How to Tackle the Challenges of Digital Transformation

The accelerating rate of change in business, the economy and society challenges both business and HR to adopt new rules for leading, organizing, motivating, managing and engaging the 21st-century workforce. Let's take a closer look.

A massive 96 percent of companies see digital transformation as essential or critical to their development. However, businesses should avoid investing in new technology for the sake of it, or because they feel they should. It is essential that enterprises identify where technology change is needed most and meet that need.

Businesses should start by assessing their overall business goals and identify what objectives it wants to achieve in the short, medium, and long-term. The next step is determining what technology will help achieve those goals. For example, it might be that the primary focus is to expand into new markets quickly, in which case it might be sensible to hold off on investment into AI technology and instead focus on a robust cloud infrastructure that can support mission-critical processes from multiple locations.

Leaders Know Digital Transformation is a Top Priority

HR and business leaders are driven by the ongoing digital revolution as well as demographic, political and social forces. About 90 percent of them rate building the organization of the future as their top priority. In its Global Human Capital Trends report, 'Rewriting the Rules for the Digital Age,' Deloitte issues a call-to-action for companies to reconsider their organizational structure, talent and HR strategies to keep pace with digital disruption.

"Technology is advancing at an unprecedented rate, and these innovations have completely transformed the way we live, work and communicate. Ultimately, the digital world of work has changed the rules of business. Organizations should shift their entire mindset and behaviours to ensure they can lead, organize, motivate, manage and engage the 21st-century workforce, or risk being left behind." — Josh Bersin, Deloitte Consulting LLP.

With more than 10,000 HR and business leaders in 140 countries weighing in, the study revealed that leaders are turning to new organization models, which highlight the networked nature of today's world of work. Because business productivity often fails to keep pace with technological progress, however, Deloitte found that HR is struggling to keep up: Only 35 percent of HR professionals rated their capabilities as 'good' or 'excellent.'

"As technology, artificial intelligence, and robotics transform business models and work, companies should start to rethink their management practices and organizational models. The future of work is driving the development of a set of 'new rules' that organizations should follow if they want to remain competitive." — Brett Walsh, Deloitte Global

Building the Organization of the Future

As the workforce evolves, organizations are focusing on networks of teams, and recruiting and developing the right people is more consequential than ever. Survey respondents said talent acquisition is one of the most prominent issues organizations face, with 81 percent of companies citing it as 'very important' or 'important.'

While Deloitte found that cognitive technologies have helped leaders bring talent acquisition into the digital world, only 22 percent of survey respondents describe their companies as 'excellent' at building a differentiated employee experience once talent is acquired. The gap between talent acquisition's importance and the ability to meet the need, in fact, increased by 14 percentage points over the last year.

It is critical to take an integrated approach to build the employee experience. A large part of it centers on 'careers and learning,' which rose to second place on HRs' and business leaders' priority lists. Eighty-three percent of those surveyed ranked it as 'important' or 'very important.' Deloitte found that as organizations shed legacy systems and dismantle yesterday's hierarchies, it is important to place a higher premium on implementing immersive learning experiences to develop leaders who can thrive in today's digital world and appeal to diverse workforce needs.

The importance of leadership as a driver of the employee experience remains strong, as the percentage of companies with experiential programs for leaders rose nearly 20 percentage points from 47 percent previously to 64 percent this past year. Deloitte said a crucial need remains, however, for stronger and different types of leaders, particularly as today's business world seeks those who demonstrate more agile and digital capabilities.

Capitalizing On Digital HR for a 21st Century Workforce

As organizations become more digital, leaders should consider disruptive technologies for every aspect of their human capital needs. Deloitte found that 56 percent of companies are redesigning their HR programs to leverage digital and mobile tools, and 33 percent are already using some form of artificial intelligence applications to deliver HR solutions.

"HR and other business leaders tell us that they are being asked to create a digital workplace in order to become an 'organization of the future. To rewrite the rules on a broad scale, HR should play a leading role in helping the company redesign the organization by bringing digital technologies to both the workforce and to the HR organization itself." — Erica Volini, Deloitte Consulting

Deloitte found that the HR function is in the midst of a wide-ranging identity shift. To effectively position itself as a principal business advisor to the organization, HR must focus on service delivery efficiency and excellence in talent programs, as well as on the entire design of work using a digital lens.

Jobs Being Reinvented

The trends in this year's report showed signs of reinvention on all fronts, including jobs themselves. Organizations should approach external talent, robotics, cognitive tools and AI systems as the "new, augmented workforce," the report said. This year, 41 percent of respondents reported having fully implemented or have made significant progress in adopting cognitive and AI technologies within their workforce. But only 17 percent of global executives said they are ready to manage a workforce with people, robots and AI working side by side - the lowest readiness level for a trend in the five years of the Global Human Capital Trends survey.

While many jobs are being reinvented through technology and some tasks are being automated, Deloitte's research showed that the fundamentally human aspects of work - such as empathy, communication, and problem-solving - are becoming more critical than ever.

This shift is not only driving an increased focus on reskilling but also on the importance of people analytics to help organizations gain even greater insights into the capabilities of their workforce on a global scale. Organizations continue to fall short in this area, however, with only eight percent reporting they have usable data, and just nine percent was believing they have a good understanding of the talent factors that drive performance in this new world of work.

"This represents one of the biggest opportunities for the HR organization. To be able to rewrite the rules, HR needs to prove it has the insights and capabilities to successfully play outside the lines." — Erica Volini

The Ai Auditor

"AI is not going to replace Auditors. Auditors who use AI will replace those that don't" — John Colhart, Mindbridge AI

With all the buzz surrounding AI for accounting, do you know how it works to improve audit quality?

Three reasons why AI improves audit quality

• 100% data analysis ensures the whole client data set is analyzed and reported on
• rapid risk identification via natural language data exploration, intuitive reports, and powerful transaction drill-downs
• redefining reasonable assurance with AI and machine learning-driven analysis that goes far beyond traditional rules and tests to detect anomalies you’ve never seen before

With our clients using the AI Auditor we face how ill-prepared organizations are to deal with digital transformation. Auditing firms are trying to turn auditors into data scientists, rather than learning how to add superior value using the powers of AI. Some get it,

"I will refuse to do any audit for a client that will not let me put their ledger into MindBridge first. There's plenty of work out there and I don't need more risk." — Samantha Bowling, CPA, CGMA, Partner at Garbelman Winslow

Samantha knows that the AI Auditor will examine 100 percent of the transaction in a matter of minutes an point out the anomalies. She no longer spends 30 to 50 hours grinding through spreadsheets to select her three percent sample size. Samantha adds tremendous more value to every audit engagement.

Concluding Thoughts

Digital transformation can be an incredibly complex process. With that in mind, here are five key steps companies need to take to prepare for a successful digital transformation journey.

1. Choose the right digital transformation strategies to meet your goals
2. Invest wisely in technology
3. Convince your stakeholders
4. Use data to enhance business decision-making
5. Constantly re-evaluate your digital transformation strategy

Organizations must understand that digital transformation is a journey that is never complete. New technologies are being launched all the time—from robots that complete tasks on the production line quicker than humans, to machines that can fix equipment problems without intervention. All of these bring with them multiple possibilities for UK manufacturers.

“It is not the strongest or the most intelligent who will survive but those who can best manage change”.  — Charles Darwin

This applies to more than just the natural world. It is just as true for organizations in the current economy

It’s important for businesses to constantly adapt their digital transformation strategy to new possibilities, reassess their journey, and question the rate of digital change—does it match up to customer expectations? How does it stack up against business goals? If these change, perhaps the businesses’ technology should too.  Ultimately, these will help to drive efficiencies and get set for growth.