Enterprise digital transformation in 2021: top 5 trends and 6 challenges
For around half of all organizations in the US and Europe, the COVID-19 pandemic has served as a driver to double digital transformation efforts due to work-from-home policies and an increased willingness to move to cloud solutions.
So, what is enterprise digital transformation?
Over the 20 years we’ve been building software solutions, we’ve designed and worked on hundreds of enterprise digital transformations. When an enterprise undergoes a major technology upgrade, it should impact the very core of how that business operates. Without embracing that shift, it can be challenging for the transformation to be successful.
The benefits of digital transformation benefits are not only found from adopting technological advancement to achieve better business outcomes. It’s also about utilizing data, establishing and accelerating processes, and fostering organizational change.
This need for change often beings as a need to migrate from a legacy system or move assets to a cloud solution. More often than not, in the process of searching for a vendor or mapping out a plan, it turns out that the transformation should start at the strategy level and spread enterprise-wide. Navigation of the transformation can only be considered successful when the adopted innovation starts bearing fruit.
Why does digital enterprise transformation matter?
In the 7th episode of Forte Connect, we discussed whether digital transformation will still be a priority during and after the COVID-19 pandemic. Our Chief Services Officer (and an expert on all things digital innovation) C.J. Montano provided his explanation on why digital transformation for enterprises is more relevant than ever:
Digital transformation is as valid as ever, if not even more valid now that it's tied to innovation and the priority of innovating, pivoting, or disrupting. Think of the value you can achieve just through automation, from owning your product to understanding how to better serve your clients through digital channels.
I think digital transformation is tough sometimes because a lot of organizations have very specific definitions of the state of being in the company and how they rely on their digital assets. With Forte Group being an organization that helps with custom software development and business agility through technology, digital transformation is always occurring with our clients.
“It's amazing how sometimes when there isn’t a digital transformation framework, everyone's forced to think creatively and collaboratively. Obviously, a lot of that has to do with the digital transformation that's been happening for years generally in the industry, but people adapt so well. I think that one of the things that goes along with trusting your employees is giving them a goal and giving them a vision, because it's a lot easier to trust or make somebody accountable or responsible for something when they have an understanding of what they're trying to accomplish and why they're trying to accomplish it.
For more information on why enterprise digital transformation is important, watch this video: Forte Connect #7: Should digital transformation still be a priority post-pandemic?
Challenges impeding the digital transformation of enterprises
The World Economic Forum estimates that “Industry 4.0,” or the fourth industrial revolution, has the potential to contribute more than $20 trillion to the global GDP by the end of 2021. However, to achieve such numbers, organizations need to focus their efforts across multiple standpoints. These include: preparing the workforce, implementing the appropriate IT infrastructure, and adjusting business processes, all without discontinuing day-to-day operations. Here are the main five hurdles to digital transformation that enterprises need to be aware of:
1. Organizational and team change
Before transformation of any kind can occur, top management leaders should ask themselves whether their employees are ready for digitalization. In the years since digital transformation became a buzzword, organizational change has been named the number one concern and challenge among executives and project teams who have tested the waters of digital transformation.
2. Data overflow
One of the main fears impeding enterprise-wide transformation is the amount of data that seems ineligible for migration. Legacy data is often too important, massive, and irreplaceable to allow anything to happen to it while moving to a new enterprise resource planning (ERP) system. This fear can be remedied by cleansing and mapping the data to avoid compromising security.
3. Strategy misalignment
How can an organization scale up and become agile? Many business leaders, CXOs, and project teams struggle with the responsibilities scattered among unmotivated employees and undefined values. Unfortunately, the digital transformations in enterprises that fail to communicate their broader strategic objectives to all levels of employees rarely succeed.
4. Overcomplicated business processes
Organizations that rush into transformation for the sake of innovation struggle more than those who take the time required to clarify what they want their business processes to look like. Those that rely more on “best practices” and “off -the-shelf” software functionality to drive their transformations tend to experience the most difficulties.
5. Difficulties while choosing an IT vendor
Companies that completely outsource their deployments to an ERP system integrator or value-added reseller were more likely to experience challenges than those that took more active ownership of their transformations. Technology configuration and integration is a common challenge, but it’s not nearly as common as other factors.
When selecting a partner for your digital transformation efforts, it’s important that they be just that — your partner in creating value. Defining value means having the proper goals and KPIs in place. Once you’ve defined, at a high level, where you want to go, it’s much easier to plot the route to get there.
To find out more about challenges that can impede digital transformation, see Ask us anything: Your digital product development strategy questions answered
6 trends driving digital enterprise transformation for 2022 and beyond
1. Work from home will stay
While digital connectivity already allowed us to stay productive in the comfort of our homes long before the pandemic hit, lockdowns just accelerated the trend of going remote. Companies and technology providers will continue to develop new ways to boost productivity with various software and hardware, while the workforce recalibrates its work-life balance and productivity levels.
2. Cloud adoption will accelerate
The pandemic will accelerate the ongoing cloud trend in the coming years. There are few reasons to stay on-premise. The remote workforce, disrupted supply chains, and data need to be distributed naturally between various ERP systems.
3. Cybersecurity will be critical (again)
Now that the list of access points to sensitive data grows along with the number of home-based workstations, cybersecurity threats are getting even more real. While away from the lulling sense of security in the office, employees are more prone to face cybersecurity breaches and less ready to manage them.
4. Program management will overpower project management
2020 taught us that the future is unpredictable and that the survival of the fittest on the market will be defined through flexibility. There simply aren’t the resources to continue supporting ineffective and rigid legacy solutions. To terminate inflexible software and switch to a more technologically advanced operating model, the skill to manage such transformation will be in high demand.
5. System integration skills will be in demand
The demand for ERP and customer relationship management (CRM) system implementation has skyrocketed since industry players realized there is no way to avoid it if they want to stay competitive. With the demand comes many challenges, such as a shortage of consultants qualified to navigate a system integration. Along with the aforementioned difficulties of matching with a suitable IT services provider, this opens up the possibility for a knowledge drain.
6. Organizations will want to be a part of their solution
Decisiveness is a crucial factor in a rapidly changing environment like the post-pandemic economic fallout. This is why organizations that take charge of their digital transformation instead of mindlessly outsourcing it have more power over its course.
Many organizations come to us after failing to find success with an outsourcing company, often in a worse state than when they began their initiative. By setting concrete goals and asking outcome-based questions at the outset, you’ll be in a better position to succeed with a transformation effort.
It has happened to our clients more than once. In particular, the largest global provider of integrated risk management software ramped up its platform with a custom-built tool for rela-time data analysis and predictive analytics. This allowed the provider to arm its customers with less time-consuming means to identify hazards and guarantee visibility.
The pace of digital transformation of enterprises is only accelerating, and trends like AI, the shift to cloud solutions, and DevOps adoption are fast-tracking these changes. As a result, many enterprises are rushing into digitalization without a clear understanding of their objectives, timelines, or organizational structure. Luckily, digital transformation trends like product ownership, cloud adoption, cybersecurity improvement, program management, and remote work will support organizations in becoming digital-first while maintaining relevance and steady revenue growth.