Article Synopsis :
“Operationalizing Digital Transformation: New Insights Into Making Digital Transformation Work” from Harvard Business Review, sponsored by XL Catlin, provides a global snapshot of how digital transformation is rolling out across industries.
The results show that front-runners in operational transformation via technology may have a significant lead over a larger group of laggards—companies that haven’t wholeheartedly committed to digital transformation or have felt hindered by too many daunting obstacles. But despite slower starts, persistence is prevalent as eighty percent of those surveyed agree that the biggest risk associated with digital transformation is not embracing it. Other key findings include:
- Digital transformation leaders use digital technology not only on the front lines, to get closer to customers, but also behind the scenes to more tightly integrate supply chains and distribution networks, and to improve operations.
- Leaders are quicker to adopt digital technology, more willing to pay for it, and more amenable to hiring new employees to secure the skills needed to take advantage of it.
- Leaders more readily embrace an open organizational structure in which data is widely shared not only internally but also with external partners.
- Leaders have executive teams that champion digital initiatives and have a vision for how digitization can transform their companies.
No two companies will benefit from exactly the same digital strategy. But leaders adopt common approaches, as outlined above.
The vast majority of survey respondents—81 percent—say they plan to boost their spending on technology over the next two years as they fight to remain competitive. The challenge, of course, will be to spend that money wisely, on the right technologies, as well as the highly-skilled peopled required for implementation, across the traditional front, middle and back offices.
To understand where companies are and aren’t realizing the full benefit of digitization, it helps to know what they want from it. Corporate executives say the five most important benefits they seek are an improved customer experience (74%), better profitability (73%), greater revenues (71%), increased insight into customer needs and expectations (70%), and lower costs (60%).
Sadly, far fewer than 50% of respondents report success in any one of these five areas. Why? Executives cite a familiar litany of obstacles, including the need to replace legacy information systems and the challenge of having siloed operations and information systems. They also blame budgetary constraints, a lack of vision, and a lack of employees skilled in the application of digital technology. Concerns over digital risk (from data breaches, for example), are also a factor.
Leaders think and behave differently than laggards in the following ways:
- At digital transformation leaders, senior executive teams are more likely to provide buy-in and support for digital capabilities, and to have a vision for how digital can transform their companies.
- Digital transformation leaders are quicker to adopt digital technology and spend more on it, and are more amenable to seeking out and hiring workers with the skills to take advantage of the technology.
- Leaders are more likely to use metrics to pinpoint interdependencies between functional areas involved in digital business.
- Finally, by a wide margin, leaders are more likely to believe that becoming a digital business requires a flatter, more open organization, one that shares data not only internally but also with external partners such as suppliers and distributors.
Related to the last point, creating a flatter, more sharing organization depends not just on getting the enabling technology right, but on getting the human side right, too, and that means getting past turf wars and taming internal politics.
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Digital Insurer's CommentsDigital leaders seek to leverage technology not only in sales and marketing but also in operations, where the opportunities may be even greater. They’re willing to pay for digital technology, and to seek out and hire employees with the skill sets needed to take advantage of that technology. Digital leaders work to share information broadly across the enterprise and with their supply chain and distribution network partners, recognizing that the benefits of digitization can grow exponentially when the entire organization works together.
Does this sound like you? If you’re the typical legacy insurer, probably not. This paper offers some excellent ideas for getting from here to there.
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