Developing and Executing Digital Transformation Strategies 

By Michael Guilfoyle

ARC Report Abstract

Executive Overview

Executing digital transformation of industry, infrastructure, and cities is under way.  ARC sees this across all markets and among organizations of all sizes.

New business processes, services, and models are being pursued. This energy and investment is a rational response by organizations (and even countries) to digital economies that present new and very real opportunities. When combined appropriately, data and technology can provide competitive advantage, that – in some cases – enables organizations to leapfrog their peers.

More data is being generated and accessed than ever before.  Increasingly, physical assets (devices, machines, and other “things”) are being interconnected. Advanced technologies such as machine learning proliferate. The cost of these advancements continues to drop, encouraging industrial and infrastructure-related organizations to harness this combination to modernize, improve, and transform their businesses and services.

More than ever, digital transformation is mission critical for business health and viability, both short- and long-term. Digitally transformed organizations will be able to transition to and thrive in digital economies, making digital transformation a matter not of “if,” but “when.”

Despite the promise, companies are struggling to execute and scale digital transformation.  ARC has observed a huge gap between the desire of most organizations to digitally transform and their ability to do so.

But we’re seeing pockets of success.  ARC has witnessed real results from digital transformation, Industry 4.0, and Industrial IoT-related projects.  Predicting asset failure, optimizing processes, and improving product quality are three areas where organizations have achieved good, measurable return.

However, these results are typically limited to narrow, often-siloed uses of digital transformation technology.  The question, of course, is why?

In many instances, ARC clients indicate that formative aspects of solutions are difficult to replicate across use cases and applications, which hampers scalability. At this point, it seems uncertain as to whether “productization” of these solutions is a reasonable expectation or if customization will be the norm from project to project.

Less disruptive solutions, like use of drone for data collection or rules-based remote monitoring, may lend themselves to repeatability. However, this might not be the case for more operationally invasive applications such as implementing prescriptive analytics or edge machine learning since the resource and expertise required may be burdensome or not well understood.  It’s no wonder, then, that return on investment is often poor or inconsistent. Simply put, sustainable, scalable digital transformation remains hard to achieve.

In response, many bits of wisdom have been offered, often by solution providers: focus on business need, start small but plan big, identify low-hanging fruit use cases, and empower subject matter experts. These are broad enough to be conceptually helpful, but not granular enough to act upon. ARC has observed that with digital transformation the output can be so far from status quo operations and traditional comfort zones that change is difficult to envision, plan for, execute, or sustain.

Strategic-level “wishes” often get pushed downhill to operations to carry out, without an understanding of the process, technological, and cultural realities preventing success. Or, there is some type of “dip the toe(s) in the water” operational execution with limited guiding perspective of enterprise-level considerations or reasonable expectations for scale. With no bridge between strategy and execution, digital transformation remains limited in terms of scope, ROI, and sustainability.

This report explains ARC’s three-phase methodology for developing and executing digital transformation strategies. It provides direction for organizations planning or engaged in digital transformation. Organizations can use it as a blueprint to ensure their initiatives are aligned with business goals, reflect operational realities, and include scalability planning.

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Table of Contents

  • Executive Overview
  • Common Missteps
  • Three-phase Path to Digital Transformation
  • Phase 1:  Ensure Reality Informs Strategy
  • Phase 2:  Connect Strategy to Business Need
  • Phase 3:  Align Framework to Tactics
  • Recommendations


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