by Randy Pennington

Proving your value in digital transformation’s third wave

Oct 24, 2018
Digital TransformationIT LeadershipTechnology Industry

Digital transformation isn’t new. It has been going on for at least 40 years. We are, however, firmly in the middle of digital’s third wave, and it is completely different from what came before. Hear from experts involved in the CX transformation about what you must do to add value in the current environment.

The folks at SEMRush recently shared an interesting statistic with me: Google search for the term “digital transformation” has grown over 1,000 percent in the past 5 years.

I understand that the business is simultaneously enamored by the possibilities of connection and terrified of digital disruption. On the other hand, I can’t remember a time in the last 40 years when digital transformation – the use of computers to augment or replace work – wasn’t underway in one form or another.

Admittedly, my frame of reference is limited by the age at which I first became aware of the computers and their role in automating job tasks. History tells me that breakthroughs and disruption caused by placing all those 1s and 0s into a coding language actually dates back much earlier. The Univac 1, for instance, was delivered to the U.S. Census Bureau in the early 1950s, and American mathematician Norbert Weiner began writing about the potential of computers to create unemployment in manufacturing in the 1950s and 1960s.

Which leads me to these questions: why is this a big deal today, and how can CIOs and CTOs prove their value in the current environment?

Digital transformation waves

From a historical perspective, digital transformation has appeared in distinct waves. The first wave began with the earliest computers used to automate processes, perform internal functions, and make work easier. The focus of the first wave was to make the operation more efficient and productive. The widespread adoption of office computer systems, personal computers and computer-assisted production allowed companies to be faster, better and cheaper.

The second wave expanded this trajectory while adding a new external dimension. Customer Relationship Management (CRM) and supply chain management platforms came of age in the 1980s and 1990s. These platforms allowed organizations to use digital tools to more effectively connect beyond their walls while still providing internal improvements.

Each of these waves was enabled by a combination of Moore’s Law and the Theory of Adjacent Possible.

Fifty plus years of exponential growth in chip capacity has led us to a place of tremendous computing power available to anyone. Likewise, the Theory of Adjacent Possible, which began as a way to understand how biological systems transform, has created an environment where enough factors are in place to enable startling change. We couldn’t reach the second digital wave without the increased computing power predicted by Moore’s Law and the growth of connectivity explained by the Adjacent Possible.

The first and second waves created the job of the CIO and eventually CTO. Computers were these mystical, complex tools that required special skills, and you, my friends and colleagues, held the keys to the kingdom.

Welcome to the digital third wave

The third wave of digital transformation is driven by increased network bandwidth, falling memory costs, cloud computing, the rise of the internet of things, and, most important, the digital customer experience.

From an IT perspective, the third wave elevated the importance of security, specialized job-focused technologies, and cloud-based applications that require less or no on-prem support. Most important, ownership for determining the technology solutions that drive the current wave of digital transformation is shared or even shifting from the CIO and CTO to the Chief Marketing Officer (CMO) or Chief Experience Officer (CXO). A survey of Chief Marketing Officers by IBM revealed that reinventing the customer experience through digital transformation is now recognized as one of the top CMO responsibilities.

The CIO and IT departments still have an important role, and there are organizations where the CXO role reports to the CIO. Regardless of ownership, CIOs are being asked to play a much different role to help integrate the digital and physical environments to create a coordinated customer experience.

I spoke with four CX leaders about how the traditional IT role can create value in this third digital wave. This is the point where I remind everyone that I have no financial relationship with any of the people quoted here. I do believe you will find their perspectives enlightening.

The basics must be right, and they are still important

You earned your stripes in the first and second digital waves with network consistency, leadership on security, enterprise-wide application support, cost control, IT governance, and supporting the desktop. Some of those things are likely to be minimized or go away, but others—like security and governance—will be more important than ever in the new digital world.

Andrew Joiner, CEO of InMoment, a company that helps clients collect and analyze structured and unstructured customer feedback, believes that the technology and core applications previously developed are the foundational pieces for what comes next. CIOs must continually educate and remind decision makers about the importance of those mission critical functions as their companies focus on new tools. 

Joiner goes on to say that, “it is not uncommon for budgets to be squeezed for legacy IT functions. CIOs must continually show the connection between maintaining and upgrading the current infrastructure and the ability to connect with customers.”

In short, if the basics don’t work, cool customer experience tools don’t really matter.

You and your team need a new mindset

More than two-thirds of the respondents to Gartner’s 2017 Customer Experience survey said that their company competes on the basis of the customer experience. That’s why InMoment’s Joiner believes that CX technology will become the next big enterprise platform. The difference is that much if not most of it will be housed and managed in the cloud.

Yoav Schwartz, CEO of cloud-based content experience platform provider Uberflip, says that the CIO’s value in an increasingly cloud-based environment will act as a consultant to the business on what’s possible and how to keep everything (both internal and external technology) secure. He believes that the IT role will focus even more on project management than it does today although the projects are likely to be smaller and more job specific. In addition, expect your role as the internal expert that vets external resources to increase.

The two critical components for third wave digital transformation are speed and security, according to Schwartz. Implementing nimble marketing solutions might not have been important for your success in the past, but it is today.

Harry Chemko, co-founder and CEO of enterprise e-commerce platform provider Elastic Path Software, told me, “Every IT professional will be nimble if the organization’s leaders demand it. The best ones will be nimble because it is the right thing to do for the business. CIOs must adopt the mindset that they help create an ecosystem not manage a platform.”

The business needs you to be a catalyst for new ideas

Adam Hatch, Chief Marketing Officer at FPX, a configure price quote solutions provider, concurs that the role of CIOs and IT departments will continue to shift toward that of digital experience facilitators. From his perspective, technology will play a pivotal role in starting the customer’s buying journey earlier and moving it through to a decision quicker regardless if you operate in the B2C or B2B space.

“The best CIOs,” according to Hatch, “bring ideas about what’s possible to the business. They don’t wait for the business to ask for help or start the transformation process without them. Today’s customer experience technology should make the business sticky and build better relationships with buyers. Facilitating and leading those types of initiatives is completely different that waiting for requirements and building an application.”

Becoming a catalyst for new ideas begins with this question: what can we do now that the technology is available? It ends with a successful implementation.

Hatch believes that companies are often guilty of “buying a car and driving it like a stagecoach.”

In other words, the need for effective change management only increases for the foreseeable future. Becoming a catalyst for ideas must also include optimizing and developing the processes that ensure a solid return on investment.

Elastic Path’s Chemko says that “the best companies will be different in five years than they are today. This stage of digital transformation will not remain static or be the last one we experience. The future will bring business models that don’t yet exist. The CIO must be the catalyst for evolving and implementing the next good idea.”

InMoment’s Joiner sums it up this way, “The Holy Grail of Branding is execution. The experience for most interactions will be digital. The CIO should be the best person in the company at identifying and bringing those solutions to the marketplace.”

CX is about human experiences. So is being an effective CIO or CTO

Each of the three digital experts with whom I spoke mentioned the role of humans, and specifically, human interaction.

Hatch, the Chief Marketing Officer at FPX says, “Sometimes the best solution isn’t digital.”

Uberflip’s Yoav Schwartz emphasized that “there must be absolute alignment between the CMO and the CIO. The CIO must know what the CMO needs to accomplish and create an environment where that person can succeed.”

Andrew Joiner of InMoment reminded me that most of the systems that deliver a compelling customer experience are designed by humans.

Your company’s marketing team owns the look and feel for delivering amazing customer experiences. You, the CIO or CTO, own the process for delivering it. The relationship between the CIO and the CMO is really not that much different than your company’s relationships with your customers. It must be built on trust, mutual respect, and shared goals. You can establish processes and systems to ensure that the transactions happen, but in the end, it is up to humans to connect.

There is a fourth digital wave on the horizon. That, however, is a story for another time. Until then, an old French children’s riddle provides perspective on where we are today:

A pond has one lily pad in it today. The number of lily pads in the pond doubles every day, and on day 30 the pond is completely full. On what day is the pond half full of lily pads?

Day 29 is the answer, and it is an excellent way to describe the state of digital transformation today. It started decades ago, and now the third wave is upon us. The best technology leaders will think, act and perform differently to navigate and flourish.