Having flown into Berlin to attend the 2014 Business Transformation Summit on 10 & 11 November, I thought it would be fitting to post this review of the Business Transformation Academy's latest book – particularly as the Editors Axel Uhl (Head of the Business Transformation Academy) and Lars Gollenia (Head of SAP Business Transformation Services) were our hosts.
Published by Gower in November 2014, Digital Enterprise Transformation is dedicated to the combination of transformational capabilities and new digital skills that organisations need to develop, if they wish to take advantage of the new technologies and ideas available to transform themselves into a Digital Enterprise.
A solid reference for everyone involved in digital transformation, the book is ideal for C-suite executives, managers, consultants and academics, and the 300+ pages unfold the value of new technology and how Digital Enterprises do business with these technologies. The rich and insightful pages also present readers with a stream of new business opportunities that are based on digital technology.
The book explains that it is vital for companies to question whether they are ready to implement new technologies, and whether they have defined a quality strategy to ensure a high return on investment. It points out a seemingly obvious, yet often overlooked need, for the potential risks and benefits of a digital transformation to be diligently reviewed and assessed prior to transformation.
On no account should digital transformation be limited only to the topic of IT Transformation. Without addressing the business site, and the identification of business needs and capabilities, digitalisation might be doomed to failure.”
Introducing The Digital Capability Framework
A core component of the book is The Digital Capability Framework (DCF), which is a strategic management toolset that helps define a customised plan to transform an organisation into a Digital Enterprise.
The DCF does this by enabling organisations to obtain clarity about what maturity level they have in terms of six Digital Capabilities, what maturity level they wish to attain, and how they intend to achieve this. The DCF is also comprised of four building blocks.
DCF Building Blocks
Digital Capabilities: these are the key skills and capabilities a company requires to transform itself into a sustainable and successful business by considering digital technology as the enabling component.
Digital Capability Maturity Models: these are the structured assessments used to evaluate the Digital Maturity of an organisation.
Digital Use Cases: these provide ways of showing how to enhance the Digital Capabilities within a specific industry.
Digital Transformation Roadmap: this provides six steps to proceed to a Digital Enterprise Transformation.
The two groups of DCF capabilities (Enablers and Goals) are illustrated below, and the importance of the DCF is reflected by the fact that seven of the ten chapters in the book focus on the DCF as a whole, then on its six individual capabilities.
Chapters 3 to 8 of the book provide a detailed look inside each of the six DCF capabilities. Simply put, organisations need to have achieved a sufficient level of maturity in their Digital Transformation Enablers, before they can realistically expect to embark on “successfully” achieving their Digital Transformation goals. Those that do decide to run before they can walk, have not yet understood the importance of the DCF capabilities, and will tend to suffer the painful and typical consequences of transformation that is either partially or completely unsuccessful.
10 Chapters Summarised
Chapter 1 introduces the importance of technological trends and how organisations can exploit them for business excellence. From Big Data to 3D Printing, and from Mobile to Industry 4.0, trends are explored with examples and research used to demonstrate the reality of the business benefits that are genuinely up for grabs by those who are adequately equipped to go reaching for them.
Chapter 2 is where the team of contributors explain that in order to become a Digital Enterprise, a company needs to identify the business benefits, as well as the risks of investing in new technology. As Business Transformation Practitioners often point out, bringing in the latest technology for technology’s sake, without undertaking a value analysis and a 360° risk assessment, can have rather undesirable consequences. So this chapter works hard to help readers fully appreciate the importance of a complete understanding and holistic analysis of internal and external possibilities, feasibilities, strengths and weaknesses.
In order to provide such a holistic view, the Digital Capability Framework integrates the Business Transformation Management Methodology (BTM²).
Chapter 3 delves deep into the classification, challenges and craft of innovation. It references the research of Shelton and Percival in 2013 which revealed that “leading innovators” have grown at a rate that is 16% higher than those that are “least innovative”. Innovation capability levels are key to what degree an organisation can successfully innovate with digital technologies, and the following statement emphasises that:
It is imperative for a Digital Enterprise to have a high level of maturity in innovation as a Digital Capability.
Chapter 4 talks about transformation capability, which has its roots in the Business Transformation Academy’s first book “A Handbook of Business Transformation Management Methodology (BTM²)”. It is firmly stated that: “on no account should the digital transformation be limited only to the topic of IT Transformation. Without addressing the business site, and the identification of business needs and capabilities, digitalisation might be doomed to failure.”
Every organisation will sit somewhere on the BTM² maturity scale, and here the authors look at the contrast between high and low levels of maturity across all nine transformation management disciplines required for transformational success. While this chapter explores the nine disciplines in 24 pages, the book referred to in the paragraph above provides 344 pages on this one topic alone, and around 250 certified BTM² practitioners now exist across the world – ready to support those organisations who want to approach Digital Transformation in the proper manner.
Chapter 5 addresses IT excellence and explains how managing IT is a key differentiator when embarking on digital transformation. IT excellence is one of the three enablers of transformation, and organisations need an IT function that is capable of providing excellent IT solutions to support its overarching digital transformation goals. IT excellence can include many areas of technology from data security to mobile devices, and from IT platforms to IT staffing.
Chapters 6, 7 and 8 address the three Digital Transformation Goals which are: Customer Centricity, Effective Knowledge Worker, and Operational Excellence.
Customer Centricity involves the capability of focusing on the most valuable customers by using the latest technologies, to achieve strategic advantages. As well as outlining the foundation of Customer Centricity, the book explains the key competencies of the Customer Centricity Maturity Model and how Customer Centricity can be improved using Digital Use Cases. The Customer Centricity chapter concludes with a look the key characteristics of a case study involving The Walt Disney Company.
Effective Knowledge Worker involves employees being the main resource for firms to be competitive. Following an emphasis on why the Effective Knowledge Worker is one of the fundamental Digital Capabilities in Digital Enterprises, the book showcases how digital technologies can enable knowledge workers to be creative and effective in Digital Enterprises, and identifies key managerial practices required for a high maturity level of the Effective Knowledge Worker Digital Capability. Google is used as a case study to demonstrate the Effective Knowledge Worker Capability in action.
Operational Excellence involves managing business processes so that their performance is outstanding. After explaining the fundamental preconditions for Operational Excellence, the book illustrates the potential of new technologies for Operational Excellence, and draws upon the Hilti case study to exemplify ways in which firms can move toward Operational Excellence.
Chapter 9 explores Digital Supply Chain Management (SCM), and provides examples towards a Digital Transformation Roadmap based on 18 SCM related Digital Use Cases. The Supply Chain Operations Reference model (SCOR) is used to assess the use cases, before placing them into a Strategic Effort-Benefits Portfolio.
Chapter 10 provides a glimpse into the world of digital supply chain transformation at DHL Freight – the road freight division of the Deutsche Post DHL Group – a firm with almost 450,000 employees, revenues of over EUR 55 billion, and Earnings Before Interest and Tax of EUR 2.7 billion.
It has been difficult to do justice to such a comprehensive book on Digital Enterprise Transformation, but I hope this post has wet your appetite enough to acquire a copy of the book (here). In the digital-decade ahead of us, it is essential that transformation leaders fully appreciate and act upon the fact that adequate transformational capabilities and new digital skills are pre-requisites to achieving the business rewards attainable through successful digital transformation.
Attempting to catch any of the challenging digital waves that are heading toward our shores is one thing – but having the capability and skill to successfully ride them without falling, is what will separate the Digital Enterprise Winners from the rest.
About the Editors
At the time of writing (Nov 2014) Lars Gollenia was the Head of SAP Business Transformation Services (BTS) at SAP AG, and Professor Dr Axel Uhl was the Head of the Business Transformation Academy at SAP. Together with their talented and eclectic team of contributors, which extends into some of the world’s most outstanding organisations and universities, they have published the following three books:
1. A Handbook of Business Transformation Management Methodology (BTM²)
2. Business Transformation Essentials
3. Digital Enterprise Transformation