COVER STORY: Digital transformation versus digital optimisation

While digital transformation has become a buzzword incorrectly used to describe incremental technology updates, its true meaning is to fundamentally change business operations by leveraging digital.

Despite what marketers would have you believe, true digital transformation does not occur simply from one customer purchasing a technology solution from one vendor. A true digital transformation spans multiple tools, across many areas of the business, supported by a cultural transformation to ensure its success.

In Digital Nation Australia’s documentary this week Neil Osmond, distinguished VP, research and advisory at Gartner clarified the difference between transformation and optimisation.

“Most organisations aren't really transforming in the sense of something net new or net capability new. What they're often doing is optimising what they do. So, it's actually digital optimisation in many cases,” said Osmond.

Cultural and behavioural change

Transformation, however, relies not just on technology, but on people process, and organisational culture.

“[Digital transformations] are all about people, and the way of working and the mindset and behaviour,” he said.

“If you think about the programmes of work that many have started, they've often looked at it from a technology point of view, that ‘We need to modernise our platforms and our systems. While that's important, the danger is that you invest all that money in shiny new technology, but then you wrap it with all the old ways of working and the old ways of thinking, and then you don't unlock any new capability.”

According to a report by McKinsey and Company, the guiding principles of a digital transformation occur in three stages: Defining value, launch and acceleration, and scaling up.

As part of defining value, securing senior management commitment for a digital transformation project is critical in ensuring its success. The CEO needs to communicate the vision of the digital transformation as an “unquestionable priority” for the business, according to the authors. 

For organisations to support the implementation of successful, large-scale transformation projects, Gartner’s Osmond believes that organisations need to start by defining their ambition.

“The first thing we need to do is get a really clear, concise view of what digital is for the organisation, what the ambition is, what the ‘from’ and ‘to’ and ‘because’ story is. Once you do that, that will then help the transformation land in terms of a narrative that you can tell to the organisation and will make it sticky, that will make the change stick.”

Stage two requires a high-calibre launch team and the nurturing of a digital culture, according to McKinsey. Osmond states that coherency is needed for true behavioural change.

“You need to keep it coherent. Make sure that there are some well-defined principles, almost like a playbook. Unless you have those principles and guardrails to make it coherent in the moment, people are going to default back to what they used to do.”

Lastly, employees need to be coached through the change, to ensure that the organisation can build new capabilities and adopt a new operating model. 

“Having dedicated resources who can help people understand change in working, who can help build the self-service capabilities that they need so they can make the changes and understand what information is there,” said Osmond.

“Organisations, first of all at a people level, understand that if they can lift the digital dexterity of the employees and start to democratise how technology is delivered, that's when digital transformation takes off.”

Bridging the digital divide

Digital transformation projects can have real-world social impacts, exemplified through Kimberley Aboriginal Medical Services’ whole network infrastructure upgrade since NBN.
Digital Nation Australia spoke to Shane Dahlstrom, executive IT manager at Kimberley Aboriginal Medical Services about the impact on remote communities of the implementation of NBN satellite infrastructure across the region.

Prior to the NBN satellite services being available in remote areas, Dahlstrom said that video telehealth was largely inaccessible due to high expense and low quality.

“We were attempting to work with external vendors to engage video telehealth, but they were very expensive services. And the quality just wasn't there. So, we weren't getting clinical buy-in, if you will. The minute one thing sort of goes wrong, it's very easy for people to be discouraged from using video technology in places where it's just too hard,” said Dahlstrom.

Since deploying the Visionflex ProEX telehealth system across the region, the use of tools like Skype for Business and Microsoft Teams has become the norm.

“It's enabled us to get our clinicians to use the technology without fear, and accept the change more readily because the services are more consistent. We're able to put more services in place for redundancy so there are less failures and less trouble at the other end. That all results in a doctor being more likely to jump on a video call and use the equipment,” he said.

Some of the improved health impacts for the community as a result of the project include early diagnosis leading to better treatment success.

“The difference now is obviously the ability to potentially remotely diagnose has increased the success of treatment, it is incomparable to five years ago, six years ago.”

Electronic sharing of patient information has also improved patient care said Dahlstrom.
“You need access to the patient records. You've got to be on the ground and experience it and then not be able to access something on your mobile phone, not be able to talk to your family to truly grasp the importance of it. It's not equitable for people that live out here.”

Transformation in the metaverse

Looking over the horizon, Nick Abrahams, global co-leader digital transformation at Norton Rose Fulbright believes that data will be core to digital transformation, especially as the internet evolves into its third iteration.

“How we integrate the data that we have from our existing Web2 platforms, with the extraordinary insights we get from Web3, will be critical to any significant digital transformation, particularly if we look to then flip our exposure to the customer into a three-dimensional Metaverse type experience,” said Abrahams.

“At the moment crypto wallets are I think, somewhat undervalued as a marketing opportunity. But we're seeing some clever marketers see it as a way of getting closer to their customers. And so, air-dropping particular NFTs directly to wallets and crypto wallets will be the social passport of the next generation.”