Summary : In the past, there was a lot of emphasis on how to do a project well and how to deliver a project, but when we really get into the digital transformation, one of the problems people find is “we don't know what we don't know”. What does it mean? No enterprise can predict the direction of its digital transformation, which is realized in the process of continuous exploration, continuous progress, continuous iteration and continuous correction.

The following article is from CIO Development Center.

CIO Development Center:
By building online and offline communication platforms, CIO groups can promote the exchange of experience in enterprise management, IT strategy, informatization practice and enterprise digital transformation, so as to enhance enterprises' cognition of the role of informatization on the whole, drive the overall improvement of enterprise informatization level and accelerate the pace of enterprise digital transformation.

This article will take you through the relationship between digital transformation and Agile and Productivity

"In the past, there was a lot of emphasis on how to do a project well and how to deliver a project, but when we really get into the digital transformation, one of the problems people find is “we don't know what we don't know”. What does it mean? No enterprise can predict the direction of its digital transformation, which is realized in the process of continuous exploration, continuous progress, continuous iteration and continuous correction."

This article, by interviewing Daniel Sun, research vice president of Gartner, specifically discusses how CIO promotes the collaboration between IT and business, gradually transforms the traditional project and waterfall delivery mode into product-centered agile delivery mode, and realizes the goal of enterprise digitization and business model innovation through digital transformation.

Daniel Sun, Research Vice President, Gartner

Source: m.ileader.com.cn

Key points of digital transformation

What is digital transformation?

Daniel Sun explained "what is digital transformation" through a classic case of digital transformation. For example, a sports equipment enterprise has gained a good market share through personalized marketing. However, the business department of enterprises find that even they have sold a lot of products, they have no ideas of why the customers like their products and how they buy. Therefore, the business department puts forward the requirement of data precipitation, and then the enterprise builds a data platform. At the same time, the enterprise has developed mobile applications in the front end to record customers' eating and exercise habits. In addition, companies have developed smart wearable devices, such as a corset with a chip placed in the heart that records the user's heart rate in real time.

After that, these types of data (structured, unstructured and streaming data) are collected together, and "machine learning" and "deep learning" are used to process the data to generate algorithms and models, and these models are provided to insurance institutions to support their accurate underwriting. This sports equipment company has successfully become a "smart medical big data service provider" through digital transformation.

Three key points of digital transformation.

According to Daniel Sun, there are three key points in digital transformation: First, the deep integration of digital technology and business scenarios. Second, step by step, innovation and change process. Finally, new business models are created and new business revenues are generated. "In the example above, what is the business model? It's data as a service or algorithms and services. The process of business model innovation of any enterprise cannot be completely replicated. It needs to be generated in a process of continuous exploration combined with business conditions."

Digital Transformation, Agile, and Productivity

But what is the relationship between digital transformation and Agile and productivity? Daniel Sun introduced, in the past, project development is an activity that several people formed a team and ensure the requirements are clear in the early stage, and then handed over the requirements to the development engineer, test engineer, delivery engineer to implement them step by step. In the early stages of development, a third or more of the time may be spent on requirements analysis, emphasizing the invariability of project delivery. However, the process of digital transformation is a process of change and exploration, which naturally forms a pair of contradictions.

If the enterprise digital transformation is based on the project model, or someone proceeds a digital transformation project, it's almost impossible to succeed. Why? Because you can't predict the future up front, companies should emphasize “Agile”, focus on “Speed” and “Flexibility”. "That's why Internet companies are so hot right now. All products of Internet companies are iterations, agile, microservices, containers...... The driving force behind these buzzwords is the quest for digital transformation, which requires iteration, exploration and ever-accelerating innovation."

Daniel Sun further explained that the relationship between digital transformation and agile is not separate, but sequential. "From informatization to digitization, and then to digital transformation, people found that the original work mode is no longer appropriate, and the 'agile' work mode emerged. The emergence of 'Internet +' mode is to transform the business model of many traditional enterprises from the traditional offline mode to the virtual online mode by means of the Internet mode, which has greatly promoted the application and implementation of digital transformation."

The difference between "project system" and "product system"

Daniel Sun also explained the difference between "project system" and "product system" in detail:

First of all, the project system emphasizes the plan, and the plan should be as detailed as possible, as far as possible to avoid changes. On the contrary, product system emphasizes exploration and allows to embrace change.

Secondly, project system emphasizes document development, while product system emphasizes interaction. On the one hand, the interaction is from internal. Through a mixed team of product managers, marketing, development, and even legal personnel, we are constantly colliding and generating new ideas together. On the other hand, the interaction is from the market (outside), through responding to user feedback to update iterations quickly.

Finally, project system focuses on the progress of the project, while product management focuses on value, specifically, whether the product can bring value to the enterprise.

Source: zhuanlan.zhihu.com

The project system is not so reliable.

In the past we have often said that projects are reliable and manageable, and according to Gartner research, projects don't seem to be so reliable. The project system emphasizes on time and on budget, but 38% of the projects are overdue, overdue at about 20%. Secondly, 30% of the projects will exceed the budget, and the range of over budget is relatively large, at about 17%.

Digital transformation is product-centred

In this context, we find that enterprise digital transformation is product-centred and delivered in an agile way.

According to Gartner data, product manufacturing delivery accounted for about 21% of the whole in 2016. Last year, 40% of enterprises delivered products by the product system mode. In 2022, the number basically doubled, and the product manufacturing delivery reached 79%.

In addition, the product-centred agile delivery model in the enterprise surpasses the project-based waterfall delivery model. The product-centred development model has taken over 45% of the development ratio. However, 60% of the development tasks are still under the traditional project system. Because the project system is also referred to a term called "waterfall + iteration". Further more, the traditional waterfall model are divided into sub-waterfalls. So, the project system is still occupied a mainstream position. If “waterfall + iteration” is understood as an agile transition, production development has taken over the mainstream position.

From the CIO point of view, from the development point of view, from the IT point of view, we believe that agile and production must be implemented. Below is a Gartner survey of CEOs around the world, looking at their demands for digitalization, business models, and innovation, and discussing how digitalization relates to the enterprise.

Source: zhuanlan.zhihu.com

First, the CEO expects digital revenue to grow at a compound rate of more than 10% over the next two years. The traditional CIO who “guard the kingdom”will gradually lose the market, and the CIO with the ability to " expand the boundary" will be favored. This is both an opportunity and a challenge for CIOs. For example, some CIOs who are good at integrating business with IT and focus on utilizing IT to promote business development have been promoted to CFO and CEO. But on the other hand, some CXOs or business executives with IT knowledge are also replacing traditional CIOs. As a result, CIOs must be vigilant and look for opportunities to leverage IT to drive new digital business growth.

Second, 63% of CEOs believe they will change their current business model within three years. The end product of digital transformation is the creation of new business models, and if the CIO can grasp an agile, product-cented approach to advancing the digital transformation of the enterprise, he is playing to the CEO's mind, which is important.

Finally, 41% of CEOs believe their companies are pioneers of innovation. Talking about innovation in the 80s and 90s, it was the innovation of machines. Now when we talk about innovation, we are talking about digital innovation.

Click here to read the Digital Transformation, Agile, and Productivity (Part 2).