“Digital transformation is not about technology”

‘Digital transformation is not about technology, it’s about what you and your organization do with it.’ The authors Sander Jansen and James van de Merbel from The Management Book for Digital Transformation are very clear. ‘It’s about what one can do with that technology to be and remain relevant in a digitalizing society.’

After consulting positions at Scheer and Accenture, Van de Merbel became information manager with responsibility for strategic setup of information management at BAM International. According to him, it is crucial to use only technology that actually provides added value.

‘Over the years, organizations often have a hairball of different systems. With a structure where IT fell under the CFO and was really only supportive. In the 1990s, there was much more talk about alignment between IT businesses. Although it results in more focus on systems that actually add value, that approach is not yet a strategic approach. This approach is more about making your work more efficient than using IT as a strategic means to be more relevant in this digital society. For the latter, one must take a step back, in order to take a big leap forward. Customers, internal business processes, technological advances and how to create new business models can no longer be seen in isolation. ‘

James van de Merbel: ‘Customers, internal business processes, the rise of technology and how to create new business models can no longer be seen in isolation.

One big learning curve

Jansen owns an online training platform and consulting firm J&M Digital Transformers, which focuses on managers who want knowledge, tools and support in their digital transformation. He teaches Digital Transformation at Hogeschool Utrecht. Jansen has previously written books entitled Strategic Management of Innovation and the Building Blocks of the Innovation Framework.

James van de Merbel is one of many speakers at a very special edition of National Controllers Day. This event takes place on Thursday, June 16th. Sign up now and take advantage of the early bird discount.

‘Originally I come from the media corner. At the then publishing house Kluwer, I was one of the first project managers involved in database publishing. I then visited a modern printing house where I saw a cartoon about how to spit books out as needed. From then on, I would be sure that this would actually be possible. So print on demand. We have implemented this concept on Zaanse Scanlaser.

‘Digital technology in itself did not lead to success in business operations. It’s not about the digital work processes, but primarily about what you do with your employees and your partners to make the technology successful. You can not avoid redesigning large parts of the supply chain. In short, you really need to create a new business model, and that’s one big learning curve. In our case, the change meant that we first had to sell content, then print it and distribute it directly to the end user. The ‘normal’ process, but vice versa. ‘

Digital foundation

ICT infrastructure can be fantastic, but do not be dazzled by it, says Jansen. “Until now, we have access to automation in organizations as step-by-step steps. Continuous improvements in efficiency and effectiveness at the application level. There is nothing wrong with that, but it prevents you from looking at the overall design of the digital foundation under your organization. What do I really need to set the innovation agenda in our sector? ‘

Both men recognized this question, and so they came to a collaboration to write The Management Book for Digital Transformation. ‘Also because there are models for implementing automation, but not for how to approach an entire transformation of the business,’ says Jansen.

Van de Merbel: ‘The models we use encourage the use of methods in which IT and business employees work closely with the customer. In this collaboration, they come up with processes where tailor-made products and services can be offered to customers in a customer-friendly but scalable way. This is often accompanied by the development of new, digital revenue models. This also includes an economic component, because after the analysis phase you have to decide which technology has such added value that you want or have to invest in it. ‘

Looking over the fence

Disciplines in the company, such as IT, operations and finance, must look beyond each other’s fences. Jansen: ‘As a result of the transformation, digital processes, services and applications are often introduced that no longer fit into the traditional cost structure.’

Van de Merbel: ‘You can not just let the digital transformation take place in one pillar, for example ICT, operations or economics alone. By definition, it would only be a step-by-step improvement of the particular pillar, not a transformation of the organization. You are one company with, if all goes well, one mission, vision and strategy. You take up the transformation based on these business goals. Implementing the technology is not the end in itself. The company’s goal is your starting point. If you do not take it as a starting point, business units begin to express desires based on technology infatuation.

‘A series of common misconceptions:’ We should also make artificial intelligence ‘. Or “blockchain is important.” Although it may not be in line with the company’s goals at all. In short, first try to sketch the overall picture, the proverbial dot on the horizon. Then you formulate what the building blocks are to get there, and put them in a timely manner in a form. Starting with low-hanging fruit, where you are the first to capture digitization that is of great importance in the short term. ‘

‘You can not just let the digital transformation take place in one pillar, for example ICT, operations or economics alone’

Of strategic importance

Digital transformation is a must, the gentlemen behind conclude. Van de Merbel: ‘If it was not to remain relevant in this digital society, it was to attract and retain young talent. More and more young professionals want to feel that they are part of an organization that is in control of matters in the field. An organization that is a winner. ‘

“To become a winner, all the leaders in your organization must be convinced that this is of strategic importance for survival,” says Jansen. “They need to understand that transformation cannot be tackled per pillar, but must be handled across the organization. It also means that, on the basis of these business goals, directors must break free from their own ICT projects in their pillar. ‘

“The role you put on your board for this is different from situation to situation,” Van de Merbel knows. “It can be a technology manager, a transformation manager or a data manager. I do not care. I’m not in favor of an IT manager under a CFO. So, from the perspective of the financial discipline alone, it gets too narrow. While you want an organization-wide role, with a mandate from the board across the organization. Just someone who can keep an eye on the big picture. And then you can also see what technology needs to be invested in to stay relevant in five to ten years. ‘

Will not be the cheapest

Jansen concludes that anyone who only uses technology to become the cheapest does not win. »Technology is evolving at lightning speed. A competitor investing a year later is more likely to be more efficient than your organization. And then you need to quickly invest again. You can do this if the return on investment proves positive with a calculation of a period of one year. But to recover the investment within a year, an organization must either run with larger volumes or with more margin.

‘That’s the crux of the matter: you only get a larger market share if the cost savings that the investment provides are directly translated into lower market prices. See here: the rat race towards the bottom. There is no winner in such a match. My advice: Do not participate in this and stop investing in digitization alone to become more efficient. Stop being a traditional organization and start the real digital transformation. ‘

You are not newly started

Van de Merbel concludes that it is not wrong to be inspired by startups. ‘But mind you, as an existing organization you are not a startup. You already have an existing business. In addition, startups often struggle with their business model. It does not matter on the scale in which they operate, but on a corporate scale.

‘I’m also not a fan of the popular business startup model that shows how the digital game is played. These snowballs often in corporate environments because too many corporate disciplines disrupt startup and they have too little power in such an organization to go their own way. It also means that you do not have to deal with how much a transformation is urgent for the whole organization. You want a clear path for the entire organization to digital transformation. With digital products and services and a data-driven culture that employees embrace. ‘

The example of Nike

The authors enter the book with the example of Nike. This company mainly produces clothes and shoes in low-wage countries. Jansen: ‘Sixty percent of the consumer price remains in the logistics distribution and retail channels. But now they also have design and product in high-wage countries. You can design your own shoe via a configurator on a website and have it made. Nike sends it directly to you. It’s less cheap than a shoe from the store, but it’s your unique shoe. The advantage for Nike is not only that they can now keep the sixty percent for retail and distribution in their own pocket, but also that they know more about you as a customer. About your size, your style, what type of shoes you are wearing and what you are willing to pay. Information they do not have from their retail channel. That way, you attract the data to yourself. ‘ Van de Merbel: ‘By engaging in digital transformation, those kinds of gains automatically come to you. You gradually learn more about your customer, and then you see unexpected opportunities. ‘

Sander Jansen: ‘Stop investing purely in digitalisation to become more efficient’

Own digital strategy

The two authors come to a conclusion. Jansen: ‘I hope administrators can determine their own digital strategy after reading the book. We offer various tools for this in the book, including an e-learning program that is an integral part of the book. ‘

Van de Merbel agrees: ‘Digital transformation starts with what you want to be as a business. First, look at where you are now and how to get where you want to be. After reading the book, I hope readers will understand that digital transformation is not about technology, but rather about your business and your revenue model. And that if you have set a course for the digital transformation, you must also follow that course. You transform in the long run by implementing successes along the way. ‘

National Controller Day 2022

Follow CMWeb on LinkedIn!

Leave a Comment