Research shows that organisation are failing to balance the demands of day-to-day business operations with the need to invest in digital innovation that drives the business forward

But in a world where customer experience is becoming a crucial brand differentiator, the ability to drive innovation, test assumptions with digital experiments, and pivot in line with changing market demands has never been more important.

As it stands though, many organisations are still inhibited by internal silos and legacy processes that prevent them from becoming agile, customer-centric organisations.

As organisations pursue their digital transformation agendas, the following five factors will come to the fore.

1. Experimentation

An appetite for risk and rapid experimentation is key to building an effective culture for digital transformation.

And with ‘the time it takes to deliver digital initiatives’ perceived by heads of digital as the biggest obstacle to achieving business goals, organisations will emphasise digital prototypes and experimentation that helps them to quickly test assumptions and build a business case for a new product or project.

>See also: The top 5 trends for digital transformation in 2018

Expect to see organisations adopt short-term measures to gain agility while they work to establish an effective digital culture and overcome legacy internal structures that block innovation, encourage silos, and have a negative impact on the organisation’s ability to deliver effective customer journeys.

We’ll likely see the the rise of digital incubators, for example, which provide a focused area for innovation within the business that’s not tied down by the concerns of legacy internal structures and governance.

Organisations looking to drive change will need to establish an environment where people have ‘permission to fail’, where digital experiments that explored new ground but ultimately didn’t succeed are still celebrated. KPIs, targets, and incentives must be put in place soas to measure the effectiveness of these experiments. Objective measures of success allow teams to ‘prove’ that the experiments worked, and should enable them to take additional experiments and justify additional investment.

Organisations will also look to methodologies and practices that support speed, experimentation, and productivity, from Agile to Lean Kanban. Just under half of digital heads believe, for example, that embracing new processes and methodologies that connect strategy and innovation is the most important change their organisation can make to improve customer experiences.

2. Open technology

Like internal silos, legacy systems and technology can stand in the way of digital innovation and growth.

In 2018, organisations will make further strides to ensure that, however they work around their legacy systems, their core platform is increasingly flexible, open, and able to serve a fast-growing number of touchpoints. Platforms will need to support integrations with a breadth of application programming interfaces (APIs) and third-party systems.

Building capacity for integrations and pre-built modules like these will help organisations negate the need for costly re-engineering work and take advantage of algorithms that provide data mining and analytics to deliver enhanced experiences.

Organisations will achieve more agile ways of working by using microservices in combination with cloud-based technologies that automate the deployment, scaling, and management of applications.

3. Competition

Competition for digital talent has never been greater. As a result, organisations will invest more aggressively in upskilling and augmenting their digital teams to support the digital transformation agenda.

While some digital capabilities should be at an organisation’s core, others could and should be resourced externally; getting the right balance is important. While organisations may be tempted to buy capacity in the short-term in the form of outsourced digital teams, it’s important to remember that this won’t enable the in-house digital team to significantly develop and grow their digital capabilities in the long term.

Organisations will interrogate their recruitment processes and evaluate their fitness for helping the business hire people with the right experiences, values, and behaviours to champion the business’s digital transformation.

We can also expect to see a stronger drive towards recruiting dedicated product owners, as the vital link between business stakeholders and digital teams. More than a third of digital heads say their organisations do not have a recognised product owner, citing reasons like budget constraints.

But by managing different stakeholders and their expectations, and helping establish a digital culture focused on data-led continuous improvement, the product owner is key to ensuring products continue to address real and changing customer needs. Supported by the right processes, practices, and methodologies, product owners are invaluable in helping a business to transform digitally.

>See also: Top 5 biggest challenges for digital transformation in the NHS

4. Data security

Security, compliance and privacy will become increasing challenges alongside the growth of IOT. And with GDPR regulation coming into effect this May, there’s never been more attention on customer data. Organisations will need to work hard to gain trust and start a transparent dialogue with users in order to deliver more relevant services to them.

As people become reluctant to share personal data with organisations unless they can see clear benefits, companies are going to have to think long and hard about the added value they can bring to users with this information. They’ll need a plan for how they assure customers they’re using digitally secure methods of managing and storing their personal data, and they’ll need to explore different tactics to personalise to a multitude of customer journeys with less data.

5. Intelligent disruption

The emergence of new touchpoints, buyer expectations, and IOT technologies is enabling B2B and B2C organisations to change their business models to grow beyond their traditional markets, drive innovation, and grow revenue.

IOT, in particular, will generate vast quantities of data capable of helping businesses optimise their processes, deliver better digital experiences to customers, and optimise costs.

B2B organisations may have most to gain, with B2B applications expected to account for nearly 70% of the value that will flow from the IOT in the next ten years, according to McKinsey. Thanks to the data captured by their physical products, B2B companies will look to explore new business models such as IOT subscriptions.

Machine learning will be vital in helping manage and deliver real-time business insight from this wealth of data. In helping to automate processes, such as generating a quote that meets the expectations of a B2B buyer, at a price point where they’re most likely to buy, machine learning is set to help businesses better understand how their customers want to do business. In this way it will be key to meeting and exceeding user needs.

The organisations that will genuinely transform their own businesses and disrupt their markets will be those that use and respond to real-time insight to continuously improve and grow.

Talk of digital transformation often centres around emerging technologies and frameworks. Ultimately though, an organisation’s ability to change and disrupt the business comes down to its ability to source and attract employees with suitable commercial awareness and an appetite for risk and digital experimentation. This is the perennial challenge, and 2018 will be no different in this regard.

Sourced from Nicholas Weber and Brett Lawrence, senior consultants, Inviqa