Authored by Prasad Kularatne, Chief Technical Advocate at N-able. The writer has extensive experience in architecting and delivering key digital transformation projects for our organization.

Author’s Note: This is the first of a four-part blog series where I will examine how to realize organizations' digital transformation goals from a project-centric perspective. I will analyse four distinct types of projects which were aimed at delivering digital transformation promise, their Critical Success Factors, challenges in real-life execution and focus areas for improving the value of project outcomes. This is the first part is an introductory blog where I will walk you through these four types of projects and their role in an overall digital transformation programme.

Sri Lanka, as a country, invests heavily in large IT projects, especially in the Telecom, Banking, Financial Services & Insurance industries. Such investments have witnessed an upward trend with the focus on digital transformation initiatives in the last five to six years.

For our customers, most of these projects were the first of their kind. We experienced wide-ranging challenges in execution of these projects. Every project brought us new challenges, and forced us to introspect into our methodologies and fine-tune them for the next.

As IT solutions providers, we must ensure, our customers generate the expected value of the IT investments they make in these transformational initiatives. Exercise of this duty has never been more important than now when our country is facing its biggest economic crisis. Most of these IT investments have sizable foreign exchange outflow, especially on the technology front, therefore, it has become extremely important for us to critically examine the avenues to bring the highest value from these investments and use them in delivering projects that drive these initiatives.

Digital transformation promises sustainable economic value through exploring, implementing, and executing innovative measures to drive customer centricity. It transforms the way an organization relates its products, services, employees, and business processes to their customers into a personal digital experience with a mutually valued outcome.

I used the below diagram a few years back, when we, as a company, aligned our application-centric business units to help drive Sri Lanka’s banking industry through its digital transformation initiatives.

Figure -1: What do we mean by digital transformation

This diagram illustrates in very simple terms the ‘what’, ‘how’ and ‘why’ of digital transformation to our customers. Then we went on the develop industry-specific frameworks to help customers understand how they should prepare and change their IT landscape to make them more customer-centric. This exercise resulted in the award of a significant number of projects that formed the core part of digital initiatives of large organizations in Sri Lanka. These were mostly multi-year programmes with a series of interdependent projects progressively helping customers to achieve their digital transformation goals.

For our customers, most of these projects were the first of their kind. We experienced wide-ranging challenges in the execution of these projects. Every project brought us new challenges and forced us to introspect into our methodologies and fine-tune them for the next. Over the years, we critically analysed what we could have done better and attempted to take those experiences into the next projects. We understood that depending on the organization's culture and the strength of leadership of the Centre of Excellence (CoE) or focus groups that drove the project from the customer end our project execution strategies need to change to help customers realize the expected business outcomes.

It is these experiences that I thought of putting into a series of blog posts. These learnings are from my own field experiences in providing consultancy and advocacy to our project teams and customers in driving digital transformation initiatives. I will put an effort to:

• Profile the common categories of IT projects undertaken to realize digital transformation initiatives
• Assess Critical Success Factors (CSFs) to deliver the intended value from those projects
• Examine factors commonly leading to diminishing realization of this value
• Evaluate how we can draw strategies to take control of these factors and realize the intended business value 

Under the umbrella of digital transformation, we broadly see our customers undertaking five categories of transformational projects:

1. Digital Channel Innovation
2. Core Application Renovation
3. Back-Office Transformation
4. Integration Architecture Modernization
5. Application Modernization

The focus of this blog series is the first four categories of projects.

In the journey to become more customer-centric and achieve the intended competitive advantage, each of these projects plays a different but interconnected role.

The following diagram illustrates a typical and high-level application landscape of an organization envisioning digital transformation.

Figure - 2: High-level application landscape (customer-centric view)

An organization interacts with their customers, either directly via self-service channels (B2C - web, mobile, conversational, wearable etc.), or the channels through their partners (B2B2C) who resell their products and services. This customer interaction is handled via the Digital Experience Services layer which implements the interaction logic across these self-service and partner channels.

For self-service channels, these interactions are modelled using customer journeys. User Experience Services provide the User Interface (UI) and the interaction flow customer experiences while taking the journey. When you check your savings account balance on your Apple Watch, when you are trying to resolve a dispute with a live agent via online chat service, when you are assisted by a relationship officer through video collaboration while applying for a bank loan or when you subscribe to a value-added service to increase your gaming experience on your data package, you interact with User Experience Services.

Omni Channel business services implement the organization's business logic for channel interactions and orchestrate these interactions by consuming services provided by the underlying Systems of Record (Core Business applications), Systems of Engagement (Process services) and Systems of Insight (Analytics and Reporting services) applications.

Digital Channel innovation projects aimed at establishing a customer-centric channel strategy for the organization to associate themselves with customers' digital lifestyles. They focus on building or renovating the Digital Experience Service layer to achieve these objectives.

Business Process Orchestration and Choreography Services automate the business processes within a specific business domain (usually through orchestration) or those that cut across multiple business domains (usually via a combination of orchestration and choreography) of an organization. These business processes are either triggered from self-service channels, partner channels or by the employees while physically interacting with the customers. These services form the backbone of an organization’s ability to efficiently respond to customer interactions either via Straight Through Processing (STP) when a customer activates a value-added service with the telecom provider, or through a series of employee interventions when a customer applies for a mortgage loan with their Bank.

Back-office transformation projects are aimed at increasing the levels of automation and improving the employee experience in participating in these business processes. They contribute to the overall digital transformation goals of an organization by ensuring frictionless customer experiences and making the organization more responsive to customer needs. These projects focus on building or renovating the Business Process Orchestration and Choreography services of an organization.

Core Applications are the heart of any business enterprise, they are the System of Record (SOR) and Source of Truth (SOT) for their customers, the products, and services they offer. These applications record all financial transactions that result from customer interactions. Automation of the primary business functions within a specific domain is also the responsibility of core applications. Billing & Rating applications in the telecom industry, Core Banking or Core Insurance applications in Banking, Financial Services and Insurance industry, and Enterprise Resource Planning (ERP) applications in the manufacturing industry are an example of core applications. Due to the very nature of these applications, they change at the slowest speed in any organization. Traditionally they were upgraded or replaced due to technology obsolescence, however, we recently see organizations renovating their core applications as part of digital transformation initiatives. We have observed the following drivers behind this trend.

• Organizations are looking for the ability to originate products and services that offer digital experiences
• Organizations want digital applications to be triggered by various events of interest generated by the business processes within the core applications domain
• Architectural changes are required to handle evolving transaction patterns resulting from customers' digital lifestyle interactions
• Demand for an increased level of Straight Through Processing (STP) of core business functions

Our focus, in this series of blog posts, will be on the core application renovation projects triggered by the above drivers.

All the above three transformational project categories require significant changes to both service and data integration architecture to deliver the intended business outcomes. To stay ahead of the competition, organizations must continuously innovate to make them relevant to the customers changing digital lifestyle. Bringing digital experience at this speed requires faster iterations in delivering new features within the digital experience services layer resulting in wider adoption of micro-services application architectures and Continuous Integration and Continuous Delivery (CI/CD) practices. Micro-services rely on an event-driven integration style, and we see organizations gradually moving into a hybrid integration architecture that combines service-oriented integration, event-driven integration, and message-based integration styles.

From the perspective of data integration, we see organizations moving into delivering real-time insights to drive personalized digital experiences for their customers. Real-time stream-oriented data integration along with real-time analytics are key requirements for delivering real-time insights. This evolution of integration architectures results in the fourth category of projects, which I term ‘integration modernization projects.’

Author's concluding note: In the next blog post, out of the above four categories of projects, let me dive deeper into Digital Channel Innovation projects, examining factors critical to their success, inherent challenges and how better planning, readiness and optimal execution strategies can successfully overcome those challenges in achieving the promised digital transformation goals. Stay tuned!