Published on the 01/08/2018 | Written by Heather Wright

It’s not about the technology – unless it’s security, that is…

Digital transformation has been a catch cry for years now, with the tech sector and industry analysts urging businesses to ‘transform or die’, and companies hailing every IT change or move to agility as part of their ‘digital transformation’.

But recent reports have highlighted that despite all the talk, many businesses are continuing to put off digital transformation. Now, a Microsoft survey shows 66 percent of Australian respondents and 43 percent of New Zealand respondents are delaying DX efforts due to cybersecurity concerns.

“Culture is organisational ‘dark matter’ – you can’t see it, but its effects are obvious.”

The Microsoft report, done in conjunction with Frost & Sullivan, shows local companies are ill-equipped to meet the challenge of rising cyberthreats, and greater investment in cloud, AI and other cybersecurity tools as well as a focus on training new cyber security experts are required to prepare companies for digital transformation.

Russell Craig, Microsoft New Zealand national technology officer, says while on the face of it DX – which sees companies enabling staff to be more mobile, access systems across many devices, engage with customers directly, share data and use universal systems across international borders – provides more access points for potential threats, going digital can enhance a company’s overall cybersecurity.

“For example, organisations will benefit from using platform services that are always patched and… benefit from enormous economies of scale and scope,” he says.

While the lack of Kiwi companies embracing DX isn’t great, for Australia, it’s even worse, with two-thirds of companies holding off on DX because of cybersecurity concerns – something Tom Daemen, Microsoft Australia director of corporate, legal and external affairs, dub ‘concerning’, given an earlier report from Microsoft and IDC showing digital transformation could add an estimated $45 billion to Australia’s GDP by 2021 and increase its growth rate by 0.5 percent annually.

“To combat this, we need to be installing a data culture throughout organisations,” Daemen says. “Data management needs to be prioritised in the boardroom as a strategic focus. Not only will this ensure organisations comply with Australian Notifiable Data Breaches Act and  European GDPR legislation, but it will empower employees to see data as the strategic asset it is and push forward with digital transformation initiatives.”

While Microsoft is highlighting security’s role in delaying DX, others are going a little less tech with their reasoning for the slow change. Last month a Capgemini report highlighted leadership and change management as key issues for DX – reinforcing New Zealand’s TechLeaders’ stance in June that companies needed a beginners guide to DX when the group of senior tech executives representing some of New Zealand’s leading businesses published a series of digital principles including ‘actively collaborate’, ‘be people-centric’ and ‘commit to lifelong learning’.

Now Gartner too, is laying the blame squarely at the feet of corporate culture, highlighting that digital transformation isn’t as simple as buying the latest technology, instead relying on significant changes to culture and systems. As such, the analyst firm is urging companies to fix their company culture in order to become a digital success.

“Culture is organisational ‘dark matter’ – you can’t see it, but its effects are obvious, says Gartner research vice president Marcus Blosch.

“To change an organisation designed for a structured, ordered, process-oriented world to one designed for ecosystems, adaptation, learning and experimentation is hard,” he says.

Gartner says digital innovation can only be successful in a culture of collaboration, enabling people ‘to work across boundaries and explore new ideas’. But most companies instead are stuck in a culture of change-resistant silos and hierarchies, Gartner claims.

Digital innovation also requires new skills focused on innovation, change and creativity, along with new technologies themselves, such as AI and IoT with the research company also noting that highly structured, slow traditional processes don’t work for digital.

Gartner suggests CIOs aiming to establish a digital culture to start small, defining a digital mindset, assembling a digital innovation team and shielding it from the rest of the company to let the new culture develop. Connections between the digital innovation and core teams can then be used to scale new ideas and spread that culture.

“It’s not necessary to have everyone onboard in the early stages. Try to find areas where interests overlap, and create a starting point. Build a first version, test the idea and use the success story to gain the momentum needed for the next step,” Blosch says.

And, sounding a note of caution in the world of DX hype, Blosch also cautions companies: “Keep in mind that digital may just not be relevant to certain parts of the organisation.”