Tech transformation is a thrilling topic that involves all market players. But experts are still in search of the keys to success. For this reason, there is plenty of research being done on this topic. At DigitalMara, we’ve been looking at some of the most pertinent research of Q2 2023 done by McKinsey, which conducted a survey of top financial performers to reveal how their approach to tech transformation differs from others. We’ve listed and analyzed their key considerations.
Statista estimates that spending on transformation technologies and services worldwide will reach $2.51 trillion in 2024. Artificial Intelligence (applied and generative), cloud, edge computing and advanced connectivity are still considered core transformative technologies with broad applications across multiple industries. Security, privacy, and resilience have also become increasingly critical for all players.
Not all companies succeed with technology transformation. According to McKinsey survey, respondents who are among the top financial performers identify 4 main factors in a successful transformation:
- Tech and digital strategies are an essential part of overall business strategies.
- The need to build environments that foster organizational change.
- The need to invest in foundational technologies.
- The need to retain tech talents.
Value and strategy
The overall strategy should be to bring together technology, digital and business strategies to derive real business value from tech transformation — not technology for its own sake, but considering what business problems technology can solve. This is a critical part of creating value for the company’s customers and employees and enabling its long-term growth and productivity.
Companies that follow this strategy report a positive impact of tech transformation over the past 2 years, including new revenue streams, improved employee experience, increased revenue from existing streams, and reduced costs. They deploy new digital systems and tools at scale, ones that touch every part of the company and allow it to benefit from enhanced transparency, speed and effectiveness.
Holistic approach
Respondents say their companies are taking a more comprehensive and strategic approach to their tech transformation. They reported having a higher number of tech initiatives over the past 2 years than others. The secret is that these actions affect each other and have greater impact when deployed in combination, not isolated. In practice, this means reshaping the business strategy along with redesigning tech organization and operating models, scaling data-related capabilities, transforming talent management, and sourcing partnerships.
Barriers
The survey shows that industry leaders are more likely than others to invest in modernizing and securing their IT foundation, including infrastructure, data, and cybersecurity. In practice, this means building next-generation data platforms, strengthening cybersecurity defenses and using threats intelligence, and also focusing on cloud migration, management and infrastructure automation.
There are times when a technology foundation does not live up to its full potential. Often this is a result of lack of investment, including time and resources, to make fundamental improvements. Execution of technological tasks is often difficult and time-consuming. Secondly, products and systems are often created without communication or coordination between the technology and business stakeholders. And stakeholders may not all see the value of modernizing legacy technology. It’s necessary to provide a convincing economic case for these changes and to focus on strategic alignment on the need for them.
Tech talents
People are a powerful asset for successful tech transformation, bringing a combination of individual strengths and diversified expertise. Effective talent management involves attracting and recruiting new talents; managing employee performance; training and developing talents; engaging and retaining top talents; and maintaining a healthy IT work culture.
For example, high-demand skills include expertise in Data Science, Machine Learning, continuous integration, cloud computing, infrastructure management, computer security, IoT, product engineering and quantum computing.
Operating model
Implementing new technology doesn’t always lead to better performance. Transformation is not only about deploying new systems but also making fundamental changes in the company’s operating model, including the workforce and workplace. Operating models with a focus on the end-user experience have distinct advantages for business. For example, there are product- and platform-centric operating models, which contribute to streamlining product development, reducing costs and time to market, promoting accountability within the organization, and ensuring that the company is creating the highest-quality products.
Roadmap for successful tech transformation
- Define the vision and goals of the transformation — identify the business objectives, understand the current technology landscape, and define the desired outcomes.
- Assess the current state of the company’s technology infrastructure — identify any loopholes, redundancies, or inefficiencies in the current systems and processes.
- Develop a strategy that includes steps, timelines, budgets, and resource requirements.
- Build a skilled team of professionals and foster a culture of innovation within the company.
- Transformation execution — deploy new technologies, upgrade existing systems, and re-engineer business processes.
- Ensure security and compliance of new technologies and processes; in other words, implement appropriate security measures and conduct regular audits.
- Monitor progress measuring key performance indicators (KPIs), making adjustments as needed.
- Communicate and train — keep stakeholders informed of progress, provide regular updates, and train employees on new technologies and processes.
- Continuous improvements — regularly assess the effectiveness of new technologies and processes and make adjustments as needed to ensure that they continue to meet business objectives.
Final words
Technology is a powerful tool that can drive sustainable, inclusive growth, solve challenges and change the business landscape. Companies must constantly adapt to stay competitive. However, you should not thoughtlessly invest in all technologies. You should study trends and understand potential use cases of each technology, and identify the critical skills needed. Otherwise, you will get frustrated without achieving the expected results of a tech transformation.
