Digital Transformation Through a Lens of Customer Experience

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Brian Solis

Brian Solis, Principal Analyst at Altimeter Group, discusses key findings from his report The 2016 State of Digital Transformation.

Capturing the state of digital transformation has become a staple in my research agenda. Every two years, I survey executives around the world to understand where they are, where they aim to go, and what challenges and opportunities emerge along the way. To give it a baseline, I focus the research beyond the traditional technology and IT story. Instead, I explore digital transformation through a lens of customer experience.

SEE ALSO: Pioneering Connected Customer Experiences is at the Heart of Digital Transformation

In the span of five reports on the subject, I’ve learned that CX is a catalyst for accelerating and unifying change to push companies along the Six Stages of Digital Transformation.

It’s pretty clear by now that executives are exploring the impact and potential of digital on their companies and markets. In my latest report, The 2016 State of Digital Transformation, I surveyed over 500 executives document to what extent these companies change or don’t, why and how quickly.

Each time I study the State of Digital Transformation, I learn that companies are modernising the back and front office with the best of intentions but not necessarily with new perspectives.

As a result, IT continues to operate like a technology partner, marketing sells through creativity and touch-points, support scales automated or dated customer engagement services at a technological arm’s length. Little is done to upgrade business integration, continuity and value propositions through human-centred design.

When I published my first research report on the subject, I specifically reached out to companies lauded for their progressive advancements against digital Darwinism, the rate companies evolve compared to technology and society.

What I learned from the onset was that digital transformation is (or should be) a story of business transformation and people. In the most interesting cases, digital transformation evolved from technology-first approaches to the quest to better understand the new generation of digital customers and employees. Once they do so, they invest in technology, leadership and operational strategies that steered the company in a more relevant and empathetic direction.

Following are some of the highlights from the report.

The Changing Customer

55 per cent of those responsible for digital transformation cite “evolving customer behaviours and preferences” as the primary catalyst for change. At the same time, the number one challenge facing executives (71 per cent) is understanding behaviour or impact of the new customer. Despite more data being available about customers, this statistic (71 per cent) increased from 2014, when only 53 per cent cited understanding the new customer was a significant challenge. Knowing this, it’s all the more surprising, or not, that only half (54 per cent) have completely mapped out the customer journey.

You would think by now that companies would understand the extent we’re living in a mobile-first world. Yet, a mere 20 per cent of leaders surveyed are studying the mobile customer journey/behaviour. That’s right…20 per cent.

This means that many companies are changing without true customer-centricity. More so, you can’t know customer behaviours if you don’t study them and let that inform your next steps.

Top 3 Digital Transformation Initiatives

  • Accelerating innovation (81 per cent)
  • A modernised IT infrastructure with increased agility, flexibility, management, and security (80 per cent)
  • Improving operational agility to more rapidly adapt to change (79 per cent).

Define “Accelerating Innovation”

Altimeter and CapGemini Consulting published two reports on the rise of innovation centres. In the most recent edition, we found that the key objectives for these new innovation centres are:

  • 51 per cent of companies partner with the start-up ecosystem
  • 28 per cent of companies focus on product innovation and/or concept development
  • 13 per cent of companies hope to enhance CX as a result of their innovation centre

Who Owns Digital Transformation?

Digital transformation is largely led by the CMO (34 per cent) and not the CIO/CTO (19 per cent).

What’s the Long-Term Vision of Digital Transformation?

The easy answer is that most companies are focusing on the immediate horizon. Digital transformation appears to be driven by short-term plans. Just 29 per cent of companies have a multi-year roadmap to guide the digital transformation evolution.

The Impact of Customer Experience and Other Functions

As in every report I’ve published in this space, customer experience (CX) remains the top driver of digital transformation.

I also learned that IT and marketing and other functions not only influence technology investments (even without fully understanding customer behaviours and expectations), they must work together to advance along the Six Stages of Digital Transformation.

Where Are You in the Six Stages?

One of the top questions I’m asked is where most companies reside in the “six stages” based on the new data in the latest State Of... report. The answer is that in the broader scope of business transformation, many companies are still early in their development. But please do use this data and the maturity model to guide your next steps and bring about the change you wish to see, and you wish others to see, in your work.

Download the report here and use the data to help make your case for change.