The Progress Report

Where and when does the digital business journey end? (Hint: it doesn’t.)

Episode Summary

Join our experts as they discuss the state of digital business now and explore how you can take a more holistic approach to continuous innovation in a digital-first world.

Episode Notes

Digital transformation projects initiated this year will take twice as long and cost two times more than expected, according to Gartner. After more than a decade of investment, many companies are still struggling to make digital deliver at scale. What are the most common pitfalls leaders face in their pursuit of digital-first experiences? What role should IT modernization play given the pace of technology change? And where and when does the digital business journey end?Join our experts as they discuss the state of digital business now and explore how you can take a more holistic approach to continuous innovation in a digital-first world.

Hear from our guests Arun Kundu, Global Head – Consulting, Cloud & IT Strategy and Transformation, Kyndryl; Benedikt Ernst, Partner Leader and Head of IT Strategy and Transformation - Germany, Kyndryl;  Guy Tallent, Vice President: IT Strategy & Transformation - Digital & Industry.

Episode Transcription

Nel Akoth [00:00:02] Good afternoon and thank you so much for joining me. On today's episode, we will be discussing the digital transformation journey and where it ends. But more of that to come. First, I'd like to introduce three digital transformation experts that I am so fortunate enough to have joining me today, all of them from Kyndryl's Advisory and Implementation Services Practice. We have Arun Kundu, Kyndryl's global head of consulting for Cloud and I.T. Strategy and Transformation. I'm also joined by Benedikt Ernest, partner, leader and head of I.T. Strategy and Transformation for Kyndryl, Germany. And last but not least, we have Guy Tallent who is the Vice President - IOT Strategy and Transformation for Digital and Industry. Arun, Benedikt, and Guy, a warm welcome and thank you for joining me on this podcast today. 


Guy Tallent [00:01:10] My pleasure. 


Benedikt Ernest [00:01:11] Thank you very much for having us. 


Nel Akoth [00:01:13] According to Gartner, digital transformation projects initiated this year will take twice as long and cost two times more than expected. Just think about that. This tells us that while the term digital transformation might be overused, many companies are not yet getting it right when executing. After more than a decade of investment, many companies are still struggling to deliver at scale. So today, we'll walk through some of the most common pitfalls leaders face in their pursuit of digital first experiences, what role IT can play, and where that journey ends, if it really does end. So Arun I want to start with you, to start with your perspective, having worked for years with Fortune 500 companies in this exact space. What are you hearing from them around digital transformation? And really how are they thinking about it, especially right now after all the disruption we've all gone through over the past few years? 


Arun Kundu [00:02:18] Thanks Nel. The reality is, when we think about digital transformation, it is really about helping businesses and industries both exist and grow. But leveraging the best and the current evolving technologies right now. So there's a business context and then there is leveraging technology in how they're defining their right to play, how they service their customers, and how they build out. Every industry today in a post-pandemic era or a post or a current pandemic era, is going through a multitude of trends. Businesses are getting smaller. More micro industries are coming out that are leveraging a whole set of both applications and infrastructure that are micro sizing. And the impact of the exponential growth is becoming extremely hard for companies to kind of handle, manage themselves, and that's why they need partners like us, like Kyndryl and others, to help them in that state. It is a continuous journey, but the journey needs a few legs and stools to give it the weight that it deserves. Right. Guy, over to you for something else that you might want to add in here. 


Guy Tallent [00:03:29] You know, if you look back over the last 24 months, there was a rush to remote. Every company had started a number of digital transformation initiatives. The pandemic forced them to fast forward remote engagement of our customers, of employees, of partners. So it really fast forwarded everything to where we are now. We've been through a real peak in activity. Where companies are focusing now is really to optimize what was done over the last 24 months and continue on modernization journey as they move forward. Companies will always want to bring different technologies into their suite based on what works for them and what their industries are pursuing. 


Nel Akoth [00:04:24] Now, Guy, I'd like to ask your thoughts and perspective on I.T. modernization and digital transformation. These two terms are typically used interchangeably. How are they different or how are they similar? Or better still, how are they interconnected? 


Guy Tallent [00:04:42] They certainly are used interchangeably a lot of times. When we think about I.T. modernization in digital transformation, digital transformation, to me, and what we talk with our customers about, the reason digital was emphasized, is that companies are trying to enable digital engagement channels. Digital ways of working. You know, for the customers, employees, partners and other service partners that they're integrating. Going forward in I.T. modernization to us, really is focused around the integration of all channels into a seamless modern operations that businesses can use and thrive on going forward. 


Nel Akoth [00:05:32] That makes a lot of sense. And, you know, if I just kind of thread that in Benedikt, I want to just bring you in on from the work that you do with customers. Do you find that approaching this digital primarily from a technology or a business problem perspective? What type of patterns do you see there? 


Benedikt Ernest [00:05:52] I think it depends a little bit with whom you speak on this kind of question. I think this is the key element of understanding digital transformation, that it's not always about technology. Of course, you can understand technology as an kind of enabler, but it just enables a different type of value creation. So I think there's a momentum in different industries or let's say across industries in the healthcare industry as well as in the automotive industry. Digital transformation is seen as, first of all, something from a business perspective that you can create processes, value chains, even the collaboration in an ecosystem completely different by using different technologies, using different interfaces, using different ways of working. And I think this is the kind of three step approach in this context that you understand the business needs of digital transformation, that you translate them into your value creation of a companies business and that you think technology independent or vendor independent, what is the best technology which can enable these new requirements? [00:07:11]And therefore, a partner such as Kyndryl who has a little bit of a vendor agnostic capable in having different technology partners at the hand, is, I think, quite essential to do this translation from business to technology requirements. [15.4s]


Nel Akoth [00:07:28] Given my role as Kyndryl's Chief Transformation Officer, I have to admit the misnomer. Typically, when people think about transformation, you think IT is going to come and solve everything. But the reality is, IT's just helping you. First, you need to understand what are the things around your business, the processes that you're enabling. And then IT is going to help you really accelerate it and/or simplify it. So how can leaders who might be listening to this today take a more holistic approach in their digital business journey? 


Arun Kundu [00:08:00] I think at Kyndryl, the way we kind of approach this, right, the holistic frameworks in the way to kind of look at the lens, is really look at it as four legs of the digital transformation stool, so to speak. Right. The first leg is very much weighted in obviously the multitude of technologies that is upon us today. The amount of next generation technologies that are there, whether it's in areas of extreme personalization, emerging business models, the operational efficiency, the integration of the partner ecosystems or the real time insights. All of these are business elements that are impacted by technology. That's one of the stools, right? So we absolutely want to make sure, do you have the right partners? Do you have the right level of maturity in engaging with those partners? That's one. That's the first leg. The second leg is as you're adopting these technologies, the operating model, whether the IT operating model or even the business operating model, needs to be tweaked to allow for these technology adoption and the benefits realization to occur. Right. So there's a lot of focus on the operating model next generation. The third one is the structure and the process, all of the workflows. The next generation of workflows and how we interact across these ecosystems of these technologies with the infrastructure for these operating models. And the final but definitely not the last one, which we need to pay the most amount of attention, is the people, the culture and the human aspect of this. At the end of all of these digital transformation, there is an adoption. An adoption by people within the business, by customers of our customers. And that has to be meticulous. Right. And that that would probably be my recommendation. 


Nel Akoth [00:09:53] And with that, Benedikt, I'm wondering, you know, how would you say you balance the need to drive change in growth while managing business as usual in this business environment? Because you know what? We again, we need an environment that are increasingly unpredictable. 


Benedikt Ernest [00:10:10] In general, you have different options how to manage this kind of problem. On the one hand side, you need to accelerate your digital transformation. But of course, the clients which we are talking about have to manage critical IT systems, critical infrastructure. So you need to take them very seriously and you need to balance new innovative projects. On the one hand side, you have the daily operations and on the other hand side you try to roll out your digital transformation initiatives, giving them the time to really implement these different digitization initiatives. And the sustainable way is also a key. So we see a huge risk while trying to do this between the daily operational activities that this is not really a sustainable implementation approach. You could also try to balance the digital transformation by having an external partner who is taking care of the full digital transformation project on the one hand side. And on the other side, you as a client, try to manage your daily operations. There are also pros and cons involved that your team is not part of this innovation journey. In parallel, between the normal daily operations, we define a new target operating model where we have a new IT organization strongly aligned to the business, and that somehow, we manage and merge at some point in time with the new IT operating model and the old one. This is a combination which we've tried now several times in different industries. You involve the critical people and you involve the teams who are able or who are required to drive this digital transformation after the initial rollout. 


Nel Akoth [00:12:00] Arun, in your opinion, when is a good time for companies to consider bringing consultants in to help?


Arun Kundu [00:12:05] Nel, first of all, you're asking a bunch of consultants when it is timely to bring in consultants.... so without leading the witness. 


Nel Akoth [00:12:13] I thought I'd try. 


Arun Kundu [00:12:15] I have no idea. But see, this is where it gets interesting. First of all, I think I'm going to respond to that in a few different factors. Consulting, as we know today, is not consulting as it was five years or ten years ago. A customer today, when they are stuck, and there is really a question of:  Who do I engage that can at least show me a path to - and show me a path to based on experience, and based on things that they see live with other customers like that - That's how they engage us. And in fact, not just us, but even the world outside of consulting at large. Right. But with that being said, the pain point really is not knowing that is one area. Secondly, knowing, but not having the right tools or the skill sets and resources to leverage firms like us. And last and definitely not the least, is we sit on such a bed of knowledge, right? A bed of knowledge from our own resources, and a bed of knowledge of the whole ecosystems that are partners that are together with us. And plus, at the same time, our view out to the rest of the industry. That is what you would, you know, at the end of the day engage a consultant with. But it is really implementable, pragmatic approaches to consulting, which is really what today's is of consulting you see more of and what we pride at least to ourselves in general to be strong in that area. 


Nel Akoth [00:13:40] And Guy, I want to hit you with a hard question, just, you know, going through that. And I hope you're ready. Now, in your view, is there a finish line for digital transformation? For example, some customers come with a very specific digital initiative in mind, which I believe has a start and an end. When they achieve that objective, are they really done? Are they really typically done? What's your thought? 


Guy Tallent [00:14:06] Projects start and end, but the journey continues. Our customers are on journeys. They're transforming different parts of their business, sometimes simultaneously, and other times in sequence. They're on a journey to improve customer experience. To improve employee engagement. To improve, you know, cost efficiencies and productivity. All of these mapped to a business goal. So if the business goals are static, projects could come to an end and nothing else changes. That's not reality. Businesses are constantly in change. They're aspiring to do more. And as such, again, lining technology to the business goals. We can end a project, but we're constantly evolving the transformation stack or the modernization activities to include the next stretch goals that the company needs to hit. 


Nel Akoth [00:15:16] So Benedikt, we've spoken a lot about digital transformation, which is really at the heart of what Kyndryl does for our customers. And in many instances we've been part of their journey for years and they've helped them throughout. What role does our advisory and implementation services practice play in this journey today for customers? If we could just, you know, share that. 


Benedikt Ernest [00:15:41] I think there are a couple of very, very good points in this, let's say, journey or digital transformation journey, where advisory and implementation can come on. If we have a client situation and we step into this current situation, we understand the strategy, the digitization strategy. And if we position Kyndryl, for example, as a partner for the implementation journey, what would be the first question of our clients? And this is what we see so often. Have you done this before? Do you have experience in this kind of digital transformation? Do you have experience? Do you know the showstoppers? Do you know the common challenges which we will experience in our partnership and in our transformation? And I think this is also the advantage when you choose a company like Kyndryl that we have these kind of two parts of our business model. On the one hand side, we have this advisory and implementation service model, which is really essential to guide a client according to the definition and the execution of the transformation strategy. And we can also benefit from our managed service business where we are not only running the critical infrastructures for our clients, but where we put use each and every day a lot of intellectual property, best practices, and know how to run in secure and resilient infrastructure, for example. And this makes a good partner that we are not only doing kind of PowerPoint work, but we can also define the strategy. We are able to implement the different transformation initiatives, test them to roll them out, to train the people, and also to manage them. 


Nel Akoth [00:17:28] Not only do we have the expertize, not only don't we have having done it for a while and we manage it for a big client, but we are also living it as a company. We are also going through a similar journey. Now, on this last question, I'd like to hear from each of you. If you want to give one piece of advice to a customer that's embarking on transformation, in the midst of it, or wrapping up their digital initiative, what would that be? Let me start with you, Guy. 


Guy Tallent [00:18:00] I'd say start with the business in mind first. The complementary side of that is frame all of your I.T activities in the context of an integrated IT supply chain. Become a strategic enabler of the business first and foremost. 


Nel Akoth [00:18:23] Arun, what do you think? What would be your advice? 


Arun Kundu [00:18:26] I think, I mean again, hearing the majority of our CIOs, one thing that they've all kind of anchored on and talked about, including our own, is digital transformation is complex. It is very large. No organization can raise their hand and say "We can do it alone". We ourselves as Kyndryl are not doing it alone. And that's why the one thing is, know the partners that you want to take on your journey with you and know them well. Because this success is not a success by self. To bring those capabilities for the business and for your customers, you really need to know the ecosystem of partners. And selfishly, yes, in Kyndryl we would love to be one of them. But again, we all play our part in that journey with you. Right. But it's extremely important to hone in on those partners in your digital journey. 


Nel Akoth [00:19:17] Benedikt, anything to add on how you'd advise or CIOs out there on this journey? 


Benedikt Ernest [00:19:23] I would say don't think only on the short term initiatives. I know that there is sometimes maybe a lot of pressure in bringing innovative digital transformation initiatives and implementing them in an organization. But if you really want to drive digital transformation, then you need to follow a sustainable strategy, which is not only implementing one piece of technology. Understand the business drivers, roll it out based on the technology as being an enabler, and not only focus on short term actions, but your long term strategy. This would be my piece of advice. 


Nel Akoth [00:20:02] Really great advice, and I can't thank you all enough because as you were giving that advice, it resonated with me very well. This digital transformation is a journey and having the right partner to work with you and go with you on this journey is critical. And again, I want to thank you to all our listeners. I hope you gained new insight today. You gained an appreciation for the fact that digital transformation, again, is a journey. It's a continuum. It truly never ends. And your success is our passion. Get the right partner to get you there. Until next time. I'm Nel Akoth, Kyndryl's Chief Transformation Officer.