The desire to drive forward digital, agile transformation continues to be one of the top trends for companies. But a successful digital journey requires time and the right focus. According to the latest annual global customer survey conducted by IT service provider CGI, 57% of respondents are pursuing a digital strategy at company level, but only 10% have been able to realize the expected added value to date.
Digital agility is no longer a buzzword, but the order of the day. Openness and flexibility when introducing modern technologies such as AI or cloud services is essential in this process. However, what is often not highlighted are the challenges and difficulties that stand in the way of companies' implementation.

The degree of digitalization varies greatly from industry to industry. In many cases, companies operating in the B2B sector in particular have a low level of digitalization or delayed digital transformation. The reason for this is that the pressure for digitalization is primarily driven by the end consumer, meaning that companies operating in the B2C segment can hardly avoid comprehensive digitalization to optimize the customer experience - in contrast to B2B companies, whose digitalization initiatives focus primarily on process efficiency.

Another reason why digitalization strategies have often not brought companies the desired success is that they have lost sight of their core business in the course of diversification projects and attempts to replace established business models with blue ocean strategies. This is where a rethink is now taking place: with a focus on the core business and the associated digitalization focused on the core business. When implementing such a strategy, 72% of the clients surveyed by CGI see improving operational excellence as their top challenge. This includes, above all, the reorganization of IT.

IT and specialist departments merge

The restructuring of IT aims to separate inward-facing corporate IT with central systems such as ERP or controlling and human resources applications from outward-facing IT relating to business models, products and services as well as customer touch points. The CIO is usually responsible for internal IT, while the CDO of a company or business unit is responsible for external IT.

The most important results of the survey: digitization is still the top topic in companies - with the most diverse IT and business priorities and the most important challenges still to be tackled. As an interim result, it should be noted: Although over 50% of the companies surveyed are now pursuing a digital strategy at company level, only 10% have been able to realize the expected added value with it to date.

© CGI

The decisive change is the merging of IT teams with the specialist departments. IT and business, i.e. IT and business processes, are merging into new value creation networks. Examples of this can already be found in companies that have begun to move away from traditional product sales. Machines and equipment are integrated into a comprehensive predictive maintenance concept and the actual use is billed according to the pay-per-use model. To achieve this, IT must be directly integrated into the products and therefore also into the value chain.

The establishment of a new organizational form is closely linked to the merging of IT and specialist departments. Management must go along with this path and actively support the process. In many cases, 'old habits' must be cut in favor of a shift in power. Fast decisions are a prerequisite for ensuring a high level of flexibility and agility. To achieve this, organizational structures must be changed and decision-making parameters adapted. As a rule, this requires a general rethink in management and the dismantling of hierarchies, i.e. decentralized structures with short decision-making paths. According to the CGI survey, 82% of decision-makers in companies have now recognized this.

Expensive, outdated IT is proving to be an obstacle to agile transformation. Many companies are still burdened by legacy software and extensive, complex, monolithic applications. At the same time, they need to reduce infrastructure costs, bring products and services to market faster and generally achieve greater flexibility and agility. When modernizing, new services and technologies that contribute to optimizing operational excellence, increasing speed and thus improving profitability must also be taken into account. Central building blocks of digital transformation such as cloud, AI, IoT, automation or blockchain in particular present fundamental challenges: the lack of IT and requirement-specific qualified personnel in the respective companies and the unavailability of skilled workers on the labor market.

It is therefore inevitable that internal know-how, in other words, a 'learning organization' must be built up. Knowledge must be transferred from the outside to the inside and the development of know-how must not take place in the form of a regulation or compulsion, but rather intrinsically. Employees must be highly motivated, otherwise all initiatives will inevitably come to nothing at some point. At the same time, companies must keep pace with the dynamics of the market and recognize technological developments that are relevant for their own company and, on this basis, invest in the skills development of their own employees.

The cloud is becoming more important

Dominik Neumann is Vice President Consulting Services at CGI in Germany.

© CGI

The use of cloud services and cloud infrastructures is also becoming increasingly important. In the global survey, 76% of decision-makers stated that they use the cloud in their company. However, many companies - especially SMEs - lack the necessary expertise and often lack basic security standards. Only 42% have mechanisms in place to identify where important data is stored in the cloud for their own organizations and customers.

According to CGI, it is therefore essential to conduct a thorough assessment of any cloud implementation strategy. This should include a clear set of criteria to determine which type of cloud - public, hybrid or private - is best suited to the application in question and, if necessary, a 'balanced cloud approach' should be applied. These criteria should relate to personal data, the data storage location, security and business continuity as well as the costs incurred.
In addition, German companies are at a clear competitive disadvantage in an international comparison, as there is no cloud-based economic area, neither in Germany nor in Europe. In principle, the European market would be large enough, but market barriers and linguistic and cultural differences have so far prevented the creation of a single European cloud market. A new digital business model is very difficult to establish in Germany and Europe, for example, compared to the USA or China.

Overall, two points are highly relevant for a successful digital agile transformation as a first step. The continuous, sometimes radical change of the organization, in which the IT departments merge into agile value creation networks (decentralized end-to-end IT) and the cloud transformation with the modernization of legacy systems and the use of new technologies. By embedding IT in the value-adding processes of the specialist departments and the resulting innovative products and services, digital transformation can be actively driven forward. If this is underpinned by the continuous and effective modernization of IT systems, the increased use of cloud services and digital technologies can be addressed. In this way, future-proof IT can be established as a driver of digital transformation.