Digital transformation: Opportunities for the boardroom agenda

Tuesday, 13 March 2018


    Digital transformation: it's a business buzzword, but what does it actually mean? At its heart, digital transformation is an acknowledgement that technology is moving at such a fast pace that every organisation - regardless of size or sector - needs to place IT at its core. 

    AICD spoke to Nick Kervin, National Technology Advisory Leader at BDO Australia about how it is up to company boards to drive the implementation of digital transformation.


    AICD: What are the most critical factors for successful digital transformation?

    NK: Crucially, digital transformation requires support from the board. It's a massive change exercise that the board needs to be completely behind to truly enable. This also means acknowledging that it will cost money.

    The other critical factor is that digital transformation needs to be communicated downwards through all layers of the organisation. This is actually quite difficult, because everyone's interpretation of digital transformation is different. You can't just say we're going to undergo 'digital transformation', you need to explain exactly what that means. For example, what specific technologies are going to be adopted, and how will that tangibly impact the way employees work?

    Lastly, digital transformation is heavily linked to innovation. Having a clear idea of how well-placed your business is to innovate, and if it isn't at the stage, it needs to be implementing a strategy to get it there.

    AICD: What is the role of the board in digital transformation?

    NK: Ultimately, the board needs to be responsible for driving digital transformation. They need to be setting the agenda for the executives to work towards, to continue to push change even when the rest of the business appears to be slowing.

    Integral to this is the realisation that business and IT strategies should no longer be considered separate. The business strategy, led by the CEO, should include IT and tech as a core component - this is what digital transformation is all about.

    AICD: What are the risks boards need to consider?

    NK: The most obvious risk is of course that the change doesn't work. However, to be truly innovative you have to be willing to embrace both success and failure. This requires a cultural shift and an acceptance that digital transformation requires trying new things, not all of which may work. Few businesses are genuinely prepared to invest in experimentation, but those that do will succeed.

    Another key risk is that boards will adopt a change that's too aggressive or isn't right for the business, which can quickly disrupt day-to-day operation. Boards need to become more aware of the technologies available and have more knowledge of which ones might suit their business in order to combat this.

    AICD: How do boards keep up with the fast pace of digital transformation?

    NK: Board members are busy people. While it's important they all start attending tech events and finding out about industry trends, the best thing they can do to keep pace is appoint someone that has an IT background. The boards that start diversifying to keep pace with digital transformation are the ones who will successfully change. Hiring an independent adviser who can help explain what technology means in a business context is also important.

    AICD: Can we learn from how tech industries are tackling digital transformation?

    NK: Yes. Take telcos for example. Our recent BDO telecommunications risk factor survey found that telcos rank digital transformation as their number one area of risk. This is because the dividing lines between industries are blurring, and telcos are no longer the sole provider of their services.

    Those telcos that have been slow to react to digital transformation are in danger of being left behind, while new competitors that have embraced technological change (for example over-the-top providers) have become established market players in a matter of years. Their use of technology to develop a strong foothold among consumers, particularly in their provision of cheaper services, is just one way they have embraced digital transformation.

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