Ask 5 different businesses what the phrase "Digital Transformation" means to them and you're likely to get 5 different interpretations. It's one of the most popular phrases used in connection with technology projects - a quick Google search for the phrase results in around 41 million hits! It's the hot topic of the year and COVID-19 has buoyed the market for new technologies and new ways to do business in unanticipated ways, including: the decline of cash and move to card/mobile payments, businesses moving to video conferencing and other quick and easy ways to communicate online, increased scrutiny of IT infrastructure and cybersecurity, and increased demand for data, analysis and AI, to name but a few.
Digital Transformation can be anything from:
- "IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models" in Gartner's1 terms,
- to "organizational change through the use of digital technologies and business models to improve performance" in the words of the Global Centre for Digital Business Transformation2,
- to Wikipedia's description3 of it as the "use of new, fast and frequently changing digital technology to solve problems. It is about transforming processes that were non digital or manual to digital processes".
From those 3 descriptions, we see that digital transformation is about a number of different end goals, including: (1) updating end of life/redundant systems and infrastructure, (2) moving to the cloud and XaaS (everything as a service), (3) using big data, AI and machine learning for analytics, (4) creating and using new technologies such as IoT connectivity, automation, blockchain, cryptotech and Web 3.0 and (5) (more generally) using technology efficiently and effectively to save costs and increase revenue.
Looking at digital transformation through that "end goal" lens focussed on the delivery and implementation of new technology is overly narrow, however. Fundamentally, digital transformation is a continuing and changing journey to improve business processes, operations, engagement, productivity and revenue through the use of new technologies. It can happen organically through internal development, involve the acquisition of new technologies or result from a cross functional or business collaboration project.
The 6Es from a business perspective
All organisations, whether consciously or not, are therefore at one or more stages of the following digital transformation journey:
Elaborating on those 6 elements, it's important for businesses to analyse and execute the various steps described below in an agile manner:
Each element will differ in relative importance from project to project but any successful project should be divisible into each of these individual elements.
The 6 Es from a legal perspective
Research from BusinessEurope in 20174 indicated that "less than a third of the surveyed companies significantly involve their legal department in the strategic planning of digitalisation". This statistic sits uncomfortably with the fact that the same respondents in the same research project also stated that legal issues around the cloud, data ownership, liability and access to data were key concerns applicable to the deployment of new technologies in their businesses.
From a legal perspective, those 6 elements are also relevant and, if followed, should reduce legal and business risk associated with any new digital transformation project. For the lawyers, the 6 elements mean the following:
Elements 1 - 3 are all about clarity - describing the destination, explaining what the journey looks like and any potential hurdles along the way. Detail here makes it easier for the lawyer to usefully answer the "can we do this?" or "what do we need to do to do this?" questions.
Elements 3 - 6 are all about detail - How will it work? What do we need to do? What are the key considerations for the business? What suppliers are performing what tasks? What laws/obligations are we subject to? What's our liability?
In our experience, having the legal team join the broader business group throughout the journey helps reduce issues and/or disputes regarding:
- rights in relation to data - access, use, control,
- ownership and use of existing and new intellectual property rights,
- confidentiality and trade secrets, particularly relevant for business processes,
- risk management - liability of suppliers, to customers, to regulators,
- regulatory issues - GDPR, sector specific regulation, and
- performance and service levels.
Consulting the lawyers may also add clarity by helping to identify additional costs or unanticipated issues that may delay time to contract or time to launch by examining the consequences of the intended use of the new technology - in their drive to deploy, innovators within businesses may gloss over "minor" details or obscure complexities that in actual fact are vital elements of the legal risk and compliance analysis that ultimately serves to protect the business.
Ultimately, the journey is not one that the business, IT or legal teams can take individually and in isolation. It's therefore key to involve the lawyers at the appropriate time during each element of the project, particularly where sign-off from the in-house legal team is required to green light the project.
Our next webinar on September 10 will look at the various different aspects of digital transformation from the legal perspective, so please do opt-in to receive an invitation to that and our accompanying vlogs, blogs and whitepapers. The webinar will cover key legal issues and risks and best practice guidance to make the digital transformation journey easier and simpler for all those involved.
2 See page 3 of the Conceptual Framework for Digital Business Transformation, published by the Global Centre for Digital Business Transformation, a CISCO and IMD initiative, at https://www.imd.org/uupload/IMD.WebSite/DBT/Digital%20Business%20Transformation%20Framework.pdf.
4 See page 10, Legal issues of digitalisation in Europe, measures to effectively help companies advance their digital strategies, available at https://www.businesseurope.eu/sites/buseur/files/media/reports_and_studies/2017-09-29_legal_issues_of_digitalisation_in_europe.pdf.
Originally published 23 July 2020.
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