In 1993, an organization witnessed the biggest loss—$8 billion—in the history of corporate America, sending it into a tailspin. Their loyal customers started abandoning them for their swifter and stable competitors. Business publications labeled them as an irrelevant organization whose era had come to an end.
However, they found their way back to growth and success by adding an important component in their business model: Transformation.
The history of IBM showcases how the IT pioneer has transformed itself multiple times during the last 100 years.
The concept of transformation is not new. But it can have different meanings for different organizations. There might be organizations that just require agile transformation, while there might be others whose business model demands a digital transformation.
The Difference Between Agile Transformation and Digital Transformation
In today’s fast-paced and competitive digital era, where the average life expectancy of a Fortune 500 company has declined from around 75 years—just half a century ago—to less than 15 years, it is becoming a necessity for an organization to undergo a business transformation to continue to compete effectively.
However, before going ahead with a meaningful business transformation, you need to analyze the difference between the agile and digital transformation. Only after you know all aspects of how your organization operates can you choose the type of transformation required to unlock new opportunities, to drive growth, and to deliver new efficiencies.
1. Clarity of Concept: Agile Transformation Vs Digital Transformation
An agile transformation aims to enable and execute delivery functions across the entire organization—both business and IT—to adopt an ideal blend of lean principles and practices, thereby fostering engagement and collaboration.
One of the vital components of agile development methodology is ‘Scrum.’ Scrum is a powerful and structured framework for continuous delivery, which is primarily focused around a team-based approach to deliver value to the business.
Digital Transformation contrarily, is a more customer-centric approach that aims to transform business by making technology a fundamental part of the business. It demands a thorough understanding of the needs of modern customers to rethink the entire business model with a strategic digital mindset.
The most important component of digital transformation methodology is ‘Technology.’ It becomes critical for organizations to continuously adapt and leverage emerging technologies to gain competitive advantages and complete in a successful digital transformation.
2. The Key Benefits: Agile Transformation Vs Digital Transformation
This makes many organizations wonder if the agile transformation model will only be showing its downsides soon.
51% of senior executives mention ‘Leadership Mandate’ as the reason which led to an increase in their organization’s level of agility over the past five years. This clearly implies that the agile transformation model is frequently implemented in a top-down manner, however, agility in an organization works best if imposed in a bottom-up fashion.
Thus, if implemented in the right manner, agile transformation can bring some tremendous benefits, including:
- Shorter time to market, thus more flexibility in product delivery.
- Preventing project-running errors because of efficient collaboration between development and testing.
- Healthy organizational culture with much more independent and self-reliant employees.
- Ability to incorporate change without disrupting the entire development cycle.
Achieving digital transformation, on the other hand, is not an easy process. However, if the investment is made in the right technologies, it can help your organization deliver customer outcomes that will make the transition worth the effort. Benefits include:
- Innovative new products and services, paving the way for growth opportunities in new and existing markets.
- End to end personalized, responsive, and hassle-free user experiences.
- Automated workflow processes and streamlined business operations boosting the organization’s efficiency.
Domino’s Pizza, for example, transformed itself digitally by building a digital platform named Anyware, which aimed to improve the ordering and delivery experience. The platform enabled the users to order pizza from a wide range of digital channels, like Google Home, Alexa, Apple watches, Smart TVs, Ford cars, and others.
The company also digitized its entire operations to allow their customers to have complete transparency from order till delivery. The result is that today, 65% of Domino’s US sales come from digital channels and 50% of its employees stationed at headquarters work in software and analytics.
3. Measurement of ROI: Agile Transformation Vs Digital Transformation
While measuring the ROI of agile transformation, it is advised to pay more attention to measuring results rather than expectations. The focus of expectations remains mostly on following operational protocols rather than value delivery.
To have a truly accurate ROI, measure the benefits of going agile using the following metrics at the start, mid-point, and end of the transformation.
- Cycle Time: It is the time taken to turn a request or requirement into delivered business value (production).
- Development Cycles: You can measure this by the time it takes from idea to solution and to which extent is this time has shortened since the transition to Agile.
- Agile Maturity: It is the number of sprints consumed to deliver working and tested software product.
- Business Value: This metric showcases the number of business value teams deliver from their sprints.
- Customer: The agile maturity will lead to a positive impact on the customer with increased speed to market (reduced cycle time) and value delivery (early and continuous delivery of prioritized feature set).
Coming to Digital transformation, 69% of transformation leaders scored the ability to “justify the value of digital transformation” through ROI as challenging or very challenging. Measuring the return on digital transformation investments is a tricky business.
When an organization undergoes a digital transformation, it goes far beyond the functional and business boundaries towards how an organization goes to market, the way it operates and the way it interacts with customers.
Thus, while determining the performance of your organization’s digital transformation, it’s important to take a portfolio view and not a project level view and come up with a digital ROI framework that will help you gauge your organization more precisely.
Remember, organizations with successful digital transformation initiatives see a 17% return on investment (ROI) over the next year.
You have an all-connected world today — we heard that on a planet of 7 billion people, there are 3 billion devices, and 2.5 billion of them are smartphones. When you’ve got such staggering numbers, the return on investment on digital is going to [come quickly] ~Rajeev Sawhney, president of strategic business at Mphasis
No matter which type of transformation you choose for your organization, the main focus is on how your enterprise magnifies your business value today and in the future. An ideal approach to consistent success is to open up and embrace a good blend of both digital and agile transformations in your business model.
Thus, thoroughly understand your business requirements and embark upon a transformational journey with an expert digital experience agency.