Digital transformation is now the major driver for many business decisions made every day worldwide. It’s transforming the way we deliver and improve the customer experience and is essential to driving innovation. As disrupters like Amazon and Uber continue to set the pace for customer expectations, demand for a more personalised and predictive experience is heating up.
These customer expectations are not just impacting the B2C world. B2B organisations are adapting to cope with these changing demands. One example is the move to models that are often cloud based, supplied and billed in subscription models. Companies that were once entirely focused on selling boxes of products have shifted models to focus more heavily on software licensing to enable them to deliver these experiences.
While this means end users receive an always-on service with regular upgrades, a significant shift in mindset and organisational change required. But, from conversations with our customers and partners, we’ve seen several challenges that businesses are facing in order to reap the benefits and open up new revenue streams.
For a digital transformation project to succeed, achieving buy-in across an organisation is vital. A common issue is a fear of change, with ‘server huggers’ often reluctant to move to the cloud due to a fear that they will lose ownership of their part of the business. Often, this is less fear of change and more concern over the knock-on effects it can bring. Shifting a business model from selling products to services requires a re-think in many areas of an organisation, from the IT services provided to how staff are incentivised.
For digital transformation leaders, it’s important to take the time to explain the changes taking place and the benefits this will bring. Taking teams through this journey and showing the advantages at every stage at the process will generate buy-in and lead to more engagement in the process, improving its chances of success.
With this resistance to change often comes a propensity to hang onto legacy or home-grown systems. Of course, this is often a credible concern, as businesses need to ensure new platforms and processes enable them to carry on serving customers without missing a beat, while their data remains accessible.
The key here is to have an agreed timeline in place, something that outlines the process, the testing that will take place and the milestones that need to be met before legacy systems are fully switched over. Most importantly, if a new type of software licensing model is being introduced, businesses should ensure that all the data required is stored in the correct place and fully integrated with new back-office systems and that the chosen system is scalable. This will streamline operations and ensure the full benefits of digital transformation can be realised.
Another obstacle tends to be around an organisation’s reluctance to adopt new, software-as-a-service (SaaS) models. Monthly upgrades to the SaaS version require an IT team to keep a closer eye on any additional updates or user education needed as a result. Moving from a cap-ex to an op-ex model means a new budgeting process while dealing with licencing will also often require a new knowledge set.
While software licensing is a well understood practice, the ability to monetise services in different ways is often a new concept for businesses. This has led to a lot of businesses bringing in enterprise architects to help lead change efforts and move digital transformation efforts outside of the IT team.
For the businesses selling these software services, a fully consultative approach is required to take their customers through these journeys. Using expertise gathered from previous projects to help customers navigate potential challenges is key. Offering consultation on specific areas that may be new to a business, such as pricing models, will also help resolve any fears they might have, ensuring organisations are set up for success.
Moving from a hardware to a software-based model, or from perpetual to hybrid, consumption or subscription-based models opens many doors for businesses – but only if it’s done correctly. In order to successfully activate and provision the cloud, protect IP and introduce IoT capabilities, businesses must first put the necessary processes in place. When all these pieces of the puzzle are slid into place, organisations can truly embrace the new models that allow them to be more innovative, flexible and secure.