The future happens all the time. Technology is fuelling a fourth industrial revolution that is exponentially increasing the rate of change and threatening the relevance of all businesses, regardless of size and complexity. This is placing digital transformation — a term that is often misused — on the strategic agenda of every business.

Digital transformation helps CEOs diversify revenue streams, sustain profitability and increase agility. It is a crucial requirement for companies wishing to remain competitive amid accelerating change and disruption.

Comprehensive digital transformation can be complicated. Complex legacy systems with a myriad components make system-wide transformation extremely challenging. And getting it wrong can be consequential. The International Data Corporation estimates that spending on digital transformation technology will have increased to $2-trillion in 2020. And for every $1bn invested in new technology, according to a 2018 study by the Project Management Institute, $112m is lost to projects that fail. By 2020, companies across the globe had thus wasted a collective $224bn on failed technology transformations.

As globalisation takes hold and digitisation of industries and e-commerce expands, the world’s biggest software developers — such as Alphabet, Microsoft and Amazon — have had an effect on the business models of companies of all scales globally. We need to be able to interact with them, leverage their capabilities, and compete with them. Every company thus needs to become a software company. For us to compete globally in a digital era, we should be able to build software as well as they do, while ensuring that ethical design and development considerations are top of mind.

Crucial components

All competitive modern organisations need to place far more strategic emphasis on software development, which is at the heart of digital transformation and competitive advantage. There is very little in the modern world that can’t be automated or enabled with software. We speak of “DevAnything”, because anything is possible with modern technology, software, data, analytics and integration. Software is no longer about a business requirement spec that is handed to an IT team. It has become an integrated, continuous process that enables business to develop creative and innovative solutions.

So what does it take to build a world-class posture on software to support digital transformation in your business? Forward-thinking CEOs need assurance that their organisation is able to deliver on the following crucial components:

  • Design. Software used to be built around how a company could best deliver products and processes. Consumers in the digital age have become far more demanding in pursuit of the frictionless experiences and instant gratification digital can offer. Technology offers a huge opportunity to differentiate customer experiences, but the stakes are much higher given the pace at which the world is moving. Design of the experiences powered by software has become the essential ingredient of differentiation and competitiveness.

Companies should place customers at the epicentre, gaining insight into their needs and problems and deploying human-centred problem-solving and design techniques to solve their biggest business opportunities and challenges. This “design thinking” approach redefines how we build products and customer experiences. Software designed to solve real problems, and for the customer, is a critical success factor.

  • Agility. Technology has exponentially accelerated the pace at which business is required to change, and this is happening faster than we can realistically anticipate: we will not know what is coming until it is upon us. The only strategic response for modern business is to build radical agility into software development processes. Agility is increasingly the only meaningful currency when building resilient, antifragile organisations that can adapt to change. To compete in a digital age, all companies should be able to develop with the speed and agility of the best in the world.

Organisations should thus move on from old “waterfall” IT approaches, implement agile enablement methodologies, and put tooling in place that ensures the continuous delivery of quality software. CEOs should have the assurance that they are developing software in ways that will allow their business to deliver products, features and processes, from design through to development and testing, at a predictable cost and at the scale and pace expected in the digital era.

Forming strategic partnerships with software development companies that can understand and translate end-user requirements, and that can scale up or down in response to immediate needs while delivering exceptional software, allows companies to quickly pivot and respond to strategic digital opportunities.

  • Interconnection. We live in a modern world of networked economies in which trading and making connections, which previously required years of manual negotiation and integration, can now happen in the blink of an eye. The new world of business is fuelled by the ability to rapidly connect internally, with partners, and with other third-party networks to offer new products, services and business processes. New products are unlocked through digital connections with third parties, and new customer experiences are delivered and enhanced by accessing specific data and services (location-based services and operations, for example) available from third parties.

At the heart of modern connectivity is the application programming interface (API), a protocol that allows secure and seamless connection to services provided internally to organisations and through third parties. To truly lead in a digital age, the chief information officer should be creating an API-first organisation that builds software based on its ability to connect. Adopting an API-first philosophy, and having the platforms to facilitate smooth exchange of APIs with other businesses, can revolutionise the quality of products and innovation, and rapidly accelerate time to market.

Digital transformation has become an existential concern for businesses nowadays, and has earned its place on the board agenda. A big part of a digital advantage starts with software. CEOs need to know they have a range of critical capabilities in place to ensure they are able to develop world-class experiences for their customers, and automation and enablement for their businesses that will allow them to remain relevant and competitive. Strategic focus on design, agility and interconnection will ensure they are building platform businesses fit to compete in a modern digital world.

• Harding  is managing executive at iOCO Digital and serves on the EOH group executive committee.

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