October 11, 2018

Digital Optimization vs. Digital Transformation

By John McDonald, VP of Strategy and Go-To-Market at Arrayworks

There are risks and costs to action.  But they are far less than the long-range risks of comfortable inaction.”          John F. Kennedy                            

Innovative business models made possible by new technologies are causing disruptions across every industry. Organizations of all sizes are reevaluating both their strategic and long-term plans on how they will compete. Smaller emerging companies are endlessly disrupting larger competitors by being born digital or by rapidly transforming into digital businesses.  This leaves their larger competitors struggling with outdated business models that are reliant upon siloed legacy systems.

Historically, organizations have had to make a choice – optimize their current business models by using stand-alone solutions or begin a transformation journey by overhauling their entire business operating system. Gartner defines optimization as the process of using digital technology to improve existing operating processes and/or business models and digital transformation as the process of exploiting the latest digital technologies and practices to create new sustainable digital business models.  While the former may be less risky and provide some short-term operating efficiencies, the latter is harder to achieve and risks major business disruptions if not carefully orchestrated with the right combination of personnel and technology.

Is that the only choice – to optimize or transform?  As we see it, there is a better strategy using a low-code platform to enable a dual approach.

By utilizing a dual approach, organizations can leverage existing business models and legacy tech investments to quickly improve current operations while at the same time can strategically launch, test and scale new transformation initiatives providing the foundation for completely new digital business models.

Low-code application platforms allow for the rapid development of new and more robust solutions. The platforms can overlay legacy systems to push and pull data as needed, or bring to life completely new digital operating models.  Either way, platforms provide the flexibility to achieve optimization or transformation independently or pursue both as part of an orchestrated and dual approach.  This dual approach of maximizing current models while strategically achieving longer-term digital transformation imperatives is what Gartner refers to as an organization’s digital ambitions.

A recent Gartner survey highlights that most organizations are pursuing a dual approach to achieve their digital ambitions.

Finding the right path forward that limits near-term risk while positioning the organization for the future is tricky business. Transform too quickly and you risk disrupting your current successful business, transform to slowly and eventually you’ve lost the initiative to participate and thrive in new markets.

A dual approach makes perfect sense. It allows you to leverage your existing business models while you formulate, refine and extend new digital models that will successfully carry you into the future.