How Digital Transformation is Defined by the OneOffice Framework

Digital Transformation is the journey to a single, digital OneOffice that creates new revenue streams and customer experiences by aligning business operations to customer needs. HfS Research, 2017

Digital Transformation takes many forms. It means different things to different organizations. We observe six dominant approaches to digital transformation, namely automation-centric, technology-centric, data-centric, customer experience and human-centric, process-centric, and digital commerce-centric. 

There is no set path or process for digital transformation and different approaches emerge that are influenced by the environmental context and organizational goals of enterprises. In some industries, the effects and speed of impact of digital technologies are greater than for other industries. For instance, the banking and financial services industry has experienced a high level of digitisation and disruption driven by changing expectations from customers and FinTech digital native competitors. In manufacturing on the other hand, the threat of disruption of the industry by “digital native” competitors is not as acute as in banking, retail, or media, to name a few.

This report builds on a study involving 400 enterprise interviews and 10 in-depth investigations of enterprises’ digital strategy. A lot of conversations with enterprise executives touch on the topic of digital transformation. Questions around digital strategy—Where do enterprises apply digital apps, tools, and platforms? What is the overall Digital Vision? What would their operations look like today if they could write off all their legacy?—lead to interesting perspectives that differ by industry, the level of disruption to the company, and maturity of the digital strategy. 

In this Point of View, we explore different approaches enterprises take to digital transformation. The backdrop for this conversation is the rampant digital disruption enterprises consistently report in research HfS is conducting with Cognizant on the digital transformation journeys of enterprises across industries. Exhibit 1 shows almost a third of Global 2000 enterprises we interviewed have seen their top two competitors change since 2014. The expectation is this proportion to grow in the years to come. Digital strategy aims to address a response to emerging digital native competitors as well as leverage digital technologies to enable digital business models and improve customer experience and operations. 

Exhibit 1: Digital Disruption is Rampant


Source: HfS Research, “Journey to the OneOffice”, 2017. Sample: 395 Enterprise Buyers

The Different Ways to Approach Digital Transformation

Through interviews with enterprise buyers, different angles to digital strategy and transformation emerge:

• Automation centric: Organizations with an automation-centric strategy have put robotic process automation into processes and are investing in machine learning as the first step to artificial intelligence and to reach new levels of actionable insights through analytics.

• Customer experience and human centric: A customer experience-centric digital strategy evolves around reimagining customer processes and creating journeys that support seamless, highly simplified, intuitive interactions; allowing a high degree of self-service; and remaining consistent across touchpoints and channels. Organizations with this approach aspire to create inspiring and heroic experiences for customers leveraging digital technologies and processes, but these are clearly a means to an end, not the other way around. Design Thinking is a critical methodology for the human-centric approach, putting the customer at the center of all interventions in technology, processes, and organizational culture.
• Technology centric: Organizations that take a technology-centric approach to digital transformation focus on creating the foundation for further digital tools and operations by writing off legacy technologies, rationalizing the application landscape, and modernizing the technology layer of the organizations’ architecture. Investments in mobile platforms, cloud platforms, and infrastructure are commonly seen priorities.
• Process centric: The process-centric approach identifies creating end-to-end processes across the organization as a priority. End-to-end processes span business functions and create responsibility and accountability for process chains centered around customer journeys.

• Data centric: The data-centric approach to digital transformation aims to unleash previously siloed data sets across business functions. Converged data sets and (near) real-time end-to-end data flows support advanced analytics, greater insight, and visibility of performance and customer needs.
• Digital commerce centric: This approach is prevalent within retail organizations as the first order of business for digital strategy is to create new sales and marketing channels that enable digital interactions and transactions with customers in the quest to fend off digital native retailers such as Amazon and Alibaba.

Digital Strategy Focuses on New Revenue Streams and Customer Experience

Our forthcoming research with Cognizant into enterprises’ journey to the Digital OneOffice (Exhibit 2) shows two-thirds of enterprises have a digital transformation strategy that centers around creating new revenue streams and customer experiences and aligning business operations to customer needs. Commonly, these priorities translate into customer experience-centric, digital commerce-centric, process-centric, and data-centric digital transformation approaches. One-third of enterprises focuses on investing in “new IT” and have a technology-centric strategy. 

Exhibit 2: Leadership’s View on Digital Transformation Strategy

Source: HfS Research, “Journey to the OneOffice”, 2017. Sample: 395 Enterprise Buyers

Organizations display similar goals for their digital transformation journeys, focusing on investing in technology, aligning business operations to customer needs, and creating new revenue streams or customer experiences.  The paths they take to reach these goals, however, diverge—every journey is different. The approaches outlined in this Point of View reflect the divergent paths. Which path an enterprise chooses depends on several factors such as the organizational culture, market conditions, available talent, and the organization’s history (in terms of previous decisions and investments). These path dependencies form often implicit guardrails that guide strategic decisions and direction. Organizations need to be conscious of path dependencies and challenge the tendencies it invokes by critical introspection, outside-in thinking, and bringing in fresh blood—doing what you always did doesn’t necessarily lead to success in the “digital” future, especially in a world where change is constant.

Alignment with HfS’ OneOffice Organization

HfS uses the lens of the OneOffice (see Exhibit 3) to describe the design and implementation of the digital customer experience and the creation of an intelligent, single office to execute and support it. OneOffice describes the enabling technologies, such as unified analytics and cognitive automation, that enable real-time predictive capabilities and an engaging digital experience that unifies all the stakeholders across the organization: the customers, partners, and employees. The Digital OneOffice is where the organization’s people, intelligence, processes, and the infrastructure come together as one integrated unit, with one set of unified business outcomes tied to exceeding expectations.

Exhibit 3: The Digital OneOffice Framework

The approaches to digital transformation in this report align well with the OneOffice framework:

• The automation and technology-centric approaches are starting by transforming the Digital Underbelly, by laying the cloud-based foundation in terms of modern infrastructure, cloud apps to run specific processes, and standardizing, digitizing, and automating manual processes.
• Customer experience and digital commerce approaches are starting with the Digital Front Office, focusing on leveraging technologies such as mobile, social, and chatbots to create personalized and inspiring customer journeys and experiences.
• The process-centric approach is starting with the Intelligent Digital Support Functions that broaden roles and leverage Design Thinking to create more business outcome-focused and driven processes.
• The data-centric approach is about the neural system of the OneOffice Organization, focusing on enabling the intelligent digital processes with predictive and operational analytics, Artificial Intelligence, cognitive computing, and the Internet of Things.

Bottom Line: Context and History Matter in Shaping the Digital Future

The different digital transformation approaches are a derivative of the burning business challenges in industries’ and organizations’ response to these challenges. These approaches typically co-exist within organizations and form a continuum, with one or two approaches creating the guiding principles for digital strategy. One approach doesn’t exclude another; rather, they are interconnected and reinforcing.

Upcoming Research about the Journey to OneOffice

Our forthcoming January 2018 report on the Journey to OneOffice will explore these topics further and include insights in the impact of various digital transformation strategies on the financial performance of enterprises.