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Digital Transformation

A study presented by Press (2016) reveals that in 2019, global spending on digital transformation initiatives will reach $2.2 trillion, almost 60% more than that spent in 2016. It is rather arduous for traditional companies that already have a structure and form, the task of overcoming the obstacles of their own style and organizational structure, in addition to finding the right talents and strengthening them, adapting their traditional environment into an environment that allows agility in the creation of prototypes, rapid decision-making, and even acceptance because these issues determine whether they can compete in the new digital markets.

According to Downes and Nunes (2013), as a result of this restructuring, whole business models can be reformulated or replaced. Because of this broad scope and far-reaching consequences, digital transformation strategies seek to coordinate efforts to transform products, processes, and organizational aspects due to new technologies, with a more broadly designed scope that explicitly includes digital activities in the interface or totally close to the customers.

Digital business transformation is the application of technology for building new business models, processes, software, and systems that result in more profitable revenue, greater competitive advantage, and greater efficiency (CISCO, 2018). Companies achieve this by transforming business processes and models, enabling workforce efficiency and innovation, and customizing client/citizen experiences (Schwertner, 2017).

In the case of digital business, the question of adapting, transforming, and/or replacing the business model is widely contemplated by the studies on the subject (Burton et al., 2018; Dorner and Edelman, 2015; Swanton and Lehong, 2017). Schallmo et al. (2017) present other definitions of digital transformation:

  • 1. “Typing means the complete network of all sectors of the economy and society, as well as the ability to collect relevant information and analyze and translate that information into actions. The changes bring advantages and opportunities, but they create completely new challenges” (Bertschek et ah, 2015).
  • 2. Digital transformation is a “business reinvention process to digitize operations and formulate extended relationships with the supply chain. Digital transformation leadership challenge is to reenergize companies that can already succeed to capture the full potential of information technology across the supply chain” (Bowersox et ah, 2005).
  • 3. Digital tranformation - the use of technology to radically improve corporate performance or reach - is becoming an important topic for companies around the world. Executives across all industries are using digital advancements such as analytics, mobility, social media, and embedded smart devices - and enhancing the use of traditional technologies such as Enterprise Resource Planning (ERP) - to change customer relationships, internal processes, and value propositions” (Westerman et ah, 2011).
  • 4. “Digital transformation is the deliberate and continuous digital evolution of a company, business model, process of idea or methodology, both strategically and tactically” (Mazzone, 2014).
  • 5. “Digital transformation describes the fundamental transformation of the entire business world through the establishment of new technologies based on the Internet with a fundamental impact on society” (PwC, 2013).
  • 6. “We understand digital transformation as a consistent network of all sectors of the economy and the adjustment of actors to the new realities of the digital economy. Decisions in networked systems include exchange and analysis of data, calculation and evaluation of options, as well as the initiation of actions and the introduction of consequences” (Bouee and Schaible, 2015).

Schallmo et al. (2017), based on a broad bibliographical query, propose the following approach: Digital transformation includes the network of actors as companies and clients in all segments of the value-added chain and the application of new technologies, requiring skills that involve extraction and exchange of data as well as the analysis and conversion of this data into actions. Information should be used to calculate and evaluate options in order to allow decisions and/or initiate activities in order to increase the performance and reach of a company. Digital transformation involves companies, businesses, models, processes, relationships, products, etc.

Agile Methodology

Having the customer as a central focus means that business processes need to be adapted to meet expectations in a timely manner.

In line with this thinking, and as IT and development become critical to the business, the suitability of these processes for the new delivery time shifts away from traditional methodology and falls into another approach: agile methodologies.

For Highsmith and Cockburn (2001), traditional approaches assumed that with much dedication and efforts they could anticipate the full set of requirements and reduce costs by eliminating change. Today, eliminating change means not responding to dynamic business conditions, not serving the customer in a timely manner, and probably driving the business to failure.

The traditional approach to continuous measurement, error identification, and process refinements struggled to eliminate process change requests, as these variations are the result of errors. Although process problems are caused by some errors, external environmental changes are primarily responsible for the critical variations. Because these changes cannot be eliminated, reducing their cost of response is the most viable strategy rather than eliminating rework.

Expectations have grown over the years, and the market increasingly demands companies to respond to the demands with innovation and high quality.

Agile methodologies are a response to this expectation. Its strategy is to reduce the cost of change over a project.

According to Hoda et al. (2011), agile software development methods emerged in the late 1990s. The agile term was adopted to classify methodologies such as Scrum, XP (Extreme Programming), Crystal, Feature-Driven Development (FDD), Dynamic Software Development Method (DSDM), and Adaptive Software Development.

Agile methods argue that the level of collaboration between the team and its clients is high.

In 2001, in Utah, 17 people, including XP, Scrum, DSDM, among others, and supporters met to discuss new ways to handle software development processes more efficiently and easily. From this meeting came the Agile Manifesto of “Software Development,” establishing common principles shared by all these methods (Highsmith, 2001).

The Agile Manifesto has 12 principles with a focus on meeting customer needs, such as: “Our highest priority is to satisfy the customer through continuous and early delivery of value-added software. [...] Agile processes take advantage of change for competitive advantage for the customer. [...] ”

What is new about agile methods is not the practices used, but the recognition of people as the main drivers of project success, along with an intense focus on effectiveness and maneuverability. This produces a new combination of values and principles that defines an “agile” worldview.

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