Game-changer: The Key to a Successful Business Transformation

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1 White Paper Game-changer: The Key to a Successful Business Transformation Why do organizations transform to fit the new business landscape? When do they realize that they need to change? Is now the right opportunity to make a significant transformation to one s business structure and position it to thrive in the next phase of the IT and BPO market opportunity? If so, what does it take for a company s transformation initiatives to succeed? Why change is necessary for the business? Today's business environment is driving companies to constantly change the way they manage and operate if they are to remain competitive. The process starts with an awareness and identification of different conditions which would justify the amount of effort to be done. These conditions are presented through a 2014 CompTIA report, Managing a Successful Business Transformation, which are as follows: Market changes as the marketplace and trend changes, so do the customer needs. Product / Service Commoditization Commoditization continues to be a challenging competitive factor that affects an entire category and incessantly drives prices downward. IT companies who began their businesses selling computer hardware and software have evolved by adding new offerings that still win sustainable margins. Insurmountable Competition the never-ending competition in the market is always present. Whether this be an entry of a new competitor or an existing entity, providers need to exhibit a relative advantage and change its marketing strategy. If a smaller company cannot compete in terms of price, it can use its position as an end-to-end service provider. New Technology / Tools - Significant changes within a company are the result of new and advanced technologies. As cited also in the 2014 CompTIA report, even though new services are offered on a regular basis, it is how the company does and transform innovation at its core is what makes it more rare and also more stable. They can see results to a shift to managed services or offering of the cloud delivery platform versus a new server product. Loss of a Key Resource a business will experience this kind of change in cases like when a small business has a limited focus in its line of business a limited diversity of revenue streams, the more that this type of condition becomes a bigger risk to a business facility. Regulatory Changes changes in government regulations can affect an IT company directly, while others affect customers in certain vertical industry segments. From time to time, government changes these rules and frameworks in economic policy and legal framework which result to businesses continually having to respond to such changes.

2 Permanent Margin Decline unlike the other listed conditions, this factor is an irregular indicator that a previous signal has been missed and a significant change effort is in need. As a rule, even if one of these forces prove to be a pressing issue in your business, it s time to ponder on a transformation. If more than one is true, then a company should abandon those regular routines and get serious in answering an urgent call for action. Planning business transformation the right way There are numerous factors upon which the success of corporate transformation depend entirely on, but this does not change the fact that only a handful of transformation efforts across the world have been successful approximately 30% of every organizational evolution initiated. Consider the statistics (McKinsey & Company/Association of International Product Marketing and Management, 2013): 75% of all global organizations have spearheaded transformation efforts at one time or another over the past decade; Only 10% of companies without a holistic transformation program succeed in their initiatives; Only 15% of companies who do have properly delineated transformation activities deploy them successfully. In Prof. John Kotter s seminal Spring 1995 article in the Harvard Business Review titled Leading Change: Why Transformation Efforts Fail, we see how well-meaning efforts for changing a company s overall culture or corporate structure seem doomed to fail. This is because even though some ideas might look simple or too obvious, critical steps or principles cannot be underestimated or overlooked during the adjustment phase. Fortunately, Kotter has presented his Eight-Step Transformation Program, a point-by-point approach to the transformation process that effectively addresses the concerns raised above. In doing so, even very large enterprises with global presence are able to effectively promote and implement their transformation plans and this helps improve their existing business processes, promotes growth in organizational leadership, and ensures organizational maturity for the long haul.

3 Kotter s program entails the following points: White Paper 1. Establish a sense of urgency regarding competitive realities. There should be a sense of the here and now with regard to transformation: it is happening now, at this instant; you would be crazy not to act on it. Jump on the bandwagon and push for change. 2. Form a strong guidance team that will collectively have enough power and wisdom to lead/guide the transformation efforts into fruition. 3. Create, present, and implement a clear vision to point the initiatives (and those implementing or following them) towards the right direction. 4. Communicate the vision through all means necessary to all stakeholders within the organization. This ensures that everyone is made aware of what the transformation is about, what changes it will involve, and its impact on various areas or levels of the organization. 5. Empower your people to act on the vision by encouraging them to take necessary risks for both personal and institutional improvement and to adapt a passion for innovation that will help open the organization to new ideas and game-changing ways of thinking. 6. Plan for and create short-term wins. As stated above, these can act as guideposts by which a company can gauge how far along it has gone with regard to the transformation process. It also doubles as a way for employers to identify and reward employees who play an active role or take a pro-active stance towards organizational change. 7. Consolidate improvements and produce even more changes. This calls for the use of increased corporate credibility to change the management structure, process flow, or any other aspect that no longer seems to fit into an evolving organization. 8. Institutionalize new approaches by articulating the connection between change and organizational success and by ensuring leadership development and succession. Every company should embrace the need to create opportunities through continuous improvement, productivity, people empowerment, or effective planning for short-term wins. Operational excellence has become a globally effective tool for business development and most leading world businesses have already embarked on this path towards a strategic distinction. This transformation is the new normal, an opportunity that solutions and service providers never fails to embark on. In order to remain relevant in this rapidly changing environment, the need to transform is no longer an option, but an imperative. It is how you plan for business change and achieving your intended outcomes are what will make a successful transformation.

4 The Boston Consulting Group has developed an article on Five Case Studies of Transformation Excellence which highlights five company case studies which show what a transformation effort looks like in the real world and how their successes made them compete effectively. Successful transformations entail three specific steps: funding the journey, winning in the medium term, and establishing the right team, organization, and culture. One of the significant company examples is Nokia, picking up on its transformation journey since 2011, its adaptations have evolved from a consumer device focused company into a network and technology focused in line with its strategy. There are also remarkable firms which adapt to business changes by developing broad, cohesive, end-to-end global operating strategies that enable profitable growth and remain quick to respond to rapidly-changing conditions. And this is what Accenture proves in its research that operational excellence and execution are essential characteristics of prominent companies in any industry. Based on their experience, the right mix of business approach, technology strategy and the execution path is what a company needs to survive and prosper in the challenging commodity markets of today. Similar to Nokia and Accenture, there are also organizations which act as primary drivers for business transformations who outsource so that they can focus on core businesses in a competitive marketplace. DTSI Group took on this challenge, where it started as a technology start-up and evolved to a full-fledged system integrator, and now catering to the growing demands of off shoring and outsourcing business in Philippines and in USA, which shows a continuous progression along the path towards transformation. Unlike more traditional corporate transformation models where success and change are gauged by individual milestones, transformation that is built on operational excellence is gradual rather than dynamic. In this context, improvements in the organization manifest as a steady stream of activity as opposed to sharp, sudden bursts of improvisation. The impact is, thus, more far-reaching and lasting even permanent than any temporary measure. Operational excellence calls for a unified approach, a singular goal as to organizational transformation. The process of improvement should start within an organization, often involving management setting the goals and employees making changes in their areas to achieve it. All members of an organization have to be on the same page with regard to operational excellence: everyone has to share a mentality centered on continuous improvement. To continuously gain a competitive advantage, it is worth mentioning that one s business should build its internal capabilities for operational excellence. Everyone needs to understand that processes need to be recalibrated from time to time in order to improve. But such transformation requires an agile and dynamic organization, which should be accompanied with the right levels of support and communication in place. The transformation journey to operational excellence means empowering one s company to break new ground through innovation and constant change.

5 About DTSI Group Diversified Technology Solutions International, Inc. (DTSI) Group, is a premier full-service provider of world-class facilities, advanced communication services, and game-changing technology to global companies. With market presence in the Philippines and the United States, DTSI Group's value solutions serve BPOs, enterprises and multinational companies creating opportunities through business integration, investment, and employment. DTSI is a member of NTT Communications Corporation seasoned with 19 years of experience, committed to bring value that extends beyond solutions. DTSI's services include: Business and Professional Consulting Services; Turnkey Built-to-Suit Facilities and Facilities as a Service (FaaS); Technology Equipment Financing; Facilities Design, Construction, and Management; Security, Technology, and Communications Infrastructure Deployment with IT Services, Consulting, Implementation and Operations Services. Through its OPEX-based financial delivery model, DTSI positions itself as an enabler of global companies by building facilities that promote cost savings, sustainability and workplace efficiency. DTSI's services offer seamless systems integration enabling companies to focus on their core businesses. To learn more, visit DTSI U.S.A. DTSI Manila DTSI Cebu The Esplanade, 12 th Floor Zuellig Building Ground Floor ebloc 1, 2415 Camelback Road Makati Avenue corner Paseo de Roxas, Asiatown IT Park, Suite #700, Phoenix, AZ USA Makati City Philippines 1225 Lahug, Cebu City, Philippines 6000 Tel: Fax: Tel: Fax: Tel: