Digital transformation management – a fundamental shift or emperor´s new clothes?
The end of the 1990s and early 2000s were the golden age of yet another TLA (three-letter-abbreviation): BPM that stands for Business Process Management. People with titles of Process Owners or Business Process Specialists started to appear in organizational charts. Also, academic journals and textbooks started to be published on the phenomenon. In short, BPM is an umbrella term for a set of structured methods and technologies to better manage core business processes within companies and business partner networks (Mathiesen et al., 2011). The means of managing the processes have taken the form of IT systems such as SAP or Oracle ERP-systems (Enterprise Resource Planning) t hat have gained positions as corporate legacy systems. The networked nature of modern business has spread these systems further to SME enterprises who often “inherit” them as a part of their supplier relationships to big corporations.
Simultaneously with the popularity of the BPM approach, digitalization has come to the stage as a transforming force for all businesses globally. As early as 1998 Charles Fine from MIT had made a note on “increasing clock speed”, and more has been to follow. One of the leading market analysts and consultancy firms in the field of ICT, Gartner, has stated they follow some 1500 individual technologies. Their recent emerging technology roadmap for mid-sized (in the American context) enterprises consisted of some 115 technologies, varying in the perceived advent of effect and business impact.
Bearing in mind the width and depth of BPM impacts in a firm and accelerating (digital) development of technology landscape, planning and scoping Business Process Management (BPM) initiatives is a task anything else but simple and easy to drive through in an organization. There is a plethora of aspects to be considered, both deep in the technical domain as well as strategically (e.g., Dumas et al. 2018, vom Brocke & Mendling 2018).
What we as researchers, management educators and business developers in university-industry have noticed when looking at SME companies, is resorting either to 1) decisions that are weakly linked to the company’s strategy and each other (both in technology choices and timings) or 2) “freezing” due to helplessness when facing the unlimited choice of optional technologies and suppliers of them or 3) incapability to decide due to uncertain value-added and payback time of investments to digitalization.
What to do since the mentioned cohort of SME companies is the backbone of Finnish employability and has accounted for net job creation in the economy for so long? Hence, its (digital) future competitiveness is crucial not only for the company itself but also for society.
More and more frequently the concept of Digital Transformation Management (DTM) has been offered as a potential solution that requires rethinking. As Baiyere and others (2020) state: “If managers continue to operate with assumptions stemming from traditional BPM logics, the digital transformation effort may be limited to performance enhancement rather than digital innovation”. If DTM is not a new form of BPM, then what is it? Lanzolla and others (2020) remarkably note that DTM relates to a) institutions and strategies, b) business models, organizational design and learning as well as to c) cognition, creativity, and capabilities.
To this date, research has not only produced definitions for DTM and explained its deviation from the BPM paradigm, but also studied the key challenges to firms that start the DTM journey (Tiersky, 2017), key success factors in DTM (Mielli and Bulanda, 2019) and DTM strategy archetypes (Fischer et al., 2020). It is noteworthy that DTM is not just about digitization (turning manually treated information into bits – e.g., by using MS Excel) nor about digitalization (making the processes controllable and recordable via digital systems), but a holistic way to look at the company that can be understood and steered with sophisticated systems. In addition, when digital transformation takes place a company can link digitally to its value chain partners not bounded by time and location.
What is blocking DTM, then?
In our RDI work at JAMK University of Applied Sciences with Small and Medium-Sized Enterprises (SMEs) that have for long been the drivers of net job creation in developed economies (since big corporations have rather downsized in headcount due to outsourcing and automation), we have identified some typical problems in DTM. These experienced and perceived difficulties culminate in:
- Low DTM competence of the senior management.
- Oversupply of technological options. The leading ICT- market research company Gartner stated already more than a decade ago that they follow constantly some 1500 technologies on their radar (Fenn and Raskino, 2008) and e.g., for 2020-2022 Gartner in the joint effort with 200+ companies charted some 110 potential technology areas with different lead times to readiness, business value, and deployment risk (Gartner, 2019). A response to this by SMEs may be to not invest in any modern technology until they can be sure of the viability of the choices that may be a target never achievable.
- Individual and non-related ICT purchasing and deployment decisions. Systems are bought to one specific use only in the conditions of urgency, as “bandages” that cover an urgent yet small scale need/problem. As a result, the systems are not interoperable, and middleware of manual work is needed to make the system outputs match.
- Limited usage of the functionalities of their installed Enterprise Resource Planning (ERP) systems, resulting in a reluctance to add new systems.
- The commitment and participation of the workforce into system definition and deployment, leading to uncommitted and non-optimal usage of the systems.
- Digital Transformation is seen more as a cost than an investment, and as a result, there is no patience for the payback time so the learning curve and required training efforts get ignored.
What would break the DTM barriers?
Since the problems related to proceedings in DTM are practical rather than theoretical, academic research should contribute more to the creation of validated tools that SMEs could use in defining and following in their DTM journey. Digital maturity assessment, risk vs. benefit analyses, roadmaps, scenarios, and tools supporting DTM as a process of accumulative organizational learning are examples of the potential pragmatic DTM enablers.
As can be seen from the list above, DTM is at the pragmatic firm level as well as in RDI work deeply and widely interdisciplinary work. Management, ICT, educational science, and subject area/industry expertise are all needed. This is one of the challenges of DTM but also a great opportunity since rarely do we find a development path in business that by its nature calls us to approach the phenomenon as the whole expertise community. Let´s see if we can deliver, for the common societal good and the good of the SMEs struggling with their transformation to be competent, agile nd attractive companies of the new era.
Juha Saukkonen D.Sc. (Econ.), Senior Lecturer of Management, School of Business, JAMK University of Applied Sciences.
Kirsi Kemell M.Sc. (Econ.), Senior Lecturer of Management, School of Business, JAMK University of Applied Sciences.
References
Baiyere, A., Salmela, H., & Tapanainen, T. (2020). Digital transformation and the new logic of business process management. European Journal of Information Systems, 29(3), 238-259.
vom Brocke, J., & Mendling, J. (2018). Business Process Management Cases. Digital Innovation and Business Transformation in Practice. Berlin: Springer.
Dumas, M., La Rosa, M., Mendling, J., & Reijers, H. A. (2013). Fundamentals of business process management. Heidelberg: Springer.
Fenn, J., & Raskino, M. (2008). Mastering the hype cycle: how to choose the right innovation at the right time. Chigago: Harvard Business Press.
Fine, C. H. (1998). Clockspeed. Winning industry control in the age of temporary advantage. Massachusetts: Perseus.
Fischer, M., Imgrund, F., Janiesch, C., & Winkelmann, A. (2020). Strategy archetypes for digital transformation: Defining meta objectives using business process management. Information & Management, 57(5).
Gartner (2019). 2020 to 2022 Emerging Technology Roadmap for Midsize Enterprises. https://emtemp.gcom.cloud/ngw/globalassets/en/information-technology/documents/benchmarks/emerging-tech-roadmap-mse-2020-2022.pdf. Accessed 10th December 2021.
Lanzolla, G., Lorenz, A., Miron-Spektor, E., Schilling, M.A., Solinas, G. & Tucci, C.L., (2020). Digital transformation: What is new if anything? Emerging patterns and management research. Academy of Management Discoveries, 6, 341–350.
Mathiesen, P., Bandara, W., Delavari, H., Harmon, P., & Brennan, K. (2011). A comparative analysis of business analysis (BA) and business process management (BPM) capabilities. In ECIS 2011 Proceedings [19th European Conference on Information Systems] (pp. 1-13). AIS Electronic Library (AISeL)/Association for Information Systems.
Mielli, F., & Bulanda, N. (2019). Digital Transformation: Why projects fail, potential best practices and successful initiatives. 2019 IEEE-IAS/PCA Cement Industry Conference (IAS/PCA), St Louis, MO, USA, 2019, 1–6. 10.1109/CITCON.2019.8729105
Tiersky, H. (2017). 5 Top Challenges to Digital Transformation in the Enterprise.”CIO from IDG. https://www.cio.com/article/ 3179607/5-top-challenges-to-digital-transformation-inthe-enterprise.html. Accessed 15th December 2021.