As digital transformation continues in organizations large and small, Kevin McCaffrey, CEO and Founder of Tr3Dent, and Charlene discuss the growing prominence and influence of digital transformation offices. The video is below followed by a transcript of the conversation.
Charlene O’Hanlon: Hey everybody. Welcome back to TechStrongTV. I’m Charlene O’Hanlon and I am here once again with Kevin McCaffrey who is the CEO and founder of Tr3Dent. Kevin, always a pleasure to see you. Thank you so much for coming back on TechStrongTV.
Kevin McCaffrey: My pleasure, Charlene. It’s always a pleasure to join you and to talk to you.
O’Hanlon: Well, thank you. Thank you, I always feel like when I’m talking to you, I have to affect this Irish accent which I’m not going to do because I don’t want to embarrass myself. [laughs] But, last time you were here we had a really, really great conversation about what you’re seeing, what your organization is seeing kind of in this space as other organizations are going through digital transformation efforts. So, I kind of want to continue that conversation and just kind of take a look at what you guys are seeing in the way of the emergence of digital transformation offices. So, tell me a little bit about what you mean by that? So, what is a digital transformation office and what does it mean for organizations?
McCaffrey: Yeah, it’s been an interesting input we’ve been getting from clients and from partners that we’ve been talking to over the last six months since we last spoke. Essentially, the concept of the digital transformation office is almost like taking your traditional PMO or your project or program management office and moving it up a layer. What we’re seeing is many organizations, through the pandemic, made a lot of short-term transformational changes to survive and to get to their customers and to service their customers.
Now, they have to look at things and say, “Okay, well we got through that. Now, we’re coming out the other end. We’ve got a new normality. We’ve got to look at how we can implement longer-term strategy for transformational activities. Rather than that be done in a piecemeal or a siloed perspective, we need to look at how we can look at that holistically across the organization. So, it’s not necessarily just a PMO on steroids. It’s actually more about the strategic — and actually, bringing that tactical side of activities that are ongoing and matching that to the strategy that the organization needs to follow longer-term.
O’Hanlon: Well, it kind of makes sense and given our druthers, we probably would have it go the other way where it started with a strategy and then turned into the tactical. But because of the circumstances being the way they are with the pandemic and the fact that so many organizations really had to accelerate the digital transformation kind of version if you will and make it reality so quickly. It has kind of come out the way that it is. But it’s great to hear that organizations are now taking a more strategic look at their digital transformation efforts and how they can take it beyond where it is today. Are you seeing this in particular sizes of organizations or is it pretty much running the gamut?
McCaffrey: Generally, with the larger-type organizations most definitely you see it more. The other thing just coming back on one of the points you made about ideally you would have gone strategic versus tactical first and I would agree with you. But I think one of the advantages of what’s happened is it’s made organizations realize they can transform, they can change, and it also moves it much further up in the agenda and in priority for the C Suite and even for the board as well. So, I think that’s been — if we want to get any kind of positives — that’s one positive out of it. I think, also what’s come out of it is the fact that in the past a lot of transformation had focused on the technology, our IT, what we’re going to do whether it’s the flavor of the month with AI block chain, 5G, whatever is the flavor of the month as I said.
But the reality is, the core components tend to be — of success — are the people. So, if you look at the transformation and how organizations had to change, they had to move people from potentially all working in one environment to working from home, impacts on business processes, those were massive undertakings for the organizations and they did a lot to help move things forward.
But going forward, the concept of the digital transformation office is to have that oversight at a senior level where you’re actually not just dealing with middle management trying to implement quick fixes to try and do something. It’s the alignment of middle management with the senior management, but also with the people that are going to be responsible for making the organization the success. So, it also kind of has started this umbrella of digital transformation office. It can incorporate things like cyber security, data management, processes, methodologies, culture. So, having that governance or that longer-term strategy and principles that you’re agreeing to so that all of the other, smaller projects that you’ve got underway to support your digital transformation office kind of are all singing off the same page. It’s really important.
O’Hanlon: Well, that makes sense and I imagine it’s an easier way for an organization to align its business goals with these transformation efforts so that they can actually put a P&L around it, if you will, and maximize their investments. I think in the early days at least of the pandemic, I think so many organizations were just focused on keeping the lights on and — maybe not the doors open but you get what I’m saying. So, you know, they really weren’t putting a price tag on how they could actually maximize their investment in digital transformation efforts. But now, we’re kind of in that phase two or maybe even phase three for some organizations. Certainly, getting the return on investment is a larger part of the conversation. So, I imagine the digital transformation office is tasked with that as well.
McCaffrey: Yeah, absolutely. Basically, one of the important things about the digital transformation office is that you need to empower it with the capabilities that are necessary or required for that organization. So, there isn’t — like anything — there isn’t just one model fits all, it has to be adapted. But you have to look at it and say, “Well, actually, for this particular organization, we need to ensure that we’ve got this oversight and we can see and prioritize” because you’re going to get different — organizations get different priorities whether it’s from the customer support team, whether it’s from product management, whether it’s from the CFO to do different things. So, from a transformational perspective, you also need to look at the priorities of those and ensuring that they all follow the same vision.
Interestingly, there was an interesting article recently by Capgemini and they came back and said that most of the time you would have thought that top management and middle management were following the same overall vision but in actual fact — based on the survey that they did — only 36 percent of the companies surveyed confirmed that they were aligned. So, you have a vision at one stage and a complete disconnect with what is actually happening on the ground. So, this is really an important aspect for a digital transformation office to be able to coordinate that kind of strategy with the tactical but also having the leadership and the capabilities within that to drive it. And also, as I said earlier, the buy-in from the employees is also key.
O’Hanlon: So, who’s in charge of the digital transformation office? I mean, is it the person who was running the PM organization before or the PM office? Or is it — is this a new C-level title the chief digital transformation officer?
McCaffrey: It can be, yeah. Yeah, certainly you do hear “chief digital officer” mentioned quite a lot. You’ve also got concepts like the chief ecosystem officer; right? So, you’ve also got obviously the CIO office. But, you know, typically a PMO is part of a project-management type element within an organization. But this isn’t just about the management of the project. It’s got a higher level within that. So, the person again who has the overall responsibility on that quite often is on the CIO-type side of the organization because usually it’s technical implementation that are going to deliver the value to the business based on their requirements.
But equally, it could be somebody who’s working it on purely from a strategy — you know, chief strategy officer as well. I also think that, you know, what we’ve seen as well is that it does depend on the organization. So that depending on — if your vision, if your strategy is to take an ecosystem approach, partner alliances and all that, you need a capability within the digital transformation office of people who are experienced in that area and can drive that. While if you’re more tech-focused, you’ve got to look at that and look at standards or interoperability and other options as well.
So, it really depends on the organization itself. You know, there’s interesting examples of where this has been implemented with the FDA in the U.S. and actually the U.S. Navy as well have implemented digital transformation offices to consolidate and view things from one group.
O’Hanlon: Well, that makes a lot of sense. I’ll be interested to see if this actually catches on with larger organizations and smaller organizations because a digital transformation knows no boundaries. It doesn’t matter how big your company is if you need to be customer-centric and optimize your processes and your technologies, digital transformation is definitely what you need to consider. So, do you think that this is going to be kind of a passing fad or do you think this office of digital transformation is going to become a regular department or part of an organization?
McCaffrey: Yeah, it’s — you know, a lot of times when people think of digital transformation, they kind of think of an end-state. But it’s actually a journey. So, to me, it’s a mindset. It’s a way you’re going to work going forward. So, to me, it isn’t a fad. It’s something that will continue and it’s not just for a specific period of time. I think — you know — if I was to summarize the overall vision for a digital transformation office, it will be to enable the business to evolve and evolve based on the circumstances that they operate in. So, that could be a pandemic, it could be a shortage of supply, it could be supply-chain issues, it could be resource issues, or whatever. Or a change in market conditions. But your business needs to be able to evolve to that and technology can help significantly with that but you need to have that vision and it’s not — you don’t just suddenly wake up one morning and say “Great, we’re fully transformed. We can close down the DTO and we’re ready to go.”
O’Hanlon: Mm-hmm. So, I wonder, actually, if the term “digital transformation,” I wonder if that’s going to evolve over time because to your point, digital transformation, a lot of people think of it as having an end state but we all know that that’s certainly not the case. But I think that word “transformation” kind of makes people think that way. So, I wonder if even the name “digital transformation” is eventually going to turn into something else that’s not so —
McCaffrey: I hope so, yeah.
O’Hanlon: Maybe it’s an evolution. I don’t know.
McCaffrey: Yeah, pardon me. You know, if you think back five or six years ago, it was about the digital revolution. So, that’s now being downplayed or corrected to transformation. But I find the word “digital” quite — I don’t want to say “annoying” or irrelevant in many ways because what isn’t digital? Does that imply you’ve got an analog transformation or a digital transformation? Right?
O’Hanlon: [laughs] good point.
McCaffrey: Right? So, what isn’t digital; right? But to me, I like the term “business evolution.” One, it’s about the business. It’s not about — people think about the word “Digital” and they’re thinking about tech, they’re thinking about bits and bytes. Transformation is an end state. As an evolution, you’re looking at how your business is going to evolve and how it needs to be able to change to react to market circumstances and others.
O’Hanlon: Yeah, I agree. I don’t think we’re going back to typewriters anytime soon so I think — when I hear “analog” I think typewriters but that’s just me. But Kevin, thanks so much for having the conversation with me. As always, good stuff. You’ve got a lot of good insights and I do appreciate your time and your expertise. I can’t wait to get out to Galway!
McCaffrey: Absolutely, my pleasure Charlene and look forward to having you out here for — we might have a pint of the black stuff.
O’Hanlon: Hopefully, one of these days we’ll make it happen. But, Kevin, thanks again and hopefully we’ll see you again on TechStrongTV soon.
McCaffrey: Thank you.
O’Hanlon: All right, everybody, please stick around. We’ve got lots more TechStrongTV coming up so please stay tuned.