As companies remerge from the pandemic, controlling costs is the new priority. As a result, the cost of innovation is being watched closer than ever.
Innovation. It may have been the most overhyped buzzword in the business world for the past decade. Innovation Labs. Innovation Hubs. Chief Innovation Officers.
Until recently, companies were “all in” on innovation at almost any cost. Innovation provided the foundation for success in the corporate world and served as the baseline for measuring digital transformation initiatives.
The irony is, even during the best of times with seemingly unlimited budgets, companies struggled to transform themselves digitally. According to a recent study by McKinsey, 84% of respondents say their organizations’ digital transformations have failed to improve performance or equipped them to sustain changes in the long term.
The new norm requires new metrics
In the new normal, these types of metrics aren’t just unsustainable, they are unacceptable. How and on what enterprises spend money will be closely monitored. Innovation can’t end, but budgets allocated to innovation will be closely monitored.
Most digital transformation projects planned at the start of 2020 have been dramatically overhauled, if not altogether scrapped. Earlier priorities are a distant memory, and new priorities have emerged. As companies remerge after being shut down from normal operations as a result of COVID-19, controlling costs is the new priority.
Recognizing the market was shifting, we’ve spent the past two months allocating all our resources to helping enterprises re-prioritize and re-emerge in this new normal. Based on our experience, we gained more in-depth insights into the anatomy of successful digital transformation projects in key industries, including Financial Services, Insurance, Healthcare, Life Sciences, Telecommunications, Technology, Media, and Entertainment. We also used this time to analyze input from customers, industry experts, and partners.
The findings of extensive research for successful digital transformation initiatives coalesce in three significant areas.
The first is using the right set of digital engineering tools. The right tools drive lifecycle automation to improve quality, enable speed, and increase productivity. These include Smart Application Lifecycle Management to improve user stories and provide a story point estimation model. Increasingly, companies are using gamified dashboards topromote transparency, quality, and productivity of development teams and track how one set of tools compares to another set. Think of it as A/B testing to find and measure the effectiveness of the right tools for the development of digital transformation assets.
The second is the reusable industry assets. We’ve found that the best line of code is the one that’s not written. Near-zero code approaches don’t only work, they deliver better results. This includes data lakes with pre-trained AI and machine learning models, synthetic datasets with tens of millions of customers and hundreds of millions of transactions, as well as cloud-native middleware with prebuilt microservices, boilerplate code generators, and legacy connectors to core product processors; and API Lifecycle Toolkits to manage onboarding, QoS, security, distributed tracing, and logging of deployed services.
Finally, the third component is certified development teams. When engineers are trained and certified on a specific technology and also industry-specific approaches, they are more successful than those who aren’t. Using agile methodology, these teams are configured in squads and tribes to promote scalability and growth.
A last word innovation costs
The cost of innovation is being watched closer than ever. With our experience in formalizing DTS, we can predict digital transformation successes very early in engagements with clients. Because of that, we’re able to set specific performance goals with each client focused on areas including reducing technical debt, improving time to market, or reducing costs.
This is the new normal. Investments in innovation need to be closely monitored and protected as much as possible.