The management challenge in a digital transformation
IT Strategy vs Digital Transformation
Digitalization is more a management transformation than a technological upgrade
Organizational Structure for the Digital Era
Digital Migration Partners (2015) suggest that digital transformation is more of a management challenge than a technology one. They argue that the right way to approach it starts by assessing how technology impacts the organizational structure and the company’s value chain.
Companies tend to inherit organizational structures that have been successful in tackling past challenges. In large organizations, IT management is often ‘system-oriented. Organizational units are delimited by the boundaries of software applications within the firm’s IT ecosystems. That organizational structure is characterized by functional and geographic silos that do not share information openly, as presented in the Figure, thereby leading to sub-optimal performance. That gives rise to fragmentation of IT management, with every single application having potentially different or even conflicting interests. Such organizations might not suit digital businesses in which efficiency is reached with integrated management at the product level (Digital Migration Partners, 2015).
Agility & Hyperawareness
No more space for silos
According to McConnell (2015), politics might prevent digital transformations due to:
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- Digital Migration Partners, 2015. Organizational Design As A Competitive Advantage In The Digital Era, Madrid: Digital Migration Partners S.L..
- Raab, M. & Griffin-Cryan, B., 2011. Digital Transformation of Supply Chains, s.l.: Capgemini Consulting.
- Kane, G. et al., 2016. Aligning the organization for its digital future.
- McConnell, J., 2015. The Company Cultures That Help (or Hinder) Digital Transformation.
- Rivkin, J. & Keyworth, B., 2015. 2016 IDC FutureScape CIO Agenda Prediction 4: 70% Failure Rate of Siloed Digital Transformation Initiatives in 2018, Framingham: IDC Research, Inc..