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Dell Technologies (NYSE:DELL) helps organizations and individuals build their digital future and transform how they work, live and play. The company provides customers with the industry’s broadest and most innovative technology and services portfolio for the data era.
Julie Devoll, HBR
Welcome to the HBR Quick Take. I’m Julie Devoll, Editor of Special Projects and Webinars at HBR. As the world experienced unprecedented disruption over the past year, businesses digitally transformed in a matter of months, in a way that would have normally taken them years. Dell Technologies partnered with an independent research company, Vanson Bourne, to measure the progress of businesses’ digital transformation globally, in search of key trends and insights. This Digital Transformation Index, conducted biannually since 2016, included over 4,000 business leaders from midsize to enterprise companies, across 18 countries and 12 Industries.
In this Quick Take, we’re joined by Matt Baker, Senior Vice President of Strategy and Operations at Dell Technologies. Matt, thank you so much for joining us today.
Matt Baker, Dell Technologies
Thanks for having me. I am excited to share the insights and talk about what digital transformation actually means.
Julie Devoll, HBR
Tell us a little bit about the Digital Transformation Index.
Matt Baker, Dell Technologies
This is a body of work that we’ve been doing, as you said, for quite some time. The idea is ultimately, where are customers on the journey of digital transformation? We will get into what that means shortly, but essentially it means that customers are self-reflecting and grading themselves on where they are in that journey. Ultimately we’re talking about how they feel about their performance as an organization in light of where they are, versus their peers, and their perceptions of where their peers may be.
It is really trying to get at the mindset and motivation of businesses and organizations for transforming digitally. Ultimately, trying to contextualize what that means for them from a competitive standpoint and from an operational standpoint. It is really insightful, particularly given where we found ourselves in the midst of a global pandemic, and how that relates to their self-grading of their performance, relative to where they feel they are digitally in light of the pandemic, and how it has either helped or hurt them that they’re on a certain point in the journey.
Julie Devoll, HBR
What did the Digital Transformation Index reveal about the pandemic?
Matt Baker, Dell Technologies
It revealed that businesses and organizations that feel that they are leaders or are farther along in the process of transforming digitally, have, in some cases, thrived in light of the pandemic. Whereas folks who grade themselves as laggards or are farther behind in digital transformation have struggled throughout the pandemic. It basically has stated that those who are farther along the digital transformation journey have been able to weather the storm of the pandemic far better than those who are farther behind.
Julie Devoll, HBR
When you say digital transformation, what do you really mean by that?
Matt Baker, Dell Technologies
It is one of these buzzwords that we hear quite frequently in the technology industry. Ultimately, it means creating digital versions of standard business processes. For example, where it may have been something that was done in person manually, it is shifting it toward codification. When I say codification, it is becoming a process that can run as a program. Ultimately, it allows you to remove it from the physical sphere and take a process that was largely created for human-to-human contact, put it online and become a program.
Imagine banking, because banking is an area that has transformed digitally quite a bit over the last decade. Imagine ten years ago, if you needed to move some money from one account to another, you would have had to go to a branch or call a banking professional. Nowadays you just pick up your phone and with a few clicks you have money going from account X to Y. You’re making payments to people online. It’s really about building that online presence, and business processes that are largely automated and built from software.
Julie Devoll, HBR
Shifting gears a bit, what do you think it means to be a digital leader? Do you see midsize companies getting there in the near future?
Matt Baker, Dell Technologies
I think the interesting thing is that midsize business, different verticals, and different industries are in different places along this digital transformation journey. I don’t think midsize businesses are any different than large businesses in terms of what it means to digitally transform. I think there are segments and sectors that are much farther along. It’s not like midsize businesses mean they are not digital businesses. That is step number one to say the size of the company has very little bearing on digital transformation.
How they achieve it, however, is a bit different. Where large organizations may employ armies of IT professionals, software developers, etc., obviously, a midsize business does not necessarily have the operating capital to employ an army of developers. Therefore they’re looking for outcomes that are more packaged and more predictable. I think that’s the real difference between the two.
Julie Devoll, HBR
What should a midsize company then be doing to continue their digital transformation path to become a digital leader?
Matt Baker, Dell Technologies
I think if we back up to what I was saying, it’s all about taking business processes and codifying them into automated activities. That means software. A lot of what we need to think through is, what’s my platform for developing those digital business processes? Do I need to employ more programmers? Do I need to find a platform that is more SaaS-like to achieve an outcome? There are a lot of questions around software. So you really need to make investments in a software platform that makes it easy for the business to translate what they’re trying to do into software processes that can be automated.
Julie Devoll, HBR
Part of that then must be nurturing their employees’ digital skills and building a digital-first culture. Would you agree with that?
Matt Baker, Dell Technologies
I would agree with that completely. I would say second to software is data. A lot of what is embodied in digital transformation is creating a data set and then acting against that data set. A lot of automation is built by observing what has happened, capturing it digitally as data, and then analyzing it to understand how it has a bearing on what a customer might think of next and how you might match your customer up with a solution that you are selling by analyzing data. You have to become proficient in many of these skills that are the hallmarks of digital transformation, which are software skills and data analysis skills. Those are the two key areas that I would say are the key skills for building your digital transformation capabilities.
Julie Devoll, HBR
What are the areas of opportunities that midsize companies need to home in on to grow and lead in their industries?
Matt Baker, Dell Technologies
I think if we reflect back on what this Digital Transformation Index is all about, it’s about sort of self-reflection on where you are and where you are relative to your competitors. I think that the key thing is, let’s step back, understand where we are, and orient ourselves to where we need to go. Do we feel like we’re laggards? Do we feel like we’re leaders? And then set an agenda.
From there, you sort of have to do a skills assessment. Do I have the right talent within the organization? Do I have the right technical skills? As I said, a lot of this is about software. Do I have software developers? Do I have data scientists? Do I have the right analytics in place? Do I have the right platforms in place? The thing that you need to do is lean in to the opportunity, you need to create an agenda and execute against that agenda.
Julie Devoll, HBR
Matt, you talk to a lot of midsize companies. What is the most interesting theme coming out of these conversations?
Matt Baker, Dell Technologies
I think the first one is, what is digital transformation? You have to step back, have a conversation and get it into real words. Those real words are you have to build software. You have to understand what your business processes are. A lot of business processes within organizations are really all about human-to-human interaction and you have to help people reimagine what it means to take something that was in the old way, a synchronous interaction between human beings, and shift the mindset to something that is an asynchronous interaction between humans and software assets.
There is a lot of curiosity around what automation is. Are we talking about AI? Are we talking about machines…all these buzzwords? To be honest with you, I think the most interesting theme is that people really just need to have a plain language conversation about what it means to move from point A to point B to point C. I think the biggest lesson is that we need to drop the buzzwords, and I frankly have used a bunch of them in the course of this conversation, and really home in on what it means practically for me to go from point A, to point B, to point C.
Julie Devoll, HBR
How are you framing the conversation to help these companies drive change?
Matt Baker, Dell Technologies
First, I think you need to look at the nature of the thing that we are talking about, this Digital Transformation Index. It is all about being self-reflective and understanding where you are on your journey and accelerating that journey. Which means you really need to focus on not only technology. You need to look at people, process, and technology. You need to make sure you have the right skills in your organization. You need to understand what processes you are actually trying to digitize, and of course, that’s fueled by technology. But getting out of balance among those three key things is a recipe for disaster. Our discussion and that key framing is that it is all about harmonizing people, process, and technology. Having an agenda and executing against that agenda.
Julie Devoll, HBR
Matt, this has been a great discussion. I want to thank you so much for joining us today.
Matt Baker, Dell Technologies
Thank you for having me. It’s been a great discussion. Thank you.
Julie Devoll, HBR
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