Digital transformation has become an overused term across all industries, but a lot of organisations are still missing out on opportunities to use digital to differentiate themselves from competitors. Many still struggle to adopt new digital technologies and techniques quickly enough, and to respond to rapidly changing customer demands.

The best way to tackle digital transformation, according to the MIT Sloan Management Review, is to enable business processes and practices that help an organisation to compete effectively in an increasingly digital world. The challenge is heightened by the pressure to innovate coming from the 21st-century savvy consumer, who now expects a compelling interactive experience across all interaction channels.

Although recognising the potential pay-off for enabling a better digital experience, IT departments face the uphill battle of delivering more functionality at a rapid pace, often with fewer resources and smaller budgets. They face barriers such as controlling the growth of ‘shadow IT’, a lack of control and standardisation, siloed data sources and fragmented system estates.

The fast pace of innovation now demanded means IT is under pressure to rapidly build digital service delivery models which are flexible, robust and future-proofed. The move to continuous development in a DevOps model, using new platform-based software models such as low-code, are becoming increasingly important. IT needs to be able to drive incremental improvements, support rapid change, and manage communication services, while delivering demonstrable returns at every stage.

Additionally, IT must manage the shift from transactional ‘systems of record’, where information is ingested, stored and managed in static databases and warehouses, to interactive ‘systems of engagement’. This is where dynamic, real-time data is accessed, interpreted and connected, and used to support multi-touchpoint, real-time digital customer journeys and interactions. 

Implementing this agile, future-proofed model is essential for IT in order to deliver digital services that contribute simultaneously to customer experience and the bottom line. To make this model a reality, CIOs and digital transformation leads need to address six key challenges:

1. Pace of change – As expectations increase, and despite some budget assigned to facilitate change, the demands faced by the IT department often outpace its ability to deliver. The IT function needs to adapt its approach and the technology it uses in order to be able to deliver faster. This has an impact on the way it assesses, develops and deploys services to the business.

2. Capacity gap – External demands on IT teams, coupled with the constraints of traditional capabilities, resourcing and legacy infrastructure, leads to an IT capacity gap. Time and delivery pressures are using up resources that could be instead providing innovation aligned to business needs. Projects fail to meet both deadlines and product quality expectations leading to unsatisfied internal, and more importantly external, stakeholders. This cannot be fixed by incremental improvements but needs a fundamental change in the IT operating model for the delivery of digital services.

3. Skills shortage – Most organisations lack the breadth and scale of digital talent required to deliver the necessary changes. Skills in new technologies – IoT, AI, multichannel communications – are in short supply, and IT specialists have always been light on their understanding and awareness of usability and user experience. Finding external expertise can be valuable, but if outsourcing is overused, organisations lose critical skills, often with disastrous results. Transforming customer experience requires new skills and collaborative ways of working with those who already understand customer-facing processes, in order to better exploit existing capabilities.

4. Risk – There are increased risks from the fragmentation of IT systems and digital communications that need to be addressed, necessitating an increased focus on security. Hyper-connectivity is increasing the risks of intrusion; all levels of the organisation are increasingly aware of data, network and device vulnerabilities. The issue is firmly on the board-level agenda but IT teams are still seen as accountable for managing any impact of any information security breach. This must be done while trying to provide a flexible approach to innovation. 

5. Fragmentation of IT – A significant and increasing element of IT spend comes from budgets outside of the IT department. This results in a partial loss of control, but ultimate responsibility still sits with IT. Yet there is value in supporting user choice and business-led innovation. IT needs to be able to offer innovative solutions to orchestrate, support and deliver what the rest of the enterprise needs, in order to regain its leadership of the technology agenda.

6. Legacy – Much IT infrastructure has grown organically, organised in silos around its initial purpose, now often lost in time. These systems frequently lack the ability to interact with customer touchpoints, communications services and triggers. It is fragile and difficult to change. IT now needs to be able to deliver services that are provisioned quickly and cheaply, to support both rapid innovation and scalability. Virtualisation and Cloud-based services have opened up new opportunities, but this needs to be taken further.