July 17, 2023

Key Factors in a Successful Digital Transformation

It is now becoming obvious that to maintain a market position, enterprises must be able to deliver their products or services digitally.

In consumer markets, the adoption of digital practices is well-established. While B2B markets have typically lagged behind, expectations have shifted, with clients expecting to start their research and transaction online. And, in many countries and industries, users now expect to be able to complete up to 70% of transactions digitally, even for multimillion-pound deals. But whether for B2C or B2B, creating a digital transformation roadmap, and then successfully delivering it, is not easy. 

If you are just starting out on your digital transformation journey, whether from the business side or IT, this article provides guidance on the important steps, considerations, and likely challenges.

If you have already embarked on your digital transformation, much of this may be familiar, but it may prompt a quick mental review, or help reassure you that you are not alone in finding many aspects challenging.  

In this article, we cover six key steps on the journey to a successful digital transformation:

1. Learn from the Best

As preparation for developing a digital roadmap for a business, it can be helpful to consider at a high level what the most successful enterprises are doing. The consensus developing is that the enterprises leading their markets have the following characteristics in how they are leveraging digital processes to support their client-facing processes:

  • Highly focused purpose, mission and vision: The most successful enterprises have resolved to a tightly focused mission and vision for the whole business - the ‘North Star’ - against which delivering digitally is tightly, if not existentially, bound. The most successful businesses will have actively communicated to and gained buy-in from the entire enterprise, complementing it with a company-wide commitment to agile techniques, design thinking and education across the organisation. This in itself generates a virtuous circle of digital transformation buy-in, capability and success.
  • Modern technology: Leading enterprises have committed to using modern sales technology such as chatbots, AI and online client portals in order to properly support what they are selling, and this technology supports the process from end to end.
  • Mixed sales model:  Not only is the sales process supported end-to-end in terms of technology, but it is also supported end-to-end with a mixture of digital tools and people so that the most appropriate engagement is available at each stage.

    The sales process can include self-serve, remote sales support, with voice or a chatbot or via a net-meeting, and it will support face-to-face sales when necessary.

    But the key here is that each method is completely integrated so that every interaction is proactive and timely and does not require information to be repeated by the client. An important consideration is that this mixed or hybrid sales approach needs to be supported by complementary sales incentives.

    Another important element is that the sales support process must recognise and handle real-world complexities so that a seamless re-route is possible to handle a deviation, complemented by a smooth ‘on-ramp’ to business as usual.
  • Personalisation: Appropriate and intelligent recognition of a new or returning client, remembering previous customisation and preferences to choreograph the workflow, and avoiding the need for repeated entry of basic details or redundant steps.
  • Integrated marketing: Closely integrated with and complementing the actual sales experience. For example, a link to a special discount should be actionable and applicable to a transaction rather than just a description of an offer.
  • Be supported by some kind of marketplace: This is potentially the hardest element to address. Retail users have for a long time been used to going to Amazon, e-Bay or many of the other marketplace apps to buy products, or going to comparison sites for car rentals, insurance or flights.

    Now business users are expecting the same experience - being able to compare the prices and features of potentially complex business products or services and then seamlessly click-through to continue the transaction, certainly without having to repeat information already provided, and ideally with enrichment to fill out as much as possible from existing possibly external data sources.

    Being able to provide this facility is both an opportunity and a threat for existing providers who must decide whether they can work with competitors to fulfil the client’s need or leave the door ajar for more agile disrupters to insert themselves to add that value.

2. Ensure Strategic Alignment

A successful digital strategy will be one that enables the core purpose, mission and vision of the business - the ‘North Star’ as it has become known. Therefore, define and agree on the North Star vision for the business, then consider what the most successful enterprises are doing, and use those reflections to determine where the enterprise needs to get to. 

In particular, determine whether any changes need to be made to reflect risks or opportunities in how business will be transacted in a digital landscape in that market (a SWOT analysis or similar).

Some considerations in laying out a high-level roadmap include:

  • The final vision must be consistent with the ‘North Star’ purpose and vision for the business, ideally drawn up with due consideration of the best practices of the most successful businesses that have been on the leading edge.
  • The vision being worked towards should not just be a digitised or speeded-up version of the existing technology or way of working. To get to a new model of working, consider setting up a 'Design Thinking' or similar workshop with executives, subject matter experts, and thought leaders, and possibly industry experts from outside the enterprise who can provide an external viewpoint and advise on themes in the sector and what functions different external partners can offer.

    The perspective should be from a customer experience objective, aiming to deliver delight and differentiation in order to build a strong relationship with the customer.
  • Every assumption in the process envisaged should be challenged – is that step necessary? Can it be done faster? How can the business add differentiation?
  • Is there a vendor out there who can provide that function already? Credit check, anti-money laundering, fraud check, identity validation, document signing, document management, no-code process management, regulatory reporting, supplier payment and collection processing - the list goes on. With a hybrid cloud and APIs, it has never been easier to use a partner to fulfil a function which may or may not use AI but will certainly have more function than could be developed in-house.
  • For certain uses of AI, due consideration should be given to governance, regulation, the ability to explain AI-driven outcomes and the support for ensuring that models can be easily maintained to avoid drift
  • Vendor applications, which may or may not involve AI,  can be integrated into the hybrid platform. These applications can offer significant function beyond what can be delivered in-house, in areas such as:
    • Internal and external chatbots and messaging interfaces (with or without natural language processing)
    • Action recommendation, e.g. in sales, middle office business processes, accounts receivable collection 
    • Document analysis e.g. to analyse terms and conditions and deviations
    • Workflow which may well be ‘no code’, with logic-based intelligence and possibly AI-based intelligence
    • Digital labour and automation applied to business processes; can also deliver agility and cost benefits in the automation of IT operations
    • Intelligent security to detect and address intrusion or attacks, including orchestration of the response
  • Whatever the digital roadmap, it is extremely important to ensure that the vision is communicated across the organisation, that there is understanding and buy-in at all levels and across all functions, and ideally that the organisation feels enabled by providing relevant education, as well as opportunities to participate and contribute to activities such as design thinking workshops. To enable the speed of response required in a digital environment, if possible the best practice is to also transform to agile methods of working (see next point). Overall, establishing understanding, commitment and digital capability across the enterprise will help address at the outset some of the problems that can arise as a digital transformation progresses.

3. Leverage ‘Agile’

Successful transformations work on a limited number of initiatives, delivered by small, agile, multi-disciplinary, empowered teams, delivering functions incrementally over time and embedding a culture of continuous advancement and engagement right across the business.

Best practice is that each team would be led by a product owner. The project teams should become small multi-disciplinary teams working in rapid sprints, provided with clear leadership and empowerment, with a product owner acknowledged and respected as having strong business and IT skills by the business and IT communities. A successful approach can also be to split the product owner role into a business product owner and an IT product owner, with both having credibility in each other’s respective areas. The IT product owner would work in lock-step with the business product owner to manage the IT resources, operations and inter-team technical interlocks covering interface definitions, integration testing and release coordination.

Each team would manage its own priorities, backlog and delivery to the wider roadmap. Therefore, in a larger programme covering more workstreams and teams, it is likely that there will need to be a programme manager and project office to ensure coherence. If there is both a business product owner and an IT product owner, it is feasible to have product owners covering a number of product and project teams, thus naturally bringing together different development streams towards one objective.

Within the development team, focus on implementing best practice development operations with a continuous integration and continuous deployment (CI/CD) pipeline, incorporating automatic testing and scans for vulnerabilities across all the applications, including any ‘lifted and shifted’ legacy applications.

For smaller organisations, it may not be possible to move to an agile multi-disciplinary team running a single application led by a dedicated a product owner. However, in order to be effective in a digital environment, adoption of agile practices such as sprints, CI/CD pipelines with automated testing and vulnerability scans should still be an objective for in-house cloud based applications.

4. Build a Modern Architecture

In order to efficiently, effectively and sustainably transform to being a market-leading digital business, it is considered best practice to move to a modern, flexible and robust hybrid (multi-)cloud business platform which manages all the linked applications and data in one management system and process.

Depending on how far a business has progressed on its digital journey, it is likely that it may still have traditional on-premises applications, some applications which have already been migrated to a virtual private cloud or clouds, and some external 'as a service' applications hosted in different public clouds. 

A step to having all applications on a single business platform is to migrate existing traditional legacy applications running on an on-premises host onto a private or public cloud. This can be through a ‘lift and shift’ from the traditional host to a host environment on the cloud. A larger application can be migrated as a whole and then, over time, be re-architected into microservices which can be called by other parts of the same application or by other applications in the hybrid cloud platform using APIs.

Alternatively, applications can gradually be re-created from scratch as cloud-native microservices. It is also possible to enable host applications to support microservices as if they were part of a hybrid cloud, and this can work effectively, but the costs and overheads of maintaining a host application, host-based microservices, as well as modern multi-cloud applications, can start to mount-up.

Even if an enterprise has migrated all applications to different but linked clouds i.e. to a hybrid cloud (or hybrid multi-cloud) architecture, in order to maximise the benefits of moving to a hybrid cloud there are a number of other areas to address.

It is best practice to have a common development 'CI/CD’ process, one process for managing containers, one dashboard to monitor and manage performance, one entry point to manage access points into and across the network, and one system to monitor for and manage security breaches and cyber-attacks. As an example, consider a situation where there is some kind of performance issue. If there is a single view of network and application performance, analysts don’t have to look into separate environments and second guess what is happening. Without some kind of hybrid cloud platform bringing the different cloud environments together, maintaining and troubleshooting can become unsustainable.

To achieve these objectives, the hyper-scalers and a handful of other vendors can provide an over-arching hybrid cloud platform which underpins and surrounds the different private and public clouds typically used by an enterprise. This hybrid cloud environment can then be complemented by cloud software which can optionally address areas such as development pipelines, container orchestration, performance monitoring, access point maintenance and security breach detection and incident handling. The choice of hybrid cloud platform and the urgency and comprehensiveness with which each of the above areas are addressed will depend on the incumbent cloud or cloud providers, the relationship of the business to a wider organisation (which may have a roadmap already), the mix of existing skills and resources in the business, and the scale of the burden or risk that each area presents.

Whilst avoiding vendor/technology/cloud provider lock-in has been a consideration in the past, this is becoming less of a concern as the various technology providers are increasingly acknowledging the importance of being able to support a multi-cloud/hybrid cloud environment and therefore they are collaborating with each other to enable better integration.

Vendors then provide cloud based applications to support specific functions such as finance, ERP or other business applications, and additional packages and tool kits which can leverage the hybrid cloud platform to simplify data integration, accelerate AI, provide development environments and support development and management of APIs across the architecture.

One final point on migrating to a cloud architecture: for smaller organisations the expense of moving host applications to the cloud, and also of implementing and running a platform to bring the different elements of the hybrid cloud architecture together, may not be justified by the IT and business benefits. Therefore a careful appraisal of the one-off and ongoing costs, benefits and also the risks associated with each option and element of the IT transformation will need to be undertaken, including remaining with the status quo.

5. Be Safe and Secure

When moving from traditional hosts to the cloud it is possible that some basics are overlooked, lost or assumed to be in place when in fact that might not be the case. In order to maximise efficiency and mitigate risks across all the transformation streams, there are benefits to specifically and separately addressing data and security. 

Data Quality, Accessibility and Recovery:

There is an ever-growing range of approaches, applications and technology which are making it easier to collect, access, combine, analyse and use data. Providing the right data, in real-time if that is what is required, is likely to be a prerequisite for some digital transformation use cases. Bear in mind that many enterprises have invested in large data lakes which have not delivered the value envisaged because the data was not documented or standardised, or provided on a frequent enough basis, or had access requirements too onerous for general business users to plough through.  

Similarly, even with the data sitting ready to be used, the tools available to create reports were not helpful for end-users, or had to be created by developers resulting in a giant backlog.

Whilst there have been undoubted success stories, often these were relatively simple use cases and supported with a considerable investment in customised connectivity, for example in getting hold of real-time or near real-time distributed data. Therefore, where data is required for a particular closely scoped use case, it is likely to be (but not definitively) quicker and more efficient to cater just for that requirement rather than create a data repository for wider use, but it does depend on the existing landscape, the scale of the planned transformation and the use cases in mind. Some considerations include:

  • Review the sources of data in the business, determine whether all sources follow the same data standards, whether the data is appropriately widely available and documented
  • Review realistic business and application use cases for the data
  • Review existing reporting tools and usage
  • Verify how data access is handled and CBNs
  • Ensure backup and recovery plans are in place, have appropriate recovery windows, are tested regularly, and cater for situations where data might have been deleted or corrupted by a cyber attack, human error, or IT error (it can happen!).
  • Ensure static and in-transit encryption standards are observed
  • Ensure data privacy regulations are adhered to 


This is by no means a comprehensive list but here are some of the security-related items that should be reviewed:

  • Address security by reviewing IT and people exposure areas, cyber-attack vulnerabilities and management measures to handle incidents. In a hybrid cloud, with partner integrations, the area of exposure is increased compared to legacy environments.
  • Determine the importance of whether incidents can be investigated and resolved using a single system or whether it involves multiple systems and groups
  • Review whether network inter-operability has been set up on a zero-trust basis, and if it has, then is the maintenance sustainable or has a bottle-neck formed
  • Review data for governance (data privacy), security and information recovery in the case of system failure or a cyber attack
  • Ensure the development process includes automatic scanning for coding, dependency and other vulnerabilities
  • Implement Single Sign-on with dual authentication

6. Manage Interdependencies and Challenges

The ‘North Star’ purpose and digital vision will have been combined with consideration of the success factors adopted by the most successful digital enterprises to create a realistic high-level digital roadmap. The success of a digital transformation program is maximised by implementing a hybrid cloud business platform and adopting modern agile ways of working complemented by a transformed structure and management system. Skipping some of that groundwork will lead to headwinds at best, or possibly failure at worst. Conversely, having addressed or started to address the best practices above, it will be easier to progress towards the objectives framed by the digital roadmap.

However, even with the foundations in place, any one business objective is likely to be dependent on other areas or teams e.g. the inter-dependency between AI-driven automation and the need for data integration. Therefore this does make it undeniably challenging to deliver the envisaged digital transformation.

Furthermore, there can be organisational barriers and challenges to delivering the whole vision. For example, the business may not realise the commitment required from them to drive and sustain the transformation going forward, or buy into gradual incremental progress over an extended period. Business or IT may not have the capacity or expertise to support the changes necessary. Data considerations may become overwhelming. Customers, partners or other stakeholders may not be ready.

Understanding and managing these challenges right from the start can reduce expense and risk of failure. Therefore it is recommended to get wholesale commitment to the vision across the organisation and put a robust programme management system in place to manage the interdependencies and challenges that a digital transformation presents.

Closing Thoughts

For most, digital transformation is no longer a choice but a necessity for businesses seeking to maintain their market position. This journey brings its own unique set of options, challenges and considerations.

It is the exponentially growing potential to infuse artificial intelligence into virtually all aspects of business operations and customer experience that is providing the fuel for this generation of digital transformation. Being able to apply human-like intelligence in customer interactions and transactions without a person being involved, at speed, is the enabler that allows businesses to entirely re-imagine how they provide products and services. However in order to leverage artificial intelligence, it is necessary to transform to become a digital enterprise, across business and IT.

With the right approach and foundations in place, informed by the insights and lessons of those who have paved the way, the optimum path for your business can be mapped out. No matter where you are on your journey, a strategic alignment, an agile way of working, a modern architectural base, a robust data and security plan, and preparedness for potential obstacles and challenges are key.

Simon Potts Finativ

Simon Potts

Simon Potts brings a wealth of expertise and experience to the field of AI and digital transformation.

With over 20 years of experience at IBM Financing, he has been the global lead on AI and digital transformation. Simon is recognised as an accomplished technology leader, holding global roles covering IT strategy and digital transformation.

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