Getting Digital Right By delving deeply into customer experience, business process design and operating model change, organizations can more effectively move from ‘doing’ digital to ‘being’ digital.

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Executive SummaryFor most organizations across the globe, digital is not an option but a

necessity. For their own survival, businesses must respond to the threat

of what digital business analyst and author Brian Solis calls “Digital

Darwinism:” the phenomenon of technology and society evolving faster

than organizations can adapt.1

Countless businesses have already lost market value and relevance

due to their failure to adapt to industry dynamics. By 2018, according

to IDC, one-third of leaders in virtually every industry will be disrupted,

particularly by competitors that leverage third-party platforms to

innovate new offerings, reach new customers, radically expand supply

and go-to-market networks, and disrupt their industries’ cost and profit

models.2 The disruption will impact products and services, customer

expectations, business models, technology, business processes and

employee practices.

In response, most organizations have launched a digital initiative,

according to industry reports, and are investing heavily in this area.

This trend is expected to continue:

• By 2018, two-thirds of Global 2000 CEOs will have put digital

transformation at the center of their corporate strategies.3

GETTING DIGITAL RIGHT 3

• The percentage of enterprises creating advanced digital

transformation initiatives will more than double by 2020,

from 22% today to almost 50%.4

Not all digital initiatives, however, are successful. Too often,

organizations take a myopic approach and undertake initiatives in a

siloed fashion, by launching an online channel or mobile application, for

example, or automating a few processes. While these types of initiatives

can be important milestones on the digital journey, they need to be done

as part of a holistic and comprehensive strategy that considers not just

technology but also a change in mindset, behavior and, fundamentally,

the way businesses and employees work.5

To successfully transform, organizations weighing digital initiatives must

delve deeply into the following non-technology considerations:

• Customer experience.

• Business process design/redesign.

• The operating model.

This white paper focuses on how organizations can address these

elements across every digital initiative, in order to not just “do” but

ultimately “be” digital.

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Focus on Customer ExperienceResearch shows that nearly 89% of customers will walk away from a company with which they have considered doing business after just one poor customer experience.6 The impact can be significant – businesses are estimated to lose as much as 20% of revenue from unsatisfactory customer experiences.7

This is why we often see organizations turning to digital initiatives with the goal of improving customer service, enhancing customer experience and providing flexibil-ity to customers. However, these digital initiatives often become ends in themselves, with businesses failing to assess their impact on the customer experience. Discon-nects between channels often cause misaligned information on inventory, customer data and service level commitments.

Let’s take an example. A fast food restaurant launches a mobile application to enable customers to place orders. However, because the menu on the mobile applica-tion is not updated regularly, customers end up placing orders for items that are no longer available. Although the orders are confirmed on the mobile application, the restaurant cannot fulfill them, resulting in delays, cancellations and extreme customer dissatisfaction.

Customer experience in today’s digital era is not limited to digital channels but cuts across online and physical channels, as well. As a result, digital initiatives must focus on providing a seamless end-to-end experience. Each digital initiative should be assessed to determine if it affects customer experience and can be structured to deliver a positive experience.

Figure 1

Dissecting Digital Customer Experience

Essential Element How to Enable It

GAUGE IMPACT

ON CUSTOMER

Assess how the digital initiative would impact customers by answering the following questions:

• Would it impact all customers or just a particular customer segment?

• What would the impact be?

• Which part of the customer engagement process would be affected (pre-sale/sale/post-sale/service)?

UNDERSTAND CUSTOMER

NEEDS

Gather insights on customer needs that could potentially be addressed through the digital initiative:

• Do customers desire a particular functionality that could be incorporated into the digital initiative design?

• Are there any unmet customer needs that could be addressed by designing new products/services?

• Gather insights through discussions with customers, industry research and observation.

IDENTIFY CUSTOMER

PAIN POINTS

Understand the full customer experience through customer journey mapping, being sure to identify:

• Pain areas or improvements that can be addressed through the digital initiative.

• Opportunities to introduce digitization in order to streamline the customer journey.

DESIGN THE

CUSTOMER EXPERIENCE

Envision how the digital initiative would impact customer experience by:

• Designing a customer experience blueprint to understand how the initiative would impact customers.

• Prototyping and testing the initiative in real-life environments with a pilot group of customers in order to identify failure modes and fix them prior to launch.

GETTING DIGITAL RIGHT 5

Truly digital organizations enable customers to participate throughout the digital journey and play a critical role in crafting their own experience. The goal is customer autonomy, with businesses making key assets and capabilities available, and customers picking and choosing among these offerings to design an experience that suits their needs. (For more on this topic, please read our Cognizanti article “Making Digital Real and Rewarding.”8)

Figure 1 (previous page) depicts customer experience elements that need to be considered for every digital initiative.

Emphasize Business ProcessesA digital front-end cannot be effective when it has sub-optimal processes at its core. A successful digital initiative must have an efficient, optimized set of business processes at its foundation. Otherwise, the initiatives will operate in silos as technology-only projects, leading to further inefficiencies and customer and employee dissatisfaction.

Let’s look at a few examples to illustrate this point. A financial services organiza-tion in Asia-Pacific with which we worked launched an online channel that enabled customers to enroll for services by signing up and submitting documents online. However, at the back end, employees printed physical copies of these forms and manually keyed the information into multiple applications – clearly an inefficient, error-prone approach.

In another case, we were approached by an energy utility in Asia that had built an online portal to enable customers to view usage data and request additional services. However, the timelines and service level agreements specified in the portal were very different from the actual service level agreements that governed internal processes. This resulted in a mismatch between customer expecta-tions and business delivery capabilities, leading to low customer satisfaction.

All digital initiatives are associated with business processes in some way. Digital initiatives change or even eliminate existing processes or create the need to design new processes. Digital initiatives also provide an oppor-tunity to reengineer existing processes and make them more efficient. Hence, it is critical to study the impact of digital on business processes and redesign them to ensure seamless delivery. It is also imperative to define performance indicators that help measure the success of digital initiatives.

Figure 2 (next page) outlines the key aspects of business process design that are associated with digital initiatives.

Customer experience in today’s digital era is not limited to digital channels but cuts across online and physical channels, as well.

It is critical to study the impact of digital on business processes and redesign them to ensure seamless delivery.

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Fine-Tune the Operating Model Digital initiatives typically necessitate a review of the business operating model, as there may be a need to consolidate work, merge departments, upskill people, increase or reduce capacity, etc. If these considerations are not assessed and planned, the digital initiative will not achieve its goals.

Examples abound of businesses that fail to evolve their operating model to accommodate digital change. Consider this hypothetical case: A consumer goods organization invests heavily in analytics technologies and creates a team to mine data and generate insights. The analytics team generates reports and shares them with the marketing, sales and operations functions. However, the

Figure 2

Optimizing Business Process Reformation Activities

Essential Element How to Enable It

IDENTIFY AFFECTED

PROCESSES

Identify all business processes that would be affected by the digital initiative:

• Which functions would this digital initiative affect?

• Which processes within these functions would undergo change?

• What are the upstream and downstream processes that would need corresponding change?

DETERMINE THE TYPE

OF CHANGE REQUIRED

Identify the kind of change required in the affected processes:

• Which processes would need to be reengineered?

• Are there any new processes that need to be designed?

• Do any processes need to be discontinued in light of the digital change?

REENGINEER EXISTING

PROCESSES

Reengineer processes to align them with the digital initiative, while also making them more efficient:

• Define the existing process.

• Perform value stream mapping to identify improvement areas.

• Identify scope for process automation.

• Reengineer the existing process by addressing improvement areas, eliminating non-value- added steps and automating manual steps.

• Design the future-state process to tie in with the digital strategy.

DESIGN NEW PROCESSES

Design new processes to support the digital strategy/initiative:

• Identify new functionality that the digital initiative could deliver.

• Design processes to support the new functionality.

• Define how the new process would align with existing adjacent processes to ensure seamless functionality.

DIGITIZE PROCESSES

Identify automation opportunities within existing and new processes:

• Identify non-core, formula-driven activities/steps in existing processes and define scope for robotic process automation.

• Build automated components into any new processes being designed.

DESIGN HIGHLY

MANEUVERABLE AND AGILE

COMPONENTS OR SUB-

PROCESSES INTO PROCESSES

Design agile processes that can adapt based on context:

• Design processes such that the entire process or a few components/sub-processes are agile and can change based on customer preferences, real-time information and other environmental factors.

GETTING DIGITAL RIGHT 7

reports are barely used because market-facing personnel feel the analytics team is too far removed from customers to provide practical and relevant insights. This problem could have been addressed by designing a collaborative work envi-ronment or dissolving silos between teams.

In another case, a financial services firm introduced a hotline to provide customer service for multiple products and services instead of customers having to toggle between different customer care numbers. An IVR system routed calls based on the product or service in question. However, the customer care teams continued to operate as they always had, as part of different business units, based in different locations, without a seamless connection. Hence, if customers chose an incorrect option in the IVR or had queries across multiple products, they were rerouted multiple times. Customers complained that no team or individual seemed to have

Figure 3

Assessing Operating Model Change

Essential Element How to Enable It

IDENTIFY IMPACT ON THE CURRENT OPERATING

MODEL

Assess how the digital initiative would affect the current operating model in terms of:

• Teams/functions that would be impacted.

• The current organizational structure, keeping in mind the need for enhanced collaboration/interaction between functions.

• How new products/services created by the digital initiative would require a redesign of teams and functions.

DEFINE TARGET OPERATING MODEL AND DESIGN FOR

COLLABORATION

Define the target operating model in terms of:

• Changes in organizational structure.

• Changes to existing functions and creation of new functions.

• Interaction model between functions (including not only delivery/sales/marketing but also adjacent HR/legal/compliance/finance functions).

• Interaction model across various channels and the teams supporting those channels.

• Potential to create a shared service model for digital processes.

DEVELOP A CHANGE AND PROGRAM MANAGEMENT

APPROACH

Ensure employee involvement, buy-in and participation in the digital initiative:

• Ensure leadership commitment to the initiative.

• Encourage leaders to communicate the business case and the need to make this change.

• Create change agents to help coordinate and lead the digital effort.

• Encourage participation and ideas from employees.

• Establish a robust program management strategy to ensure seamless execution of the initiative.

DETERMINE CAPACITY REQUIREMENTS

Identify capacity requirements to support the target operating model:

• Would the digital initiative result in automation and productivity improvements, leading to capacity creation?

• Would the digital initiative result in introduction of new processes/services, leading to capacity requirements?

DEFINE SKILLSET REQUIREMENTS

Identify skillsets required of teams to support new functionality/processes:

• Is it possible to upskill/cross-skill existing resources?

• Does the initiative require entirely new skillsets?

• If new skillsets are required, would it be optimal to hire or contract resources?

• Is sourcing or offshoring a more cost-effective option?

DEFINE SUCCESS CRITERIA

Define success criteria for the digital initiative in terms of:

• What is/are the key metrics that would establish the success of the digital initiative?

• How do these metrics align with organizational/strategic goals?

• Identify and gather appropriate data points to build a business case for resource and cost allocation for the digital initiative.

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end-to-end information. All this could have been avoided through an operating model that ensured cross-training or led to the creation of shared services. 9

Yet another example is a travel services company that decided to increase its online sales by making existing products and services available on the Web. However, managers consistently failed to meet their online sales targets because the products were not designed to be sold online. Neither the systems nor the products delivered on the advantages of the digital channel. Fur-thermore, the digital shift faced huge internal resistance, as revenues were still very much dependent on offline travel agents as the primary distribution channel. Those agents and the business heads internally saw online as a competing sales channel that would cannibalize the company’s main source of income.

Management attempted to fix the situation by setting up online as a profit center (measured mainly by sales), thinking this would better incent the e-commerce team while not impacting the offline business heads. Unfortunate-ly, this governance setup made it impossible for any digital change in the overall business to happen.10

When digital initiatives are conducted in silos, without corresponding changes in the business operating model, they cannot achieve their potential, either in terms of improving the customer experience or in realizing a significant return on investment.

To ensure the success of digital initiatives, organizations must proactively change/evolve their operating models. Figure 3 (previous page) outlines key operating model considerations.

Looking ForwardA digital initiative that ventures beyond the technology lens and focuses on customer experience, business processes and operating models will realize far greater success. Considering the importance of digital initiatives to the survival and growth of the organization, it is imperative to consider all factors and design a future state that exceeds stakeholder expectations.

Organizations should consider the following factors when embarking on their digital journey:

• View each digital initiative not as a mere technology intervention, but as a holistic change that cuts across the entire value chain and creates new value propositions.

• Regard end users as partners on the digital journey and involve them in ideation, evaluation, design and delivery.

• Design versatile processes that can adapt and reinvent as customer preferences and business models change.

• Design operating models that enable cross-functional interaction to provide the best customer experience and value.

• Create an open, innovative environment by cross-skilling and upskilling employees

and enable them to own and drive digital transformation.

When digital initiatives are conducted in silos, without

corresponding changes in the business operating model, they cannot achieve their potential,

either in terms of improving the customer experience or in

realizing significant ROI.

GETTING DIGITAL RIGHT 9

Footnotes1 Brian Solis, “Digital Transformation and the Race Against Digital Darwinism,” Brian

Solis blog, September 2014, http://www.briansolis.com/tag/digital-darwinism/.

2 “IDC 50th Anniversary: Transformation Everywhere,” IDC, https://www.idc.com/IDC_50anniversary/download/IDC50thAnniversary.pdf.

3 “Gartner, IDC and Forrester on the Future of Digital Transformation,” What’s the Big Data, Dec. 27, 2015, https://whatsthebigdata.com/2015/12/27/gartner-idc-and-forrester-on-the-future-of-digital-transformation/.

4 Gil Press, “Six Predictions about the Future of Digital Transformation,” Forbes, Dec. 6, 2015, http://www.forbes.com/sites/gilpress/2015/12/06/6-predictions-about-the-future-of-digital-transformation/#511a9f7125b4.

5 Rob Asen, Ted Shelton and Burkhard Blechschmidt, “Being Digital: Making Digital Real and Rewarding,” Cognizanti, Vol. 9, Issue 1, 2016, https://www.cognizant.com/content/dam/Cognizant_Dotcom/whitepapers/being-digital-making-digital-real-and-rewarding-cognizanti12-codex2094.pdf.

6 “2011 Customer Experience Impact Report,” Oracle Corp., 2012, http://www.oracle.com/us/products/applications/cust-exp-impact-report-epss-1560493.pdf.

7 “New Oracle Global Research Study Finds that Brands Could Lose up to 20% of Revenue Due to Poor Customer Experiences, Yet Many Struggle to Develop Successful Strategies,” Oracle Corp., Feb. 4, 2013, http://www.oracle.com/us/corporate/press/1903222.

8 Rob Asen, Ted Shelton and Burkhard Blechschmidt, “Being Digital: Making Digital Real and Rewarding,” Cognizanti, Vol. 9, Issue 1, 2016, https://www.cognizant.com/content/dam/Cognizant_Dotcom/whitepapers/being-digital-making-digital-real-and-rewarding-cognizanti12-codex2094.pdf.

9 Personal experience of the author as a customer of the bank, followed by discus-sions with bank employees.

10 Jan Sedlacek, “Why Kuoni Failed,” Jan Sedlacek blog, June 11, 2015, http://jansed-lacek.net/kuoni-failed-the-digital-transformation/.

About the AuthorUma Kasoji is a Director within Cognizant Business Consulting’s Strategy and Transformation practice. She brings more than 15 years of experience in business transformation and operations consulting across a variety of domains and geographies. Uma has helped various organizations in defining and executing strategic change and has led stand-alone projects to deliver cost optimization, risk reduction and efficiency improvements across a variety of business areas. She is a Six Sigma Master Black Belt, has expertise in Lean and received an MBA from the Indian Institute of Management. Uma can be reached at Uma.Kasoji@cognizant.com | https://in.linkedin.com/in/umakasoji.

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GETTING DIGITAL RIGHT 11

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