Navigating the Challenges of Digital Transformation with Success

Digital transformation holds vast potential to lift the performance of investment organizations to new levels. However, while it offers ample opportunity, there are key challenges to identify and overcome. Marcelo Borges, Head of Organizational Effectiveness at Alter Domus, examines the critical factors to understand and steps to take for organizations to achieve optimal digital transformation.

Opportunities Driven by Digitalization

Organizations across the investment industry are looking for improved business assets and capabilities to drive overall performance. These include access to high-quality data at any and all times, greater data transparency, timely delivery, as well as more accurate, faster product and service launches and enhancements. Digitalization can drive these improvements.

The rapid advancement in digitalization witnessed in the past two years has shown investment organizations the enormous business potential that it is uniquely capable of unleashing. However, at the same time, the digital evolution that the pandemic precipitated has also greatly increased client expectations that need to be satisfied.

Partnering Product and Sales
 A key way for organizations to meet these increased client expectations is to develop a closer partnership between the sales and product development departments. Such a close working relationship between these two departments enables organizations to understand exactly what their clients are looking for and use these insights to shape product development. However, this tends to be much easier said than done.

“It requires strong leadership and collaboration from both departments to meet the challenge of working together in an open, efficient manner with the wider organization’s best interests at heart. It’s critical to align sales promises with production capabilities, which necessitates a fundamental understanding for each department of how the other works,” explains Marcelo.

Rising to the Great Resignation Challenge 
 There is a current phenomenon across the world called the “Great Resignation.” Employees have been resigning at an unprecedented rate due to the shifts in the labor market that the pandemic has created. Employees are demanding more from their employers. This has worsened the skills gap, especially in data science. Digitalization applies to all of this because Generation Z and millennials are increasingly seeking meaningful work that is fulfilling.

By looking deeply, in granular detail, at their workflows, organizations can identify inefficiencies that digitalization can address and improve. By transforming into a digital business, organizations can automate menial, repetitive tasks and allow employees to focus on more stimulating work that requires their specific skills. “AI can support employees with capabilities such as data analytics and machine learning, and as a result, enable organizations to better attract, engage, and retain talented employees,” says Marcelo.

Overcoming the Challenges of Digitalization

Successful digital transformation requires careful consideration of an organization’s operating model and planning of how to integrate digital technologies and new processes in all applicable areas of the business. Any threats associated with digitalization are not a result of digitalization itself but rather of suboptimal project and change management. It is absolutely imperative for organizations to meticulously plan and execute digitalization in order to benefit from it in full and offset any risks that may arise from any oversight.

The Critical roles of Data, IT, and Compliance Departments
 Success is predicated on partnerships developed between the IT, Data, Risk & Compliance departments, as well as with all other pertinent stakeholders and departments across the organization. These three departments, in particular, must be front and center of any digitalization drive or organizations are almost certain to encounter significant problems. Once again, it’s important to note that in this type of scenario, it isn’t digitalization per se that would be the cause of issues, but rather a deficiency in planning or project management.

Throughout the digital integration process, the Risk & Compliance departments must have a central role in advising upper management of any possible breach of regulatory obligations. At the same time, compliance officers should also highlight how and where new technology can support improved compliance, such as with automated regulatory reporting and improved data and data capture.

Foreseeing Future Problems to Prevent their Occurrence

All too often, business leaders see the possibilities that new technologies can generate and launch them without full forethought and planning. Marcelo outlines three critical questions that must be addressed as organizations pursue their digital transformation:

1. What is the strategic imperative for the digital transformation? 
2. Where is the organization in its digital transformation journey? 
3. How will the organization progress from its current to its desired state? What is the Target Operating Model? 

Project management combined with robust change management is critical to any transformation, particularly when undergoing digital transformation and technology adoption. Organizations that lack comprehensive planning and execution phases are often confronted with frustrated employees who reject the new digital processes and return to their previous workflows, often resorting back to using non-digital methods such as spreadsheets.  

“The cost to organizations of this sort of outcome cannot be understated. The new technology typically involves considerable investment. There is also the cost of failing to take advantage of the benefits that the new technology could have delivered, and employee morale can take a hit too,” underlines Marcelo.

Driving Successful Digital Transformation

Digitalization itself can’t resolve infrastructural and process issues, which is a common mistake that organizations make. To this end, it is on organizations to cultivate strong leadership and a company culture that enables new technology to drive performance higher. Strategy and processes must be optimal and aligned across the business. Moreover, particularly in the wake of the “Great Resignation,” employee knowledge and engagement is going to separate the industry leaders from the laggards. 

"While technology is more important than ever, it will not design a business model or strategy. Rather, technology is an enabler and requires a solid system and structure in place to work optimally."

Marcelo Borges, Head of Organizational Effectiveness at Alter Domus

The most successful businesses understand that technology transforms processes that can be digitalized. They constantly invest in client and employer value propositions, and in their people, to improve inefficiencies and make work more meaningful.