Digital Economy Dispatch #032 -- Why a Focus on Your Software Delivery Maturity is Essential to Digital Transformation

Digital Economy Dispatch #03218th April 2021

Why a Focus on Your Software Delivery Maturity is Essential to Digital Transformation

I was talking to an old friend of mine this week who told me that he had recently bought a new car. He decided to get a Tesla. After test driving several different cars from a variety of manufacturers (including a Porsche!) he picked the Tesla for one simple reason: the software.

Our conversation reinforced the difference in approach I see in many organizations across every domain. Driving the Tesla was different as they had redefined the driving experience around their highly configurable software platform. They are a great software company in the automotive business. His experience of the other cars was that they were great vehicles struggling to be managed and controlled by an embedded software platform.

How does this make a difference? A good example is how often the Tesla’s software is updated using its Over-The-Air (OTA) approach. It is estimated that since the Tesla Model 3 first hit American streets in 2017 more than 120 OTA updates and upgrades had been introduced by early 2020. This is one way that the car adapts and evolves to the conditions and needs around it.

Many commentators have observed the importance of a well-developed approach to software delivery as fundamental to digital transformation. Over 10 years ago, Marc Andreesen’s “software is eating the world” comments we intended as a prediction and a provocation. They now seem like an obvious observation of the digital journey we’re all experiencing.

So, is it going too far to say that the speed, quality, and reliability of a company’s software delivery approach is a very good indicator of its digital transformation maturity? I don’t think so.

There is no doubt that the adoption of digital technology has helped all organizations maintain their current operations. However, digitizing previous ways of working is seen as necessary but insufficient to deal with today’s challenges. A digital transformation is essential. Leaders in digitally transformed organizations drive change and manage uncertainty by maintaining closer ties between business needs and delivery of new software capabilities into production.

Particularly critical to progress is the move toward extending the integration of IT development and operations functions, often referred to as DevOps, beyond their current boundaries. In general, as organizations adopt more agile practices and invest in tools to accelerate DevOps for digital transformation, they increasingly streamline their software development and delivery workflows. The emergence of Value Stream Management (VSM) recognizes that the discrete automation silos that defined DevOps are evolving into platforms that orchestrate application delivery as a value stream.

In today’s fast-paced world, understanding more about digital transformation and the role of VSM is vital. Over the past few months, I have been working with digital.ai, a technology company helping large enterprises in digital transformation, as they investigate the current attitudes and activities being undertaken in support of digital transformation and the role of VSM in strengthening the relationship between business goals and IT delivery.

One of the key tasks I have supported was helping to conduct a survey across three groups within Large Established Enterprises (LEOs): IT decision makers (ITDMs), Security decision makers (SDMs), and Business Executives (BEs). We’re keen to get a deeper sense of their attitudes and actions in driving their software delivery capabilities to power digital transformation initiatives. In particular, through this survey in December 2020 we wanted to gain insights into how they see investment in digital technologies creating measurable value to the business, what are the experiences with digital transformation, and where additional improvements to practices are expected in the future.

The key results from the survey are fascinating, and I’d highly recommend you take a closer look. Here are my personal observations on the highlights from the survey and its associated report:

• While almost all ITDMs, SDMs and BEs involved in digital transformation report that it is going well at their company, half say it is not producing the results they expected overall.

• A majority of ITDMs, SDMs and BEs say that problems with digital transformation have damaged their company’s bottom line.

• All ITDMs, SDMs and BEs polled who are involved in digital transformation say that organizations need visibility into business planning processes to produce better outcomes.

• In order to succeed, organizations need to get all teams on the same page according to over nine in ten ITDMs, SDMs and BEs involved in digital transformation.

• While over three-quarters of ITDMs, SDMs and BEs involved in digital transformation say COVID-19 had an impact on the alignment between their business and software delivery systems, only three in ten say it was a large impact.

• Overall, there is close alignment between the three polled groups on digital transformation issues. They reported that they are working well together and aligned to meet the objectives of their company. However, they do still worry about misaligned goals between business, IT and security leaders.

• There is a reported high understanding of VSM and significant adoption in companies. However, within BEs there is a high level of questioning about its role and fit in the organization.

• Almost all stakeholders say they would be likely to use a platform that connected their software delivery processes to business objectives if it offered their organization insights needed to make better decisions that increased value delivered to their customers.

What should we conclude from this survey of 600 decision makers from LEOs with respect to digital transformation? I take away three key broad insights from this work.

First, that digital transformation still feels to many people like a technology upgrade that is being done to them rather than a business improvement that is carried out to support the organization’s broader objectives. A much more integrated planning approach is required to ensure organizations recognize the need to align the variety of stakeholders in their digital strategy.

Second, that the software delivery backbone of many digital transformations provides a basis for coordination and alignment across the organization. This is strengthened by recognizing and supporting a strong software delivery approach focused on optimizing value to the business.

Third, as attention focuses on the business value delivered through digital transformation, clear visibility and accurate information across the key software delivery processes will be essential to support business agility. Investing in a more integrated solution to value stream management will become a high priority for LEOs to build resilience and drive growth in a volatile business environment.

The full digital transformation progress report is available at: info.digital.ai/digital-transformation-progress-report.

Digital Economy Tidbits

Bouncing back from failure. Link.

Business Transformation 2021. Some very interesting data about the possible bounce back from the covid crisis of 2020. Where and how will organizations invest in digital transformation?

Investment in digital transformation is expected to approach $6.8 trillion between 2020 and 2023 as the world economy digitises. Yet the vast majority of these investments stall or fail – and usually for reasons within a company’s control. To make the most of the digital opportunity, it is not enough to want to transform, businesses must have the right leadership in place and properly resource projects.

How HR can help build the organization of the future. Link.

One of the areas I believe require greater attention is the role HR play in guiding and driving digital transformation across the organization. I thought this was a very useful article from McKinsey talking about this topic, and offering a perspective on 9 key areas of focus for the future.

The pandemic underscores the urgency for a more dynamic talent and work model. Human-resources leaders can help by focusing on identity, agility, and scalability.