Driving value through digital transformation
Digital transformation is central to the growth and survival of many businesses on the African continent, just as it is to businesses in other regions.
African businesses can realise significant growth through innovative solutions that address market failures, according to Accenture’s Reimagining Africa’s future report.
“What makes innovation so important today is the high degree of inefficiencies that can be seen with legacy IT systems,” said Ewoudt Cloete, chief digital officer at Avatar South Africa, a marketing services firm. “Also, market saturation of competition means less room for companies to gain clear competitive advantage unless they innovate and digitise at a faster pace than their competitors.”
To lead a business through tech-driven transformation – changing how an enterprise uses its technology, its workforce and business processes -- IT executives need to think systematically about how to build effective innovation strategies, according to technology leaders working in sub-Saharan Africa enterprises.
“CIOs who are not capable of operating at the strategic levels will not be successful,” said Helen Constantinides, Group Chief Information Officer for AVBOB Mutual Assurance Society.
To successfully drive digital innovation, IT executives should focus on initiatives that address specific business challenges while improving efficiency and cost-effectiveness.
CIOs and other enterprise technology leaders are also typically required to ensure their businesses stay abreast of technological trends, in order to make sure they continue to innovate and maintain a competitive advantage.
Here are three key keys factors that African technology executives believe are to the success of their innovation strategy, and thus to digital-transformation initiatives.
Create a culture of innovation
Establishing a culture that embraces innovation and experimentation is crucial to the successful implementation of digital transformation initiatives. According the African Union’s Digital Transformation Strategy for Africa draft, the key to a successful transformation strategy involves creating a vibrant and inclusive “digital culture” that stimulates innovation in business.
“Even the most informed digital strategy with executive support will not hold up without the right culture to sustain it,” said AVBOB’s Constantinides. “Organisational engagement is therefore a key element for each digital initiative in the strategy.”
Digital adoption can often be hindered by a company culture that is not easily receptive to change. Aside concerns about financial constraints, operational stability and data security, resistance from various stakeholders in an enterprise can stunt innovation.
The embrace of innovation should start at the top. “It is important to ensure innovation is engrained in company culture and the example needs to be set by senior management,” according to Avatar’s Cloete.
Other African tech executives echo that sentiment, stressing that CIOs need to reach out to their peers on the business side.
“Maintaining strong, positive relations with other business leaders is very important,” said Constantinides. The key is trust, and continuous engagement with peers.
“To earn trust requires a lot of proactive engagement,” Constantinides added. “Enabling technology to be a transformational force for our business is a persistent journey that requires continued involvement and engagement and needs a business culture of continuous improvement to thrive.”
To help ensure that tech projects help foster a culture of continuous innovation, Avatar focuses on the concept of “ideas that move people,” according to Cloete. “We use this as our litmus test for all potential innovations that we consider.”
What this means, according to Cloete, is that any technology-related project should address either a shift in perception about the business or a change in the behaviour of staff or customers, while improving efficiency or otherwise creating value for the business.
Tech leaders’ suggestions for fostering a culture of innovation focus on two requirements: consistent effort and actionable plans. This means not only keeping abreast of emerging technology but deliberately setting aside time to brainstorm on a regular basis.
“Many companies now require CIOs to keep their finger on the pulse technological changes in order to prevent loss of competitive advantage. Even when operations are the primary focus, I still set aside one day of the week to sit with my team and discuss the latest innovations we could use to potentially argument our current systems,” said Shayne Turley, CIO of Goldwagen, which supplies vehicle spare parts to the Southern Africa market.
“Even when operations are the primary focus, I still set aside one day of the week to sit with my team and discuss the latest innovations we could use to potentially argument our current systems,”
Include all stakeholders in your strategy
IT executives charged with coming up with digital transformation initiatives face the challenge of figuring out how to increase digitalisation while minimising friction. Successful innovation strategies address concerns of management, operations, and business analyst functions, while taking into account the perspectives of employees and clients. This creates a shared vision among staff and clients about what can be expected from a proposed digital transformation project.
“We’ve found that the most effective way to gain buy-in especially from the most important stakeholder (clients/customers), is to spend adequate time informing and educating them around the digital agenda, especially if it affects the way they interact with the business,” Cloete said. This takes time, he warned. “This is not something that can happen overnight, it’s a journey you need to be willing to take with your client.”
No business can grow without continued support of its customers, so understanding how a tech deployment will affect customers is a prime consideration. Customer insight should the fundamental cornerstone of any tech initiative, cautions Constantinides.
“Without understanding our customers, our digital strategy would only be based on assumptions that may not effectively address our customers’ pain points or their needs,” she said.
According PwC, disruptive innovation is transforming the potential for African businesses to thrive. Capitalising on potential opportunities, though, often requires a major rethink of customer engagement and business development strategies. This, in turn, often requires different business units to come to a consensus around which transformation initiatives should dominate the company’s agenda.
“Collaboration with business leaders and confirming their sponsorship and involvement is one of the most fundamental and important factors affecting all our continuous digital improvement efforts,” Constantinides explained.
Take a revenue-centric approach
Technology leaders should keep in mind that innovation, to be useful to the business, needs to deliver a return on investment.
“Ultimately, to successfully develop new, unique concepts that sustain financial viability, the primary goal of business model innovation should be centred around realising new revenue sources through offering product value and delivery to customers,” said Cloete.
This means that senior IT executives need to have cost estimates to back up the viability of their proposed strategies. Considerations also include examination of which solutions to build in-house and which technology can be leveraged or integrated from third-parties or major vendors.
“Adopting new technologies could also result in incurring unnecessary costs and creating operational issues by disrupting systems already in use,” Turley explained.
One way to help ensure that innovation drives revenue is to look at how IT investment can
translate into customer value in the form of new products or services, new features, and improvements in user experience, according to Saleem Motlekar, an independent business strategic advisor and former head of the Office of the CIO at Old Mutual South Africa.
These new services and features, Motlekar said, should ultimately turn into “business outcomes such as increased revenue; cost reduction; and better profitability.”
Originally posted on CIO Online
