Almost every business in Australia currently has some sort of digital transformation project underway, yet the term itself means different things to different people.
Some equate it with a tactical initiative such as 'going paperless', while for others it means undertaking organisation-wide transformative initiatives that deliver real business value in the form of speed and agility.
Research undertaken for MuleSoft's 2016 Connectivity Benchmark Report found that 73 per cent of Australian organisations are already executing digital transformation strategies, with almost half (43 per cent) reporting significant progress. This was the highest result of any country surveyed for the report.
In many cases, the initial motivation for starting down the digital transformation path occurs when an organisation experiences a disruption to its existing operations.
This can come in the form of a competitor that suddenly gains market share through a new digital initiative, or a completely new entrant that seems to appear from nowhere and quickly changes the rules of the game.
'Digital Darwinism' waits for those who don’t respond. The average life of a company on the S&P 500 index has plummeted to 18 years – down from more than 60 years in the 1960s.
When it comes to digital transformation, some businesses mistakenly think that the changes they will be required to make relate only to their IT department. However, to truly digitally transform, I believe that a business needs to adopt an entirely new operating model that allows both the business and IT to build, innovate and deliver on stated objectives together.
While some still believe that it’s the large that beat the small, I believe it’s the fast that beat the slow.
Aligning IT with the business
For digital transformation projects to be successful, IT needs to evolve and become a strategic business enabler, providing the right tools and infrastructure for innovation to occur more broadly across the organisation.
If an approach like this is not taken, there is a risk that business users will have unrealistic expectations around what a planned transformation program will actually deliver, and an even larger risk that 'shadow IT' will develop because the business loses patience with its existing IT infrastructure.
For example, an organisation may have a stated goal of doubling its revenue by 2020, but this may be difficult to achieve without significant co-operation between the business and IT, ensuring that everyone is on the same page.
This will likely require IT to adopt a new operating model – one that, at the core, focuses on security, governance and access to data but cedes much of the development of the experience services or APIs (application program interfaces) to line-of-business IT.
This also has many implications for DevOps – for example, rather than waiting to release a new business application until all its features are perfect, organisations could instead get it to the stage of being a 'minimal viable product'.
Once it is released to the market, it can then be further improved through an iterative development process.
Closing the IT delivery gap
While adopting a new operating model will deliver benefits, further initiatives will still be needed to help close the IT delivery gap.
One of the most important is to enable business-wide reuse and discovery by using an API-led approach that unlocks the value of existing systems, thereby allowing for rapid innovation without compromising the security and control of critical data and infrastructure.
APIs can be used everywhere – including building orchestration services or experience services in the form of new mobile apps or portals, or whatever the case may be.
The end result is building an application network from the bottom up, which connects every application, every device and every source of data. Every node that is added to the network adds value to every other node.
Rather than having point-to-point connections or fixed linkages between systems, applications and data stores, an application network allows resources to be plugged in using APIs. In time, some of this will be automated through machine learning and artificial intelligence.
This API-led approach allows for the rapid development of new features and services without requiring large-scale changes to be made to the underlying infrastructure.
The result is a more agile and responsive organisation, which can add new technologies to drive innovation, launch new products quickly and secure improved revenue opportunities.
Taking a bite-sized approach
Building an application network does not have to be a mammoth task that risks overwhelming those involved. Instead, it can emerge as all connectivity is driven by APIs, which are treated as products themselves and designed for consumption from the beginning – APIs that have a full life cycle from design to retirement and are the fundamental building block for all connectivity, internal and external.
It also requires a very different operating model in IT. It’s not just about the technology; it’s also about the people and the processes and changing how they come together to deliver speed and agility.
Digital transformation is a process that may never be finished, and organisations may well find they have to change their overall approaches to IT.
Those that will truly succeed in the digital age will be the ones that leverage APIs to deliver reusable assets and improve the way they operate and scale.
By focusing less on tactical implementations like going paperless and more on a cultural transformation that shifts IT’s role from a centralised support function to a business enabler, IT and business leaders can drive digital transformation initiatives to the finish line faster than their competition.
Will Bosma is the vice-president, Asia-Pacific, of MuleSoft.