Information systems: The key to successful digital transformation

The pandemic accelerated digital transformation initiatives and raised the stakes. Predictive models faltered with unprecedented disruptions to supply chains and customer behaviors. The ability to collect, analyze, and communicate with data has never been more of a competitive advantage than it is today. Gartner found that 69% of boards of directors accelerated their digital initiatives due to the pandemic. Nearly half of them expect this acceleration to change their organizations’ business model.

And it should.

The key to digital transformation isn’t technology. You could have the best technology at your fingertips, infinite compute power, full support from the board of directors, and still veer off course. People, processes, tools — without aligning these functions of business, digital transformation initiatives carry a higher risk of failure. It’s estimated that around 70% of these projects fail – sinking over $900 billion throughout industries.

So, what’s the difference between successful digital transformation initiatives, and those that fail? Information systems.

What are information systems?

An information system (IS) enables organizations to effectively collect, process, store, and distribute information across departments. It’s made up of six major components:

Hardware
Software
Data
Procedures
People
Feedback

When used together, these elements create a system that allows companies to fully leverage their data to improve decision making and communication, cultivate an agile and data-driven culture, and maximize operational efficiency throughout the business.

To create lasting digital transformation, an organization must understand the components that create its information system, and how they will change.

Evolution of information systems

In the 1980s, management textbooks often divided information systems into four categories:

Transaction Processing Systems
Management Information Systems
Decision Support Systems
Executive Information Systems

These were often positioned as a hierarchy in a pyramid.

Image source: Compo – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=10908088

However, as businesses advanced their digital transformation and cutting-edge technology became more available, new categories were made to accommodate them. These include data warehouses, knowledge management systems, enterprise resource planning systems, intelligent systems, and many more.

These new categories brought new capabilities. And new challenges.

On the one hand, this expansion follows the trend (or perhaps, the trend follows the new categories) of organizations growing more flexible and agile. For example, instead of creating one BI or AI system for each persona, one system can be used by all. This in turn creates new opportunities for other roles within the organization by providing sales associates, claims auditors, human operators, etc. with data they need to make smarter and more effective decisions on the front line.

The new categories and flexibility can also create challenges. As more teams are able to access and use data to inform their decisions, data governance, infrastructure, organizational changes, and integrations become even more important to sustaining and accelerating the transformation.

How digital transformation impacts information systems

Some organizations may believe you can simply buy the best technology or license, and that alone will provide digital transformation. Not so, unfortunately.

In reality, you need to choose the right tech stack, upskill your team, change management and processes to create a truly data-driven organization. To reap the benefits, we must look at digital transformation as something that impacts the various systems in the organization. Attempting to shoehorn a new technology or deploy ML models in your business without regard to the system involved won’t be of much use if you lack the data, processes, and staff skills to use capitalize on those new insights.

What does this mean? It means that in order to build long-lasting, successful digital transformation, it’s best to…

Start with the business goal
Choose the right tech stack
Be Agile
Have the data available
Foster a data-driven culture

All of these are connected, drawing from various parts of your information system. Let’s demonstrate with an example.

Example: Implementing BI

Let’s say your company wants to improve its business intelligence. We would recommend that you start by working back from the desired business capabilities. What are the fundamental needs? Who are the end-users? What are the top use cases? These are all important steps in creating a data strategy that keeps your business and IT teams in lockstep.

Great BI needs a tech stack with the right features and integrations to meet your business objective. There is no one-size-fits-all, and the tech landscape moves fast, so flexibility will be a key element to allow for Agile development, updates, and scalability.

There’s also the matter of data. The BI solution will need access to a variety of data, which may require data estate modernization if the data is siloed across systems.

Once implemented, it’s important to empower employees with the skills and data culture to understand how they can leverage the data and dashboards in their roles to make smarter decisions.

It takes a comprehensive approach to implement great BI and make it “stick”. Indeed, the digital transformation allows the company to realize the full value of the BI implementation. Working with digital consultants like Neal Analytics can help you throughout the journey, from building a strategy and choosing the right tech stack to ensuring governance best practices and training teams.

The “people” element of transformation

One of the largest barriers to digital transformation is the friction between the innovation and its potential users (aka the employees). According to Steven Alter, these systems “run a high risk of never being implemented, especially when the impetus for change comes from a source other than the potential user.”

People make up a key element of information systems, and successful digital transformation initiatives rely heavily on internal SMEs, end-users, and business and IT leaders, no matter what technology is being used.

At the end of the day, it will be your business functions and goals that drive the transformation. Our job at Neal is to help facilitate that.

Next steps

If you need technical expertise, knowledge based on experience with digital transformation journeys, or proven processes to assist with your initiative, contact us at Neal.