Successful Strategies of Digital Transformation through Capabilities Innovations

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2 Successful Strategies of Digital Transformation through Capabilities Innovations Hasan Ganny bin Hanif Francis Chairman, AEA Malaysia Chapter

3 Presentation Outline 1 Successful Strategies of Digital Transformation 2 Tea-Break 3 Digital Capabilities 3

4 Drivers of the Future World World Mega Trends in 2050 Transformasi Nasional Digital Innovators + Digital Infrastructure = Digital Disruption 4

5 5

6 Digital Disruption 15 years ago Travel Agents would claim that you cannot book vacations online it needs a personal touch and experience 10 years ago you would not dream of banking online it s not safe 5 years ago few people would buy groceries online 6

7 Explosion of Internet of Things Double the number of devices Source: 7

8 What Gartner Says about Digital Transformation Source of articles: Gartner 8

9 What Gartner Predicts about EA Source of articles: Gartner 9

10 Moving from Era of Automation to Digitalization The Era of Automation The Era of Digitalization From 1980 to 2010 From 2010 onwards Integration Connected 10

11 The Automation/Computerization Era ( ) Technology Focused: new software & hardware for each IT project and IT driven efforts Project Management Focused: time, resources and budget are fixed before the Business Requirements are Captured Challenges: - More than 60% of IT projects failed - High Cost of IT Maintenance i.e. up to 90% of IT budget - It lacks of Business Values for IT Investment - IT becomes Stopper to the Business progression 11

12 The Digitalization Era (Since 2011 onwards) Business Focused: Enterprise Architecture creates a cultural platform for Business & IT Integration through the Digital Enterprise Map Architecture Focused: Digital Architecture development before Project Management Benefits: - IT Projects success - Business & IT Agility - IT shows ROI as Business Investments - IT supports the Business Evolution 12

13 7 steps for Successful Digital Transformation 7 Value Realization & Continuous Improvement 1 Digital Capabilities& Digital Reference Architecture 2 Digital Vision & Readiness Assessment 6 Digital Operational & Change Management Successful Digital Transformation 3 Architecture & Business Requirements 5 Implementation & Governance 4 Roadmap & Migration Planning 13

14 7 steps for Successful Digital Transformation 1 Digital Capabilities & Digital Reference Architecture The first step is to build digital skills competency for the leaders, digital team members, EA owners and project team. Equip your enterprise with digital reference architecture and setting up of the EA tools for central repository and collaboration. 2 Digital Vision & Readiness Assessment Conduct an assessment of your current practice and its driver, goals, needs, and people and technical readiness. Strategy, Motivation and Capabilities views are defined with Digital Principles. 3 Digital Architecture & Business Requirements As-Is and To-Be Domain Architectures are defined starting from Business & Information views, followed by Application and Technology views that becomes the basis for the business requirement for implementation. 4 Digital Roadmap & Migration Planning Gaps and opportunities are consolidated to define the Implementation Roadmap and Migration Planning with portfolio of program and projects with consideration of existing architectures and ICT assets. 14

15 7 steps for Successful Digital Transformation (continue) 5 Implementation & Governance Project Management is the main role in implementation responsible for delivering the project derived previously. This involves the procurement, installation or upgrade of the system and associated activities, such as training, mock go-live, and pilot testing. Digital & EA team handshakes with PMO and play the role of governance. 6 Digital Operational & Change Management The final phase of implementation includes successfully attesting to demonstrating meaningful use of Digital Transformation, and reassessing through measurement what you have learned from training and everyday use of the system. At the same time, the change management programs for competency and digital adoption are implemented. 7 Value Realization & Continuous Improvement Emphasizes continuous evaluation of your practice's goals and needs benefit validation or value realization to continue improving capabilities 15

16 Digital Transformation Through Digital Enterprise Architecture The Mapping of TOGAF 9.1 & ArchiMate Value Realization & Continuous Improvement 1 EA Skills & Digital Reference Architecture Strategy & Motivation Extension 2 Digital Vision & Readiness Assessment 6 Operational & Change Management 3 Business & Information Architecture 5 Implementation & Governance Technology/ Physical Layer 3 3 Application Architecture Technology Architecture 4 Digital Roadmap & Migration Planning Implementation & Migration Extension 16

17 Creating A Digital Implementation Statement of Direction Defining vision and guiding values for digital exploitation Define a business strategy that incorporates the use of digital to achieve business results Defining a digital roadmap/high-level schedule Describing a digital reference architecture Assessing organisation readiness for digital Identifying the skills gaps that need to be filled Managing internal and external expectations Producing a business case that draws this information together with identified and quantified benefits 17

18 Objectives Of Digital Strategy 18

19 Organisation Readiness For Digital Like all major organisation transformation programmes implementing digital initiatives will change the organisation Cross-functional and business process changes Technology delivery changes The organisation must be ready for digital in three ways: Be able to deliver digital initiatives that comprise the strategy Be able to change itself to enable the implementation and operation of digital initiatives Be able to operate digital initiatives Need to assess the current state of the organisation, its readiness for digital and what is needed to achieve the desired state of readiness 19

20 Organisation Readiness For Digital Assessment Framework 20

21 Digital EA Skills 21 21

22 Digital Skills Focus on smarter management of IT investments to maximize ROI Emphasize emerging digital channels to the customer Explore new avenues to keep the value flowing Use digital to drive core business efficiency and effectiveness Create a more coherent and collaborative approach within IT Resources to fund digital investments Understand the powerful role of software and apps Focus on modern software development and delivery methods Exploit APIs for internal speed and efficiency Manage the use of APIs to engage the developer ecosystem 22 22

23 Digital Reference Architecture Digital Reference Architecture defines a template solution for the underlying and enabling technology solutions and components required Reference Architecture defines the target end-state architecture and the set of interim transitional phases required to enable the delivery of the Digital Delivery Roadmap Digital Reference Architecture exists within the context of : Organisation s Enterprise Architecture and other subsidiary architectures Public Sector s Enterprise Architecture and other agency architectures 23

24 Digital Vision Statement About The Organisation s Digital Positioning, Operating Model, Competitors And Customer And Collaborator Needs And Behaviour Digital Strategy Digital Transformation Extending And Exposing Business Processes Outside The Organisation Digital Architecture Future State Application, Data and Technology View To Achieve Digital Operating Status Digital Transformation And Enterprise Architecture The management function that drives digital transformation needs to involve the enterprise architecture function in the design and implementation of digital strategy and organisation, process and policies and the creation of a digital architecture 24

25 Enterprise, Domain and Project Architectures Enterprise (Strategic) Architecture defines and manages overall organisation architecture Domain (Segment) Architecture(s) are subsets of Enterprise Architecture to enable individual business unit/domain objectives and targets to be met Project (Capability) Architecture(s) enable project level objectives to be met 25

26 Digital Strategy In Business, IT and EA Context 26

27 Digital Organisation Capabilities What the organisation needs to be good at in order to develop and deliver on a digital strategy There is substantial overlap between these skills and those of other programme delivery Framework to measure where you are and where you need to be Develop framework in relation to the digital strategy and what you intend to achieve Use to develop plan to address gaps 27

28 Digital Organisation Capabilities 28

29 Example: Capability Map View (example) 29

30 Digital Delivery Roadmap Defines, prioritises and creates an integrated schedule for the delivery of digital functions and related required enabling technologies for a agreed time frame Need to agree the prioritisation process Roadmap is always subject to constraints such as budget, resources Dependencies can be identified and tracked Capability roadmap can be grouped by business area or process group, external party or channel 30

31 Digital Roadmap & Migration Planning Digital Transition And Transformation Digital Architecture And IT Strategy Digital Execution, Delivery and Operations Business Strategy Digital and IT Strategy Digital Capability Delivery Roadmap Vision and Guiding Values for Digital Adoption Organisation Readiness For Digital Digital Solutions Digital Architecture Supporting Solutions Measurement Framework Measurement and Reassessment 31

32 Digital Operation Management & Change Management Systems handed over to operations and includes successfully attesting to demonstrating meaningful use of Digital services Reassessing what have learned from training and everyday use of the system to meet Operational /Service Level Agreement (OLA/SLA) At the same time, the change management programs for digital adoption are implemented Benefits validation or Value realization review is conducted to evaluation the success measure of the Digital transformation Emphasizes continuous evaluation (performance management) of your practice's goals and need post-implementation review and monitor for continuous improvement 32

33 Value Realization & Continuous Improvement Digital Transition And Transformation Digital Architecture And IT Strategy Digital Execution, Delivery and Operations Business Strategy Digital and IT Strategy Digital Capability Delivery Roadmap Vision and Guiding Values for Digital Adoption Organisation Readiness For Digital Digital Solutions Digital Architecture Supporting Solutions Measurement Framework Measurement and Reassessment 33

34 Key Success Factors Establish a new perspective to drive meaningful change. Understand customer values, expectations and behaviors. Assess operational infrastructure and update (or revamp) technologies, processes and policies to support change. Define the purpose of digital transformation, aligning stakeholders (and shareholders) around the new vision and roadmap. Form a dedicated digital experience team with roles/responsibilities/objectives/accountability clearly defined. Gather data and apply insights toward strategy to guide digital evolution. Re-evaluate front and back-end systems for a seamless, integrated and native customer (and ultimately employee) experience. Implement, learn and adapt to steer ongoing digital transformation and customer experience work. 34

35 Tea Break 35

36 Presentation Outline 1 Successful Strategies of Digital Transformation 2 Tea-Break 3 Digital Capabilities 36

37 Strategy, not Technology, Drives Digital Transformation? Source: 1) IBM Institute for Business Value, Redefining Competition, Insights from Global C-suite Study The CEO Perspective, 2015 Source: 2) Harvard Business Review Analytic Services, The Ecosystem Equation: Competing in the Connected Economy,

38 Strategy, not Technology, Drives Digital Transformation Digital success isn t all about technology: The 2015 Digital Business Global Executive Study and Research Project by MIT Sloan Management Review and Deloitte identifies strategy as the key driver in the digital arena. Maturing digital businesses are focused on integrating digital technologies, such as social, mobile, analytics and cloud (SMAC), in the service of transforming how their businesses work. Less-mature digital businesses are focused on solving discrete business problems with individual digital technologies. Digital transformation is a specialized type of business transformation where IT plays a dominant role. 38

39 The Ability to Digitally Reimagine the Business Digital strategy drives digital maturity The power of a digital transformation strategy lies in its scope and objectives Maturing digital organizations build digital skills capabilities to realize the strategy Employees want to work for digital leaders Taking risks becomes a cultural norm The digital agenda is led from the top 39

40 Digital Strategy Drives Digital Maturity A digitally maturing organization follows a clear and coherent digital strategy and effectively communicates it to employees. Organizations across the board are using digital to improve efficiency and the customer experience, but higher-maturity organizations differentiate themselves by using digital to transform their business, allowing them to move ahead of the competition 40

41 Digital Transformation Framework Business IT Architecture Series ASIA MIT Center for Digital Business and Capgemini Consulting 41 41

42 Focus on the how more than the what. Business IT Architecture Series ASIA MIT Center for Digital Business and Capgemini Consulting 42 42

43 Digital Capabilities Digital Capabilities, can be defined as the skills and/or competencies required for living, learning and working in a digital society. ~ Source: UK Joint Information Systems Committee (JISC) 43

44 The Digital Capabilities Your Company Needs Digital Enterprise, a company needs to identify the business benefits, as well as the risks, of investing in new technology. The promise of new technology is not simply to automate processes but in fact to provide new ways of doing business. A Digital Enterprise will outperform its competitors if it is able to: transform and innovate simultaneously, leverage the best-suited technology for its business, understand and serve its customers in a superior way, provide a highly motivated and collaborative working environment that facilitates knowledge workers, and operate its business in an efficient way. Digital Enterprise Transformation ( ) by Axel Uhl and Lars Alexander Gollenia 44

45 6 Core Digital Capabilities Innovation Management is the capability of managing innovation-related business processes. It enables the company to generate, identify, assess, and realize new products, services and processes facilitated or driven by digital technologies and management practices. Transformation Capability is defined as the holistic management of extensive, complex changes on which the organization s future success strongly depends. IT Excellence is the usage of new technologies (such as SMAC) to enhance business technology and, as a consequence, the business. This includes, but is not limited to, real-time insight into important company data, stability, agility, security and dynamic plugand-play functionality. IT Maturity level 3 and above recommended. 45

46 6 Core Digital Capabilities (continued) Customer Centricity is defined as the capability of focusing on the most valuable customers by using modern technologies. Thereby, one aims at reaching strategic advantage and increased long-term profits through the alignment of one s products and services with the wants and needs of the right customers. Effective Knowledge Worker means that employees are the main resource for companies to be competitive. Areas of effective knowledge working are collaboration, work teams instead of hierarchies, knowledge sharing, coaches instead of managers, managing by objectives. Operational Excellence operational excellence means managing business processes in an organization, so that their performance is outstanding. It is a central capability for any organization that wants to compete. The objective of operational excellence is to realize efficient and effective business processes through continuous improvement and innovation. 46

47 Digital Capability Maturity Model The journey towards a Digital Enterprise is complex and time-consuming. Each transformation project is unique and involves numerous individuals, activities, technologies and objectives. We could use the Digital Capability Maturity Model to support the digital journey. Level 1 Initial Level 2 Reactive Level 3 Defined Level 4 Managed Level 5 Excellence This level is characterized by ad-hoc and chaotic processes. Processes are immature and unstable. No benchmarks are given for judging Digital Capability. Digital principles are established and communicated to involved persons. Although no organization-wide process is defined, an elementary management control is installed guaranteeing minimal agreement, which allows repeating the success from prior similar projects. This level is characterized by an organization-internal schema that is imposed on projects. A documented and intraorganizational standard process is established, which allows for project-related customization. Process standardization is given and quantitative statistical techniques are used to predict (digital) product quality. Processes of projects are running routinely. Processes are continuously improved. Problems are analysed systematically and future asset values are identified. 47

48 The Digital Capability Maturity Model 48

49 Factors of Digital Maturity Assessment (sample) Factors Level 1 Initial Level 5 Excellence Culture The Digital Capability is not recognized as important or relevant and not part of the culture. In addition, failure and negative feedback are seen as poor experience inside the company. The Digital Capability is recognized as an important aspect and the progress of enhancing the Digital Capability is continuously measured, reviewed and improved. The status is communicated to the entire organization. Leadershi p The Digital Capability is not an important topic amongst leaders. No or few steps are taken to align specific initiatives with the core ideas of the Digital Capability. Leaders continuously assess and improve their effectiveness in aligning everyone with the shared understanding of the Digital Capability. Their goal is to become best in industry concerning the Digital Capability by involving the ecosystem. Value The Digital Capability is not valued and measured in the organization. Lack of value identification, planning and realization for the Digital Capability. The value of the Digital Capability and its benefits are seen as strategic objectives. Periodic revisions of established KPIs to value the Digital Capability guarantee an improvement of the incentives. 49

50 Analysis of the digital maturity (sample) 50

51 Summary Digital transformation is (very) complex and is a specialized type of business transformation where IT plays a dominant role. Digital Enterprise architecture provides the tools and the approaches to manage the complexity of digital transformation Early involvement of digital enterprise architecture increases successes and reduces failures Digital transformation is not a big-bang project, meaning that everything has to change from one day to the next. it is an ongoing organisation-wide activity. It s culture of the future The six Digital Capabilities are key to establishing a successful digital transformation Major digital transformation initiatives are centered on re-envisioning customer experience, operational processes and business models. Successful Digital Transformation does not happen bottom up. It must be driven from the top. Digital transformation is not a luxury; it is a necessity, if you want to survive and thrive in an environment of near-constant change and disruption. 51

52 Q & A Hasan Ganny bin Hanif Francis Chairman, AEA Malaysia Chapter hasan.ganny@atdsolution.com

53 Thank You Hasan Ganny bin Hanif Francis Chairman, AEA Malaysia Chapter

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