Next Generation Digital Transformation - Beyond Analog and Digital Revenue to Digital Commerce

1. 1
Beyond Analog and Digital Revenue to Digital Commerce
May 2023

2. 2
Agenda
Disclaimer: This presentation acknowledges and gives credit to the work of others. Necessary validation has been taken to avoid copyright infringement. Any instances
that violate terms can be removed when notified. All discussed thoughts & opinions are my own & not that of my employer or other parties.
§ IT Transformation
§ Spectrum – 2022 to 2023
§ Core Components, Capability Maturity, Architecture, IT Maturity
§ Digital vs IT Transformation
§ Key Differences
§ Digital Transformation
§ Spectrum – 2022 to 2023
§ Attributes, Low Barriers to Entry
§ Economic Model, Revenue and Efficiency Dividend
§ IT Services Enablement - Landscape 2023
§ Where to Begin – Pathways
§ Core Components and Enablers
§ 1st and 3rd Gen – Technology Enabler Lens
§ IT Maturity
§ Challenges and Why Its Difficult

3. 3
Attribution
Licensed Under
This work is Licensed Under
No Derivative 4.0 International

4. 4
There are four different categories of IT driven Transformation. 1st three categories
are relatively well known and, adequately managed using traditional sourcing and
delivery approaches
• Business-as-usual change:
• Delivery strategy: Business- as-usual IT releases are done fully in-
house or using vendors, depending on the lower cost of delivery.
Example: Incremental changes to existing applications or the addition
of small new applications to a stable IT landscape
• Commodity transformation:
• Delivery strategy: Traditional (prime) contracting model with an
established supplier (typically a large systems integrator or large
software vendor). Example: Multi-business-unit, multi-country ERP or
CRM rollout
• Pilot or controlled experimentation
• Delivery strategy: Contract with the technology owner and execute an
“incremental,” prototype-based design. Example: Travel company
piloting dynamic packaging technology with one small business unit
• Innovative:
• Delivery Strategy: Take strong control of the technology owner (through
a joint venture or buyout) to ensure control over innovation and to
manage risks effectively. Example: Cross-country rollout of smart
metering services
Low High
Low
Demand
Side
Challenges
High
Commodity
BAU
as
Change
Supply Side
Challenges
Innovative
Pilot/Controlled
Experimental
Source: Booz & Co
IT Transformation
Spectrum - 2011 to 2023

5. 5
Strategic
Alignment
Transformation
Capability
Agile IT
Architecture
Execution
Excellence
Source: Booz & Co
Four key components must interact with and inform one another,
leading to a smooth transformation process and repeatable capabilities
IT Transformation
Core Components

6. 6
Prog. Mgmt.
Governance
Performance
Mgmt.
Lacking Ad-hoc Competitive Best-in-Class Differentiated
Transition
Mgmt.
Vision &
Strategy
Design &
Develop.
Technical
Readiness
Stakeholder
Mgmt.
Change
Mgmt.
None
Business
Readiness
Stewardship
Ownership
Building
Capability
Building
Key Message
A company must ensure that it has the right set of drivers and capabilities in place to carry out
the transformation. The drivers, which can vary from company to company, demand careful
consideration, as they will determine the ultimate success of the transformation. Following is a
generic template for transformation capability.
IT Transformation
Capability Maturity
Source: Booz & Co

7. 7
Application
Architecture
Business
Architecture
Source: Booz & Co
Infrastructure
Architecture
Data/Information
Architecture
Design and
Architecture Principles
Operating Model, Program of work, Road Map
Enterprise
Architecture
Agile IT
Architecture
IT Transformation
Enterprise Architecture

8. 8
IT Maturity
Business Silos
Standardised
Technology
Optimised Core
Business
Modularity
Percentage
Of
Investment
(0
–
100%)
High
Flexibility
Low
Flexibility
Source: 2005 MIT Sloan Center For Information Systems Research
Global
Flexibility
Local
Flexibility
IT Transformation
IT Maturity

9. 9 Source: Booz & Co
IT Transformation projects are massively complex and highly disruptive to long-standing business processes and their end-users,
and can span years and cost hundreds of millions of dollars. Success of such large scale transformations projects on all agreed
objectives in the beginning is quite low.
Why such projects fail is presumably well understood:
• lack of user involvement,
• weak support from top management,
• unclear business objectives and so on, the list is long.
What is required
• Companies must align the transformation with overall corporate strategic and business goals, and all stakeholders must buy
into the future vision.
• they must settle on the necessary transformation capabilities, and fill any gaps in current capabilities.
• Third, the transformation team must work to create an agile interim architecture that can see the company successfully
through the transformation, maintaining business continuity while enabling the planned changes.
• Finally, successful execution will require the creation of a transformation operation model and appropriate progress
monitoring and governance procedures for guiding the program to completion
IT Transformation
IT Enabled

10. 10
Digital Transformation is :
• Front-office, customer-facing, and demand-generating or generates
Revenue. They're the business's brand.
• Top Down.
• Digital demands move at the pace of the market, competition, and
customer expectations rather than the upgrade cycles of IT vendors.
• Digital transformation drives or can drive the IT Transformation, but
not the other way around.
IT Transformation is :
• Back office, customer enabler, fulfils demand or an OPEX control
measure. Its about operational efficiency and optimisation.
• Bottom Up.
• IT demands move at the pace of technologies lifecycle and the upgrade
cycles of IT vendors.
Source: HBR.
Cost Revenue
Fulfillment
Demand
Side
Generation
IT
Transformation
Economics
Digital
Transformation
Transformation
Digital vs IT
Key Message
• Digital Transformation is not an IT Transformation.

11. 11 Source: BCG
Applications
Speed& Cycle
Time
Methodology
and Tools
Skills
Customer to
Business
Business to IT
IT to IT
IT to
3rd Parties
Industrial (non Digital) Speed Digital Speed
• Mature technologies with long life cycles • Emerging, short life time, built on fast changing
technology with legacy technologies
• Release cycle of 6 to 12 months driven by planned
business needs
• Quick cycles (<1 mth) from idea to deployment,
driven by rapidly changing users needs and comp.
• A hierarchical organisation using established
frameworks and standardised approaches to design
• Self organising teams using agile tools, fast evolving
SDK and automated
• Individuals with specialised skills
• Jack of all trades who combines upto date
knowledge of technologies and business
• Predictable demand via established channels,
products and processes
• Unpredictable demands due to evolving trends,
technologies and channels
• Siloed and Fenced driven by mid and long term
strategies
• Highly collaborative and constantly changing
• Siloed and Fenced, vertically integrated, tech stack
is stable
• Collaborative and horizontally integrated, tech
stack is constantly evolving
• Buyer – vendor relationship, IT controls the pace of
interaction
• Participating in 3rd party ecosystem, the ecosystem
sets the pace
Transformation
Digital vs IT

12. 12
2011 - 2015 2020 - To date
2015 - 2019
Revenue Generation
OPEX Reduction
Fulfilment & Demand Centric
SMAC as Enabler
CX, Scale and Agility
Revenue Protection & Generation
OPEX Optimisation
Fulfilment & Demand Centric
SMAC + IoT, AI, ML, RPA, Sec as Enabler
Resiliency, CX, Scale and Agility
Revenue Protection & Generation
OPEX Optimisation & Inflation Relief
Demand Centric
SMAC + IoT, AI, ML, RPA, Sec. as Enabler
Digital
Transformation
1.0
Transformation Type
Sell Metered Revenue, Shared Risk Outcome
Analog + Digital Revenue + Digital Commerce
Create Multisided Business Platform
Business, IT and other Support Functions Led
Digital
Transformation
2.0
Digital Transformation
Spectrum - 2011 to 2023
Key Message
• Sales Trigger has evolved with the Evolution of the Digital Transformation Journey from early
2011 to Post Covid. The Spectrum of Digital Transformation Triggers are highlighted below.
Transformation Type
Digitise Product or Service
Analog + Digital Revenue
Sell Existing Digital Assets
Business and IT Led
Transformation Type
Move into New and Adjacent Industries
Digital Revenue + Digital Commerce
Run Platform as a Business
End to End Business Transformed
Source: Gartner, BCG, HBR, Sales Academy, Forrester, Mckinsey
Next Gen
of
Digital
Transformation
3.0

13. 13
• Simple
• Ubiquitous – universal access to services and apps by consumers and enterprises
• Personal
• Affordability – pricing to make them affordable, MC is minimal
• Speed – the extent to which digital services can be accessed in real-time
• Usability – ease of use and Intuitive
• Frictionless – straight-through processing
• Empowering
• Skill - multiple
• Reliability – the quality of available digital services
• Platform Centric
• Top Down
• Cultural and Silo Breaker
• Fail Fast – startup mindset
• Scalable
Digital Transformation
Attributes

14. 14
Disruption across industries by digital evolution is swift and deadly
• It is operating at the speed of thought
• It turns assets into liabilities
• It comes from any firm of any size and from anywhere
Digital Disruption is driving fundamental shift in Business Model. This shift has led to deep impact on organisations operation,
structure and, their culture. Its low barrier to entry is driving constant innovation and opening doors for non digital business.
Source: Disruptors Handbook, Forrester.com 2012
Digital Transformation
Low Barriers to Entry

15. 15
• A ”True Digital Business” doesn’t suffer from the restriction of infinitesimal
growth because any increase in incremental cost leads to a rise in incremental
revenue by multiple times. To achieve this, a digital business has to be
multisided and leverage network effects. If a Digital business underpinned by
Digital assets is not opened up upstream and a traditional monetising model is
applied like what News Corp. did with Myspace then that business can not
survive the marketplace.
• Digital companies like Amazon, Netflix, and Facebook have PE ratios above 50.
Any PE ratio above 15 indicates a growth stock, but to have PE above 50 and
100 shows how an investor sees the return from these digital companies.
Digital Transformation
Economic Model
Key Message
• Economic Model for Non Digital Business is restricted in infinitesimal growth by the limitation of how maximum
profit is achieved.
• Every increase in incremental Revenue is matched by incremental Cost i.e., to expand the revenue base, cost base
has to be increased, resulting in similar profit before the expansion of revenue or cost.
Digital Transformation is :
• Front-office, customer-facing, and demand-generating or generates Revenue. They're
the business's brand. Digital demands move at the pace of the market, competition, and
customer expectations rather than the upgrade cycles of IT vendors. Digital
transformation drives or can drive the IT Transformation, but not the other way
around.
IT Transformation is :
• Back office, customer enabler, fulfils demand or an OPEX control measure. Its about
operational efficiency and optimisation. IT demands move at the pace of technologies
lifecycle and the upgrade cycles of IT vendors. Source: HBR.
Cost Revenue
Fulfillment
Demand
Side
Generation
IT
Transformation
Run the Business
Economics
Digital
Transformation
Growth Centric
Small Large
Low
Price
High
Max Profit
Quantity (Vol)
MR = MC
MR > MC MR < MC
Economic Model for
Non - Digital Business
or
Traditional Brick & Mortar

16. 16
Digital Transformation
Efficiency Dividend to Rev Gen.
Key Message
• The Economics of Digital Transformation has another indicator where OPEX has changed in terms of its application.
• In IT Transformation OPEX is about enabling Reduction and Optimisation for
Operational Efficiency dividend whereas in Digital Transformation it is about generating Revenue and Freeing up the
cash for driving the growth of top line and bottom line.
Digital Transformation is :
• Front-office, customer-facing, and demand-generating or generates Revenue. They're
the business's brand. Digital demands move at the pace of the market, competition, and
customer expectations rather than the upgrade cycles of IT vendors. Digital
transformation drives or can drive the IT Transformation, but not the other way
around.
IT Transformation is :
• Back office, customer enabler, fulfils demand or an OPEX control measure. Its about
operational efficiency and optimisation. IT demands move at the pace of technologies
lifecycle and the upgrade cycles of IT vendors. Source: HBR.
Cloud, SaaS
Capabilities
Economy
Integrated
Enterprise
IT Business
Stability
Capability
Agility
Business
Arch Led By
API
Economy
IT Transformation is about enabling
OPEX Reduction and Optimisation for
Operational Efficiency Dividend
Digital Transformation is about
generating Revenue and freeing up
the cash for driving the growth of
Top and Bottom Line
IT
Transformation
Digital
Transformation
Revenue and Cost Lens across
IT and Digital Transformation
Cost Revenue
Technical
Pivot
Business
Run the Business
Assets
&
Process
Economics
Growth Centric
Invention
&
Value

17. 17
Digital Transformation
Comp.
Internal
Services
Focus
External
Traditional IT
Technical Capability
• Mapping of IT Capabilities and IT Services Focus
provides a good spectacle of how IT services have
evolved from Traditional IT to Digital IT (not
shadow IT)
IT Services Landscape - 2023
IT Services Landscape for Enabling Digital Transformation
• Composability and Agility driven by API and Orchestration
• Microservice Architecture enabled by containers for Portability)
• Cloud Native Apps and Migration to Cloud (Agility and Savings)
• ML, AI and Robotics enabled automation for S/W and H/W
• Agile Delivery – DevOps, CI/CD (Agility, MVP)
• Ex – from Data, API and Development Management to Campaign, Distribution Management, from Hosting,
Security to After Sales Support, Personalised Customer Advice, Ride Sharing, and Business Led Products
Digital IT
Data, API, Dev
Mgmt
Hosting, Security
Campaign , Distrib
Mgmt.
Ride Sharing
“The changing landscape of IT services is underpinned by Digital
Transformation where services are defined by consumption not by how they are
fabricated”.

18. 18
Digital Transformation
Transformed
Analog
Customer
Exp
Digital
Silos
Legacy Ops Efficiency
• Mapping of Customer Experience and
Operational Efficiency provides a good spectacle
of how multiple pathways are available for
enabling Digital Transformation.
Where to Begin - Pathways
Multiple Pathways for Digital Transformation
• In Business, value can be created by generating more revenue or reducing the cost envelope. In either case, this
can be achieved by transforming the business operations. Composing and deploying new services with
compelling CX is key to driving growth in a digitally enabled business world. Besides enhancing operational
efficiency dividend is key to improving the bottom line of the business.
• The following pathways are available to achieve this goal:
• 1st transform CX and then Operations - Move from Silos to Integrated Experience and then to Future Ready.
• 1st transform Operations and then CX - Move from Silos to Industrialised Experience and then to Future Ready.
• Move from Silos to Future Ready State directly that is do both transformations in parallel, CX and Operations.
• This is the most challenging pathway as it requires aligning Business and IT resources in parallel for a
desired outcome.
• In practice, either path can be followed deepening upon the maturity of digital transformation and how much
information can flow without boundaries
Future Ready
Integrated
Experience
Industrialised
In Practice either path can be followed deepening upon the maturity of
digital transformation and how much information can flow without
boundaries.
Source: HBR, MIT Sloan

19. 19
Digital Transformation
Core Components and Enablers
Source: Gartner, HBR.
Strategy
Digital
User
Experience
Design
Meaningful
Content
and
Services
Channel
and
Ecosystem
Integration
Operations Governance
Digital
Infrastructure
Generate
New Digital
Revenue
Operating
Model
Technology
Platform
Funding
Customer
Experience
Operational
Excellence
Optimise
Asset
Utilisation
Address
Risk
Culture
Org.
&
Decision
Rights
Sourcing
Talents
& Skills
Ways of
Working
Cloud &
Devops
AI & Data
Analytics
Channel
&
Customer
Platform
Ecosystem
Integration
IoT
RPA
Security

20. 20
Social Mobile
Big Data/
Analytics
Cloud
• Four major technology
drivers aka SMAC
(Social, Mobile, Big Data
Analytics, Cloud) are
driving the major
transformation themes
across Business Models,
Customer Experience and
Operations.
Business
Model
Customer
Experience
Operational
Process
New Digital Business Model Driving Revenue with Global Reach
New Touch Point across Customer Experience Mapping
New Digitised Process and Workflows across the Value Chain
Digital Transformation
1st Gen – Technology View

21. 21
Channels (SMW) &
Customer Platform
IoT RPA
Digital Twins
AI & Big Data/
Analytics
Cloud &
Devops
Ecosystem
Integration
Security
• Key Message
• 3rd Gen of Digital Transformation is enabled by multiple technology drivers aka IoT, RPA,
Digital Twins, Platforms, Cloud, Ecosystem Integration and more are driving the major
transformation themes across Business Models, Customer Experience and Operations.
Business
Model
Customer
Experience
Operational
Process
Digital Transformation
3rd Gen – Technology View
New Business Models Driving Digital Commerce and Revenue with Global Reach
Ecosystem and Platform Centric (Multisided) and New (Adjacent) Industry Growth Enabler
New Touch Point across Customer Experience Mapping
Frictionless and Intuitive
New Digitised Process and Workflows across the Value Chain
Drive Operational Excellence and Optimise Asset Utilisation

22. 22
IT Maturity
Business Silos
Standardised
Technology
Optimised Core
Business
Modularity
Percentage
Of
Investment
(0
–
100%)
High
Flexibility
Low
Flexibility
Source: 2005 MIT Sloan Center For Information Systems Research
Global
Flexibility
Local
Flexibility
Digital Transformation
IT Maturity
Next Gen
of
Digital
Transformation
3.0
Digital
Transformation
2.0

23. 23
Finance
(Transactions)
Customer
(Engagement)
Internal (Ops.)
Learning,
Culture
&
Infrastructure
Rapidly Changing Customer
Desire and Needs. The digital
generation is always on the
move.
Increase the top-line and bottom-line growth with seamless transactions
Business process are
fragmented, need to digitise
all, leveraging new digital
platforms.
Resistance to Cultural Change,
Fail Fast is Missing.
Lack of unified Product,
Marketing, and fragmented
Channels.
Old operating Model.
Lack of Analytics and
Intelligence on Digital
Operations.
Ageing infrastructure
and Information Overload.
Ad hoc strategy to leverage
and integrate social and mobile
ecosystems. No well defined
KPIs.
Lack of Customer Centric and
Composable Services. Most
services are functionality
driven and aren’t intuitive.
Lack of collaboration and Silo
based Approach hindering
Boundary less information
flow.
Digital Transformation
Challenges

24. 24 Source: Creating Corporate Advantage , David J. Collis & Cynthia A. Montgomery
Structure,
System
&
Procedure
Linkages
&
Alignment
Intro Growth Maturity Decline
C
C
Drives
Behaviour
People Shapes
Culture
Time
Culture Shapes People
Culture is the biggest
challenge for any
transformation to be
successful.
For a mature organization, the cultural
challenge is magnified enormously as it drives
the behavior of people. Any change to that is
resisted vigorously.
Cultural
Digital Transformation
Why Its Difficult

25. 25
Disclaimer: This presentation acknowledges and gives credit to the work of others. Necessary validation have
been taken to avoid copyright infringement. Any instances that violate terms can be removed when notified. All
discussed thoughts & opinions are my own & not that of my employer or other parties.
For further information, please contact:
Name: Vishal
Address: Melbourne, VIC 3000 Australia
Mobile: 0468 675 566
Blog: http://blog.sharmavishal.com/