Transformation and Disruption – avoiding early pitfalls

Everyone talks about Transformation and Disruption – almost universally ambiguously as “Cloud”. So, using core research from DXC its Digital Transformation Unit, and its Leading Edge Forum , I wanted to clear some of this confusion and most importantly ensure that when an Enterprise considers “Transformation” it does it with the right backdrop

The risk and danger of blog posts like this is that they may be an interesting read but from a real business perspective it could leave a summary of “that’s great but what do I really do now” and of course the evidential “how could DXC help…”

Using the DXC Digital Transformation Agenda as a core blueprint, I will focus on a 2×2 Operating Model: Architecture as Strategy which defines the two axis of business process standardisation and business process integration.

However, before I discuss Transformation, I want to clear the air on “Disruption”. It will often be said that disruption is universal and there is no Industry that is not being affected.  Whilst at a superficial level this may be correct, in reality (and backed up by research), the level of disruption will vary because of two core dimension.. Firstly, disruption is both significant and high only where the level of risk is relatively low.  Furthermore, where disruption is effecting the physical world is having a more significant effect to that in the IT world. So significant disruption is observed in taxis, hotels, travel, retail stores, and high levels of disruption in music, books, TV, magazines etc.  However, in those industries with relatively high risk – banking, healthcare, law, accounting, regardless of whether its in the physical or computer world, the level of disruption is still relatively low; although once (it could be considered when not if) these industries have managed the risk, the effects will be the most significant of all e.g. autonomous cars, block chain, cyber warfare.

So, on the basis that an organisation considers its need to Transform, lets be clear what this means. Using the DXC blueprint of the 2×2 model: business process standardisation and business process integration there are 4 states:

– Diversified (low standardisation, low integration) – this means there are individual profit centres for services, there is local innovation and these can be quick to reach to changes. It is simple to acquire and divest units and there will tend to be multiple solutions for many instances.

– Co-ordinated(low standardisation, highintegration) – this is where there will be a seamless customer service and intimacy, there will be a shared view of the customer and an end to end value chain with no silos. It will be fast to market using existing integrated channels. There will be multiple solutions but there will be standardised output

– Unified (high standardisation, high integration) – there will be a single owner (the highlander principle i.e. being the “one”); global change can be implemented quickly, there is lower cost and its fully integrated.  There is a single solution for anything with one output

– Replicated – (high standardisation, low integration) there is lower cost through synergies, it will leverage purchasing power through economies of scale; there will be a common and predictable operation and freedom to innovate with customers. There will be a single solution for many instances driven by local flexibility

Typically an organisation will start in the low integration and low standardisation state (diversified) but aspire to reach the Unified state; either via a co-ordinated or replicated route.

This sounds great, there is now a target state and even some transitionary steps.

All too often, it is the IT Department which is initiating this business case and will commence accordingly with an Infrastructure assessment

However, what DXC has recognised is there are two types of Transformation: aptly called Type 1 and Type 2

When looking at what Transformation is,  it can be considered to be a layered set of changes to the following areas:

Infrastructure

Applications

Information

Business Process

Strategy

Type 1 Transformation means staying within the Diversified model and establishing an efficient shared services for IT. This is where most IT projects start (and finish).  There will be a glass ceiling in a Type 1 Transformation as it is typically run by the IT department with a resultant weak Enterprise Architecture, and diversified IT Governance.

Type 2 means the Operating Model is Transformed, Processes and Information is managed, Applications are simplified and Infrastructure is in shared services. It will mean a successful transformation to a different operating model (coordinate, unified or replicated). Culture change in IT becomes business focused. The Business Architecture will define the priorities and the IT Architecture will define the “how”. Application de-deduplication will be driven by process de-duplication. Effectively this is a full Enterprise Transformation.

This doesn’t mean “Type 1 bad, Type 2 good”, but more means, make sure you know what you are asking for.  Don’t expect the benefits and change of a Type 2 transformation by using a Type 1 transformation plan.  Type 2 is definitely much much harder but that should be expected as the benefits are significantly greater.

Of course this is only the beginning, in order for an Enterprise to transform, there are number of significant activities it needs to follow.  It needs to follow some form of “Flight plan” i.e. looking at current to future state within a digital context, critical success factors, the change journey and the value assessment (see future reference to DXC Digital Transformation) , and one of its core changes will be to successfully scale its agile way of working.  (see my next blog on Scaled Agile part 2; scaled agile part 1 is here:….https://wordpress.com/post/neilfaganblog.wordpress.com/298)

 

 

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