The Digital revolution is fast and waits for no one. In the last few decades, digital technologies have changed the world in so many ways. The wearable tech we have in our pockets and on our wrists prove that we live in the digital age and experience digital transformation on a daily basis. According to estimates, around 85% of U.S. citizens use products with digital or AI elements every day.
The increasing frequency in which digital technologies are used in everyday life has forced enterprises to transform themselves and become (partially or fully) digital businesses. Companies have done this to improve the overall customer experience, gain a competitive advantage, and keep up with technological advancements.
Developing and implementing a solid digital transformation strategy is a challenging task. To make things much more manageable, companies (especially non-tech companies) are opting for the help of a digital transformation consultant. There is a lot to consider in making the important decision to invite a third party into your business. You will want to hire someone reputable and experienced whom you can trust. So, what does a digital transformation consultant do? What should you look for in a consultant? Does your company operate within an industry in which digital transformation consulting services are relevant?
Types of Digital Transformation
There are four types of digital transformation – business model, business process, cultural/organizational, and domain transformation. Typically, we see enterprises focused exclusively on organizational or process transformation, but failing to address all of them leaves a lot of value on the table.
Another important thing to remember is that digital transformation is multidimensional, which means that it must be executed collectively. It must involve the Chief Digital Officer or Chief Information Officer and the CEO, as well as business and strategic leadership. Too many companies wrongly believe that the digital transformation journey must begin with cultural/organizational transformation. Teaching the enterprise to be more digital, agile, and to prioritize innovation is important, but it has been shown that companies that first pursue business transformation initiatives see greater success.
- Business model transformation
Many companies decide to pursue digitalization to move past their traditional business models. Business model transformations are focused on fundamental building blocks of how value is delivered in a specific industry. Some famous examples of this type of transformation are Uber’s reinvention of the taxi industry, Apple’s remodel of music delivery, and Netflix’s regeneration of video distribution.
- Business process transformation
Corporate activity is mostly focused on business processes – APIs, analytics, machine learning, data, and other technologies offer companies new ways to reinvent their business processes. The aim of transforming business processes is to reduce cycle times, lower costs, or increase quality. For example, companies implement robotic process automation to streamline back-office operations such as legal and accounting. Adopting technology in business process areas is becoming table-stakes because it can create significant value.
- Cultural/organizational transformation.
Redefining organizational capabilities, mindsets, talent, and processes for the digital world is necessary for full, long-term digital transformation. Top-notch organizations recognize that digital requires agile workflows, greater reliance on business ecosystems, decentralized decision-making, and a bias toward learning and testing. They also take active steps to bring change to their enterprises.
- Domain transformation
In this area, there is an enormous opportunity but surprisingly little focus. New technology is blurring industry boundaries, redefining products and services, and creating new arrays of non-traditional competitors. Executives should appreciate the opportunity those new technologies provide to unlock business beyond the markets they currently serve. Domain transformation can create new value.
What Does a Digital Transformation Consultant Do
Education and Skills
Like other types of consultants, a digital transformation consultant aims to make work processes run more smoothly. What is specific to digital transformation, is that consultants work to enhance the tech components of an organization. They evaluate where technology should be and/or where it is already deployed to provide better products/services and enhance the customer experience.
Their essential skills are technical aptitudes. Digital transformation consultants have experience with different programming languages, such as SQL, C++, or Java, along with spreadsheet and word processing programs. Furthermore, they are experienced in enterprise integration and website management, meaning that they know their way around CSS and HTML. DT consultants also have critical thinking abilities that help them to resolve technical issues and improve application performance. They are excellent communicators who provide an exceptional customer experience. Consultants also have a sense of adaptability because they must keep track of new and emerging technologies.
Roles and Responsibilities
A digital transformation consultant will analyze an organization’s infrastructure and find gaps in service to find ways to enhance its technical performance. They are focused on increasing an enterprise’s performance as well as meeting long-term strategic goals. Digital transformation consultants can work directly for a consulting company or as independent contractors. They collaborate with multiple departments and work with technical personnel, digital marketing personnel, product managers, and service personnel. These consultants will also need to build a relationship with the company’s management to get approval for recommendations that they provide on the company’s best work processes.
Creating a Digital Transformation Roadmap
Digital transformation consultants are responsible for developing and implementing a high-level roadmap for their client’s digital transformation. This roadmap (based on the business architecture concept) is made of four stages:
- Assess the internal and external situation
- Develop strategy and assess its business impacts
- Architect a business solution
- Establish initiatives and deploy the solution
Each of these four phases comprises six activities that may overlap, but it is essential to keep all of them in sequential order.
- Assess the internal and external situation
– Analyzing trends and external forces. A digital transformation consultant or digital consulting firm analyzes trends and external forces to list specific and broader factors that influence the company. More overall factors include environmental, legal, technological, social, economic, and political factors. Typical characteristics include the external environment that directly affects the organization’s strategy and operations, such as competitive rivalry, the threat of substitute products and services, barriers to entry for newcomers, customer power, supplier power, etc.
– Identifying and prioritizing customers’ needs and wants. Identifying the stakeholders, understanding their needs, and prioritizing them is the next step. Customers’ met and unmet needs always have a higher priority.
– Analyzing technologies suitable to support customer experience enhancement. The next step is understanding the entire spectrum of digital tech and identifying the most promising ones. Consultants choose the technology based on the customers’ needs and the organization’s capabilities that need improvement.
– Analyzing current business and operating model. This model should be analyzed with the goal to meet the customers’ needs. The business model shows how the value is created, captured, and delivered. The operating model explains the creation of the business model (how resources are connected to create value).
– Analyzing culture and potential for change. Digital transformation consultants need to understand the organizational culture, motivation, competencies, reward system, and their potential to adjust to the new reality of using digital technology. They are responsible for change management, which is one of the pillars of effective digital transformation.
– Mapping and cross-mapping core and extended architectural domains. Consultants map each domain to identify the relationship between them.
- Develop business strategy and assess its impacts
– Defining business scenarios. Uncertainty is always a part of the planning effort. Digital business transformation consultants develop scenarios with varying degrees of probability to help management perceive the company’s potential future in alternative ways.
– Defining technologies to be used and target customer segments.
– Developing the desired business model.
– Developing a goal/objective hierarchical system. The whole goal/objective hierarchy must be mapped for the company to understand its strategy.
– Analyzing objectives and business architecture impact.
– Analyzing business architecture and IT architecture impact.
- Architect the to-be business solution
– The goal/objective hierarchy and to-be business model is the foundation upon which the entire to-be business architecture should be mapped and cross-mapped. The digital transformation consultant is there to help visualize the to-be business architecture.
– Developing to-be organizational culture and people practices.
– Designing to-be organization structure.
– Designing to-be value chain and decomposing it into detailed processes.
– Visualizing to-be IT architecture.
– Analyzing current state and target state transformation.
- Establish transformation initiatives and deploy the solution
– Defining each digital transformation initiative based on the objectives. Digital transformation consultants help make the specific choices to achieve each of the pre-defined objectives from the goal/objective hierarchy.
– Prioritizing initiatives.
– Defining KPIs and creating imitative measurement criteria.
– Establishing a project plan. The consultant translates each initiative into a project plan that defines the timeline, people involved, scope, objective, risks, etc.
– Monitoring progress, deploying corrective measures and evaluating the level of success. The digital transformation consultant evaluates the performance of the transformation journey and communicates it to all stakeholders. This is done at the very end of the process. However, everyone needs to understand that this isn’t the end of the transformation journey. It is another stop on the road to long-term transformation.
A comprehensive digital strategy will provide companies valuable insights that were not available during the time of legacy systems. It will also bring more efficient operational processes and could open new sources of revenue. Experienced digital transformation consultants and digital transformation consulting companies can develop and implement comprehensive digital strategies for their clients. Furthermore, they can communicate the digital strategy’s value to the company’s leaders and outline the exact benefits.
Digital transformation may seem overwhelming, vague, or scary, but taking small steps in the right direction is already a good start. The i4 Group provides extensive digital transformation services and can accompany you on this journey.