations.

Businesses that fail to adopt digitalization will eventually perish sooner or later. As a result, there's a need for a rethinking of business processes and ideals to align with digital users.

Implementing IT on a large scale isn't done by just waiting around. It is achieved by actively collaborating with leading business experts to generate ideas on how to use these technologies for the company's growth.

What should businesses do now? 

While digital transformation involves many technological changes, it also involves many great cultural changes within the organization. Basically, digital transformation affects the internal operating models of a business. Here are the basic ways to scale up your organization's digitalization.

• The very first step is to assess the digital maturity of the company. A quick study of your business functions and how they operate can reveal a lot of insights. Surprisingly, even some of the biggest organizations still give approvals with emails or paper and seals. In the digital age, this is not good enough. Knowing where your organization stands with respect to digitalization is a good start.
• Second, organizations should have a digital strategy to take them from their current state to a fully digital state. It should be worthy of note that digitalization isn't a particular state or end game; it is a journey. Hence, every organization should come up with a digital strategy, a roadmap, and a plan.
• Third, organizations need to redesign their internal business procedures and begin gap-opportunity analyses at every level. Top-down and bottom-up approaches for digital initiatives can be used simultaneously. A top-down strategy would align all the departments with a common digital strategy and high-level guidelines, while the bottom-up approach gives individual departments license to establish their functions and work out a roadmap to accomplish that.
  
  Utilizing only one of these strategies can quickly lead to silos again, where each department ends up with isolated business applications that lead to digital chaos. For example, the sales and production teams might have their respective digital business applications without having a clear picture of each other's goals. Also, certain departments might implement a tool or product which may be the best for a problem statement but does not fit with the overall digital strategy.  
• Fourth, organizations should get a central digital team to manage the digital journey and act as a bridge between management and business teams. The team should be tasked with implementing the company's digital strategy. 
  
  This team is different from the IT department. In certain organizations, this team is referred to as the Centre of Excellence (COE), the innovation team, or the digital transformation office. The team helps to:
  
  (i) Identify the current state of digitalization
  (ii) Determine where silos exist and how they impact company progress, 
  (iii) Create a roadmap toward full-scale digitalization, 
  (iv) Govern and support departments to align with digital strategy, amongst other things.
• Fifth, leapfrog with digital initiatives. The good news is that there are tools now available which can really help fast-track your transformation efforts. Today, customers and partners are already digitally aware, and digital adoption by external parties will be easier and readily welcomed. 
  
  Tools like Intelligent automation, Low–Code, Intelligent document processing, Business Intelligence tools, and Cloud products can help to quickly convert an existing not-so digital process into a digital-first process.

Conclusion

The role of technology in modern business operations has become too significant to be ignored. IT is no longer operated as a central department that dictates to companies. Rather, it is now an integral part of every department within an organization. This is the true meaning of digitalization. Rather than wait for things to be developed by a central IT department, businesses can seize the initiative and take control of the functionality themselves.

 To achieve great success with their digital transformation process, businesses must understand that digitalization is first a mentality shift. It is not the implementation of a single IT application; it is a change in perspective that sees digital processes as more than just a business enabler but a crucial component of business strategy. 

The great news is it's never too late to start. Leaders with an older generation mindset may fail to prioritize digital transformation, but it would always lead to a struggle to survive with their outdated processes and methods in this predominantly digital era. 

It is like fighting with a foot cavalry against a modern air force! IT is here to stay.