Among the most significant trends in business strategy at the start of the post-pandemic era is digital transformation. Before the emergence of COVID, business leaders were already beginning to recognize the importance of digital tools and strategies; in 2019, enterprises spent over $1 trillion on digital transformation. Yet, as the pandemic accelerated so many other business and consumer trends, the drive to digitally transform became an imperative through 2020 and beyond, with non-digitally savvy organizations falling to the wayside as the most technologically advanced businesses saw success.

Today, experts anticipate digital transformation spending between 2020 and 2023 to exceed $6.8 trillion — and, unfortunately, much of that investment will go to waste.

Digital transformation is important, even essential to success in the current business environment. Yet too many executives are focusing on the wrong components of digital transformation, leading to imbalanced changes that have little impact on company performance. The problem, many experts suggest, is not an organization’s intention to digitally transform but their poor transformation strategy — particularly that so many organizations lack an understanding of digital maturity.

Why Digital Transformations Fail

The intention to digitally transform is generally a good one, but an organization needs more than intentions to sustain a digital transformation. According to a study by Everest Group, a global BPO research firm, 68 percent of enterprises fall short of their digital transformation goals. There are many reasons why an organization might experience failure during their digital transformation, such as:

• Lack of commitment: Executives afraid of excessive disruption choose to interrupt or abort digital transformation before the transformation provides value.

• Rapid transformation timeline: Organizations build a schedule that expects complete transformation over two years or less.

• Poor change management: Business leaders do not achieve buy-in from their staff, who aggressively resist digital transformation.

However, by far the most common reason for transformation failure — and perhaps the reason that ties all the others together — is a fundamental misunderstanding of digital transformation. Contrary to popular belief, digital transformation is not merely making use of the latest digital technologies. Digital transformation should radically restructure a business, providing it with a new model and a new value-generation strategy. This process is not one that can be achieved over a handful of months; in fact, considering the ever-evolving nature of digital technology, it is not out of the realm of possibility that an enterprise will continue digitally transforming for the foreseeable future.

Thus, the goal that many organizations are aiming for — “complete” digital transformation — is not realistic. Transformation should be an endless process that helps an organization remain relevant as the landscape of digital technology shifts. Instead, the state that many executives are looking to achieve is that of digital maturity.

What Is Digital Maturity

Digital maturity has many definitions, but the most widely accepted one is this:

The ability to quickly respond to disruptive technological trends.

A digitally mature company tends to have digital capabilities that provide competitive advantage in its market. Many enterprises that maintain digital maturity are not necessarily the most technologically advanced; rather, they have the right combination of tools and skills to leverage new technologies and create value when necessary for business survival.

With digital maturity, an organization is much more capable of sustaining a constant state of progressive digital change — which is what allows successive digital transformations to reach business goals. In addition to helping a company survive amidst technological innovation and disruption, digital maturity can help a business achieve success. Research from Deloitte indicates that enterprises with higher digital maturity tend to realize three times higher growth in revenues than firms with what is recognized as low maturity.

But — how does a firm know that they have sufficiently high digital maturity to capture higher revenue potential and thrive in an increasingly digital market?

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How to Measure Digital Maturity

The same Deloitte survey cited above indicates that there are “seven digital pivots” indicating a company’s progress toward true digital maturity. These include:

• A flexible and secure infrastructure
• Data mastery
• Digitally savvy talent networks
• Ecosystem management
• Intelligent workflows
• Unified customer experience
• Business model adaptability

Yet, aside from these seven indications that an enterprise is on the path to digital maturity, there are models that business leaders can use to better understand their digital transformation needs. Executives eager to master these models might enroll in digital transformation online short courses that focus on achieving digital maturity, but a basic outline of these models is as follows:

Digital Maturity Model by Deloitte

In partnership with the TM Forum, Deloitte created the Digital Maturity Model, which describes the goals of digital maturity across six business dimensions: customer, strategy, technology operations, data and organizational culture. These six dimensions are further divided into 28 sub-dimensions and 179 digital criteria, which business leaders are to use to determine their firm’s digital maturity.

Digital Acceleration Index by Boston Consulting Group

The Boston Consulting Group, partnered with IDMA Singapore, developed the Digital Acceleration Index as a framework to help companies audit their current digital capabilities. The index includes evaluating six building blocks of digital maturity:

• The degree to which business strategy is driven by digital technology
• The digitization of the core value chain
• Growth in digital products and services
• The introduction of digital culture
• The management of data
• The integration of ecosystems

These building blocks are again divided into 36 categories, which business leaders use to measure and track digital maturity. Executives can find three versions of the index — light, full, and extended — and select the option that provides the depth of insight they need in their digital transformation.

Why Even Digital Maturity Has Limits

Evaluating digital maturity is not the only key to success. Digital maturity models like those explained above do not tell executives where to invest; they do not tell leaders how to improve business value or how to develop an effective strategy. For that, business leaders will need to invest in education and earn real-life experience in digital transformation.

Still, digital maturity is an integral part of digital transformation — one that many business leaders continue to overlook. By investing more in understanding digital maturity, executives will become better equipped to plan digital transformations that have positive impacts.

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