77 Building Blocks of Digital Transformation: Simply Explained

77 BUILDING BLOCKS OF DIGITAL TRANSFORMATION:

Simply Explained

By Jace An

77 BUILDING BLOCKS OF DIGITAL TRANSFORMATION:

SIMPLY EXPLAINED

By Jace An

Second Edition

Copyright © 2021 Story Tree FDC

Published in the United States

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

All product and company names, logos, and brands mentioned in this book are property of their respective owners. The author and the publisher assume no responsibility for errors or omission that may appear in this book, nor do they assume liability for damages resulting from the use of the information contained in this book. Any recommendations in this book may not be applicable to every situation.

DEDICATION 

This book is dedicated to my better half, Emily and my precious daughter, Alice for their spiritual support along the journey to completing this book.

ACKNOWLEDGEMENTS

I would like to express my special gratitude to Nick Crowther, Managing Director at Freerange Future - a global award winning agency, for inspiring me to embark on the journey to creating this book. This book would not have been created if it were not for him.

Throughout the process of creating and publishing this book, many individual professionals have helped me out. I’d like to give a special thanks to Eddie de Jong, Dayeong Yun, Beenish Qureshi, Todd Emsley, and Edward Oh for actively participating in editorial review, book designing and formatting, and contributions for this book. This work would not have been possible without support from all of them.

TABLE OF CONTENTS

Prologue

Introduction

Mega Capability 1. Digital Customer Experience Management

Capability 1-1. Digital Customer Journey Management

Capability 1-2. User Research

Capability 1-3. Usability Analysis

Capability 1-4. User Experience Designing

Capability 1-5. User Experience Testing

Mega Capability 2. Social Interaction

Capability 2-1. Social Listening

Capability 2-2. Social Media Marketing

Capability 2-3. Social Media Servicing

Capability 2-4. Online Community Management

Capability 2-5. Rating & Review Management

Capability 2-6. Content Moderation

Capability 2-7. Social Crisis Management

Mega Capability 3. Digital Marketing

Capability 3-1. Digital Brand Marketing

Capability 3-2. Search Engine Optimization

Capability 3-3. Paid Search

Capability 3-4. Content Targeting

Capability 3-5. Affiliate Marketing

Capability 3-6. Online Advertising

Capability 3-7. Digital Campaign Management

Capability 3-8. Lead Management

Capability 3-9. Marketing Offer Management

Capability 3-10. Email Marketing

Capability 3-11. Mobile Marketing

Capability 3-12. Marketing Automation

Capability 3-13. Conversion Rate Optimization

Mega Capability 4. Digital Commerce

Capability 4-1. Online Merchandising

Capability 4-2. Shopping Cart & Checkout

Capability 4-3. Payments & Reconciliation

Capability 4-4. Order Management & Fulfilment

Capability 4-5. Account Management & Self-Service

Mega Capability 5. Digital Channel Management

Capability 5-1. Channel Mix & Optimization

Capability 5-2. Cross-Business Integration

Capability 5-3. Cross-Channel Integration

Capability 5-4. Multi-Device Presentation

Mega Capability 6. Knowledge & Content Management

Capability 6-1. Knowledge Management

Capability 6-2. Content Lifecycle Management

Capability 6-3. Digital Asset Management

Capability 6-4. Content Aggregation & Syndication

Capability 6-5. Web Content Management

Mega Capability 7. Customization & Personalization

Capability 7-1. Customer Preference Management

Capability 7-2. Customer Communication Management

Capability 7-3. Social Behaviour Management

Capability 7-4. Interaction Tracking & Management

Capability 7-5. Customer Loyalty Management

Capability 7-6. Digital Customer Services

Mega Capability 8. Digital Intelligence

Capability 8-1. Product Similarity Analytics

Capability 8-2. Customer Insights

Capability 8-3. Customer Segmentation

Capability 8-4. Conversion Analytics

Capability 8-5. Digital Marketing Effectiveness

Capability 8-6. Big Data Analytics

Capability 8-7. Web Analytics

Capability 8-8. Reporting & Dashboard

Mega Capability 9. Digital Data Management

Capability 9-1. Non-relational Data Management

Capability 9-2. Distributed Data Store Management

Capability 9-3. Enterprise Search

Capability 9-4. Master Data Management

Capability 9-5. Data Quality Management

Capability 9-6. Digital Data Policy Management

Mega Capability 10. Digital Infrastructure Management

Capability 10-1. User Interaction Services

Capability 10-2. Process Integration Services

Capability 10-3. Parallel Processing Services

Capability 10-4. Artificial Intelligence Services

Capability 10-5. Federated Access Management

Capability 10-6. On-Demand Provisioning Services

Capability 10-7. Digital Continuity Management

Mega Capability 11. Digital Alignment

Capability 11-1. Digital Innovation

Capability 11-2. Digital Planning

Capability 11-3. Digital Governance

Capability 11-4. Cross-Boundary Collaboration

Capability 11-5. Digital Journey Readiness

Mega Capability 12. Digital Development & Operations

Capability 12-1. Digital Program & Project Management

Capability 12-2. Digital Design Authority

Capability 12-3. Digital Capability Development

Capability 12-4. Digital Capability Introduction

Capability 12-5. Digital Service Operations

Capability 12-6. Digital Quality Management

Endnotes

Glossary

References

About the Author

PROLOGUE

The Purpose and Audience of This Book

Since ‘77 Building Blocks of Digital Transformation: The Digital Capability Model’ has been published to help ‘digital practitioners’ who work in the digital space, quite a few readers have suggested writing a book about digital transformation for 'the general public’ who are interested in learning more than basics of digital transformation. That is how this book ‘77 Building Blocks of Digital Transformation: Simply Explained’ has been created.

This book is intended to deliver the key messages of ‘77 Building Blocks of Digital Transformation: The Digital Capability Model’ to the general public. That being said, this is not a theory book that discusses the academical ideas and concepts of digital transformation, but a ‘practical’ field book that describes the proven digital capabilities as the building blocks of digital transformation.

‘77 Building Blocks of Digital Transformation: Simply Explained’ is focused on ‘introducing’ the 77 Building Blocks. It aims to help the general public understand ‘actual practices’ in the digital space, but does not fully cover the Maturity Model described in detail in ‘77 Building Blocks of Digital transformation: The Digital Capability Model’ that aims to help digital practitioners with measuring maturity of the digital capabilities. Instead, this book provides some examples of higher maturity indicators as an introduction to the Maturity Model of the digital capabilities. If you are looking for a deep dive into the Digital Capability Model including the Maturity Model, please refer to ‘77 Building Blocks of Digital transformation: The Digital Capability Model’.

A digital capability is defined in this book as an organizational capacity and ability to produce intended business outcome in the digital space by combining process, people and technology elements in a way that is unique to each organization.

A Process element includes process flow, input & output information, and business rules, policies & guidelines. A People element includes organizational structure & culture, and people’s roles, responsibilities & skills. A Technology element includes applications, data, infrastructure, facilities and equipment around digital technology.

The Social Listening digital capability is for example defined as an organizational capacity to understand what users are talking about on social media and use that for business by combining its well-defined processes, skilled staff and their clear roles & responsibilities, and automation tools. A higher maturity of digital capabilities ensures effective and efficient operations of a digital business.

Digital business operations is a multi-disciplinary area where business and IT converges and works together to produce business outcomes in the digital space. Understanding both business and IT as if these were a single departmental function is therefore critical to the success of digital business. The Digital Capability Model is optimized to meet the needs of those who wish to obtain and increase this cross-boundary, multi-disciplinary knowledge.

The Digital Capability Model is comprehensive in scope, making it best suited for those who desire to have a broad understanding of the entire scope of digital capabilities and want to use a holistic approach to improve the performance of their digital business.

Impact of the Digital Trend on Business

I started my career as the marketing manager of an Interactive Marketing team in a marketing communication company. When my team saw the potential of the Internet as an unprecedented effective marketing channel, we developed an Internet shopping mall in the mid-1990s. E-business soon became the dominant trend as the first version of digital business in the early 2000s.

Nowadays, new digital technologies are introduced at a rapid pace. As was learned from integrating e-commerce or e-business into the traditional business in the past, other significant potential for further sell-side improvements is possible by applying those contemporary digital technologies to the business.

It is commonly acknowledged that Social, Mobile and Cloud are among the most relevant factors of the contemporary digital era. A closer look at these three elements reveals that they are closely related from a business perspective.

Put simply, those three things are all related to ‘digitized user interactions’. Social means users interact with each other for socialization, Mobile means users interact using mobile devices, and Cloud means dynamic provisioning of business services to support unpredictable, massive transaction processing involving the un-structured and semi-structured data those interactions generate.

Before the contemporary digital age, customer behaviour could only be determined through surveys and focus groups interview (FGI), or at best by analysing behaviours of customers who did visit.

Using Social, Mobile and Cloud, previously unseen customers’ private reactions to brands through ‘digitized interactions’ can now be observed and even measured, even if they never visit or shop. Customers reveal themselves to businesses through their digitized interactions. Marketing & sales divisions should be most excited about the digitization of customer behaviours.

The Digital Capability Model

The Digital Capability Model can help you to make the most of these new digital opportunities and make the most out of the digital trends because the Model has Social, Mobile and Cloud at the core of the digital capabilities, and seamlessly integrates them with digital business.

[Figure 1: The Digital Capability Model – Mega Capability View]

The Digital Capability Model is a reference model used to diagnose and design business capabilities required for digital business. It focuses heavily on the operational areas of information technology, marketing, sales and customer service. Several noticeable features in the Model should be of interest.

1. The Model is based on the global best practices for digital business.

The Digital Capability Model consists of 12 mega capabilities and 77 capabilities that are based on global best practices. The digital capabilities of an organization can be benchmarked against the best practices in two ways. Firstly, the digital landscape can be checked to verify if it covers all the mega capabilities and their constituent capabilities contained in the Model. Secondly, an organization’s digital practices can be compared with the leading practices described in the maturity indicators{1} of each digital capability.

2. The Model consists of front-office, middle-office and back-office modules to help you respond to customers better.

The front-office interacts with customers directly through digital channels to market and sell products and services. The back-office supports the front-office by providing information needed to interact with customers. In architectural terms, back-office processes are not necessarily integrated with front-office processes seamlessly. Chances are therefore that the front-office is not responsive enough.

This is where the middle-office concept comes in. The middle-office in the Model is responsible for preparing customized content based on analytics insights provided by the back-office and then feeding the customized content to the front-office on demand. The middle-office is seamlessly integrated with front-office operations so that front-office staff are well equipped to interact with, and respond to customers. This enables staff to socialize with customers, and market and sell products and services to them effectively.

3. Most digital capabilities in the Model are aligned with customer journeys toward purchasing

Thanks to digitized customer interactions, customer behaviour and interaction can now be observed objectively. So that the customers can be influenced effectively at multiple touchpoints to move toward a purchasing action during their journey. This is why managing customer experiences and journeys are becoming more critical in the digital age than ever before. All channels, front-office, middle-office, and back-office, should be aligned with strategically developed customer experience journeys. This concept is core to the formation of the Model.

4. The front-office is structured to move interactions with customers from socialization through marketing to sales.

It is not possible to sell to everyone encountered online immediately. Socialization should first be used to build a relationship as per the customer journey map.

The Social Interaction capabilities of the front-office can target a broader audience than customer segments in a marketing plan. This enables the building of brand awareness, interest and preference widely, as well as creating word of mouth through loyal brand supporters.

The relationship evolves beyond socialization to the point where marketing offers can be pitched, and to the next level where potential customers are led to a purchasing transaction. The Model fully supports the concept of managing conversions in the marketing funnel.

5. The Model is relevant to many different marketing approaches.

Marketing practices typically consist of planning, execution and performance evaluation processes. Every business, however, has a different set of marketing processes. The holistic and comprehensive nature of the reference model makes it relevant to any marketing process that conforms to the Plan-Do-See marketing cycle.

INTRODUCTION

The Structure of This Book

The Digital Capability Model consists of 12 mega capabilities and 77 capabilities, where a mega capability is comprised of a set of capabilities. This book is organized to describe the capabilities individually ac

cording to the taxonomy of the Digital Capability Model. The diagram of the Digital Capability Model on the next page will facilitate better understanding of the structure of this book.

Digital Customer Experience Management is discussed first. Digital Customer Experience Management is a set of digital capabilities used to improve customer experience across all digital channels and touchpoints. Digital Customer Experience Management capabilities provide overarching directions for the front-office, middle-office and back-office capabilities of the Digital Capability Model.

The front-office capabilities are explained next. As mentioned earlier, the front-office is structured to be aligned with the customer relationship moving from socialization to purchasing action. This starts at Social Interaction capabilities and moves up to Digital Marketing capabilities, and eventually Digital Commerce capabilities.

[Figure 2: The Digital Capability Model - Capability View]

Digital Channel capabilities are introduced right after the introduction of the front-office capabilities. This mega capability is closely integrated with the front-office capabilities that use Digital Channel capabilities to connect to a broader digital user base, including digital customers.

Following the introduction of Digital Channel capabilities, the middle-office and back-office capabilities are described.

Digital Data Management capabilities and Digital Infrastructure Management capabilities are the technical foundations on which the front-office, middle-office and back-office capabilities are built.

Digital Alignment is a set of capabilities used to develop and execute digital plans that are aligned to corporate and business unit strategies. Digital capabilities are developed based on the digital plans and maintained through the Digital Development & Operations capability. These two mega capabilities are discussed at the end of the Digital Capability Model.

In the final part of this book, the digital capability planning methodology is introduced. This brief methodology can be employed to make the best use of the Digital Capability Model when digital plans need to be established to improve digital capabilities.

Machine Learning is mentioned a few times in this book, but not established as a standalone capability of The Digital Capability Model for a reason. Machine Learning-based AI is instead discussed briefly in the epilogue.

A Mega Capability and a Capability

Every mega capability in the Digital Capability Model has its constituent capabilities. In this book, a mega capability is introduced first and its constituent capabilities are subsequently explained.

The definition of a capability also includes key concepts that complement the definition and assist with determining the maturity level of the capability.

MEGA CAPABILITY 1.

DIGITAL CUSTOMER EXPERIENCE MANAGEMENT

Digital Customer Experience Management is a set of digital capabilities used to enhance customer experience throughout all digital interactions with all levels of organization, e.g. marketing, sales, delivery, and support. It enables simplified, seamless, and intuitive customer experiences in order to eventually strengthen customer relationships and directly affect the bottom line.

This mega capability should be an integral part of corporate-level customer experience management. The entire customer experience should be managed across digital and non-digital channels for seamless customer experience.

While the Digital Capability Model has extensive implications to almost every operational area of an organization, its primary focus is on improving marketing and sales capabilities and effectiveness by leveraging contemporary digital channels and technologies. This mega capability is therefore at the core of the entire Model, as it provides overarching directions directly to the front-office, middle-office and back-office where daily digital marketing and sales activities are performed.

Digital Customer Experience Management has a significant impact on Digital Brand Marketing capability in particular, because a brand is defined as the collection of all customer experiences with all levels of an organization and the brand is built from the results of the customer experiences.

There are 5 capabilities in this mega capability:

Digital Customer Journey Management

User Research

Usability Analysis

User Experience Designing

User Experience Testing

Let’s look at how they collaborate to achieve what this mega capability intends to achieve.  Remember the end goal of the mega capability is