Focus on Digital Maturity – Instead of Digital Transformation
Image: Depositphotos
There is a great deal of excitement these days around “digital transformation.” Instead of being preoccupied with “transformation,” companies may be better off paying attention to their level of maturity in deploying digital technologies – and then working diligently to become more digitally mature.
Digital maturity matters. A company’s level of digital maturity is a significant indicator of growth and financial success. Indeed, one recent study reported that higher-maturity organizations were far more likely than lower-maturity ones to significantly outperform their industry average on key financial metrics.
There is no shortage of digital maturity models. Google and Boston Consulting Group worked together to build a model consisting of four stages: Nascent, Emerging, Connected, and Multi-Moment. Likewise, Deloitte and TM Forum teamed up to produce a digital maturity model for the telecom industry involving five dimensions and twenty-seven subcategories. Analyst firms such as Forrester, Gartner and IDC have also created their own perspective on digital maturity.
A digital maturity model is most useful when it meets the following two criteria:
1. Companies can use it to determine where they currently stand in terms of digital maturity by asking and answering a few simple questions
2. The model provides companies with insight on how to move up the maturity scale or curve.
There’s a lot to be said for using the capability maturity model (CMM) as a framework to build a digital maturity model. CMM was originally developed by the Software Engineering Institute at Carnegie-Mellon University to assess maturity in software development and has been applied to both software development and process improvement for some time now. Many business leaders and IT professionals are familiar with the stages in CMM.[i]
Adapting the CMM framework to digital technology has the following stages:
At Level One – Called Initial or Ad Hoc, there is no formal program to deploy digital technology. Instead, there may be small proof of concept projects carried out inside departmental boundaries.
At Level Two – called Repeatable, digital technologies are deployed one at a time of limited scope, typically in one department at a time.
At Level Three – or Defined - One or more digital technologies are applied to end-to-end processes with cross-functional collaboration.
At Level Four – Managed – several digital technologies are integrated[ii] with a focus on one or more end-to-end processes.
At Level five – Optimizing - The integration of digital technologies becomes part of the organizational deploys digital.
This model can be used to determine a company’s level of digital maturity by asking and answering a few simple questions:
· What is the scope of digital projects? Smaller the scope – the lower the level of maturity. The broader the scope, the higher the level of digital maturity.
· Are digital technologies deployed mainly in a departmental context? If yes – there’s a lower level of maturity.
· To what extent is there collaboration in deploying digital tools across departments? If not much collaboration across departments – then there’s a low level of maturity. When there’s extensive cross functional collaboration, it typically creates the foundation for a higher level of maturity.
· Is the digital program strategy driven? If yes, then there’s a higher level of maturity. If technology driven – then there’s a lower level.
· Does leadership view the business from the customers point of view – or the so called “outside-in?” Does this view drive strategy? If yes, then there’s a higher level of maturity.
The fact that most organizations are at a relatively low level of digital maturity means that much of the buzz around digital transformation might be more hype than reality. For example, IDC estimated that nearly 80% of companies are at the three lower levels. In other words, just 21% of companies are at high levels of maturity (level four or five). This CMM based digital maturity framework is also useful as it facilitates asking and answering questions on the factors that drive movement to higher levels of maturity such as scope, collaboration, integration, sequence, and mindset.
Scope matters. Less mature organizations are more likely to deploy digital to improve processes of small scope – typically within departmental boundaries. More mature organizations deploy digital technologies to improve end-to-end process performance – and not just in a departmental context. Less mature organizations are more likely to have several small proof of concept projects. More mature organizations will pay more attention to scaling and deployment.
Collaboration matters. When departments do not collaborate, digital efforts suffer. It was surprizing to learn from a 2020 Accenture survey that 75 percent of 1,500 global senior and C-level executives still saw different business functions competing against one another instead of collaborating on digital efforts. Lack of collaboration across departments is a prescription for perpetuating data silos. Collaboration is needed across internal centers of excellence, and technology vendors for digital automation to reach its true potential. Data silos are perpetuated by lack of technology vendor collaboration too. While cross team collaboration is simple in theory, in practice it can be challenging as the teams responsible for process improvement and customer experience often sit in different parts of the organization. Further, while cross functional teams are important – such teams often lack budget authority so cross functional governance in the form of executive steering teams is also needed.
Integration of tools matters too. That’s what Gartner calls Hyperautomation and IDC calls intelligent process automation. Instead of just thinking about deploying one discrete technology for the benefit of an individual department as less mature organizations are likely to do, leaders of more mature companies tend to think about deploying multiple digital technologies in an integrated, agile manner for the benefit of the business.
Digital maturity is driven by the specifics of the company’s strategy, and strategy needs to be driven by customer experience. In turn that requires paying attention to the firm’s value creating, cross functional business processes. That doesn’t happen in the first two or even the third maturity level. This is in stark contrast to the approach to digital taken by less mature organizations where individual departments select individual technologies to solve small problems within their own departmental boundaries
Mindset matters. Shifting management attention from a traditional static view of business to a customer centered, agile, business process-based view of performance involves a new mindset. First, instead of just thinking about what is good for the company, more mature digital organizations also focus on what is good for customers. Second, instead of thinking just about what is good for their individual departments, the leaders in more mature organizations tend to shift their attention to what is good for the entire organization. Then, instead of just thinking about deploying one discrete technology for the benefit of an individual department, thoughtful leaders think about deploying multiple digital technologies in an integrated, agile manner for the benefit of the business. This constitutes a significant change in mindset and can be challenging as it must overcome decades of silo behavior conditioning. The mindset of leaders in less digitally mature organizations may be dominated by such silo thinking.
It’s problematic when companies attempt digital transformation without having a clear understanding of what it means, where they currently stand and where they aspire to go. That’s where assessing digital maturity can be of significant benefit. Yet, higher levels of digital maturity are not easily attained. Moving up the digital maturity scale involves an ongoing process of candid introspection, new mental models, and an insatiable drive to evolve and grow.
Andrew Spanyi is President of Spanyi International. He is a member of the Board of Advisors at the Association of Business Process Professionals and has been an instructor at the BPM Institute. He is also a member of the Cognitive World Think Tank on enterprise AI.