Across the industry, tech vendors are mostly eschewing earnings guidance, given the uncertainty caused by Covid-19.
That seems smart and prudent, but it doesn’t tell the whole story. As captured in my April interview with CircleCI CEO Jim Rose, and in a range of earnings calls since then, enterprises seem to have hit the gas on digital transformation initiatives.
Sure, digital transformation has been a popular catchphrase with the CxO set, with 87 per cent of senior business leaders telling Gartner it’s a company priority.
For many, however, it’s been only a catchphrase: a nod to innovation without substantive action behind it, which is why just 40 per cent of these same leaders report bringing their digital initiatives to scaled production.
This may be changing, and fast. Given that Covid-19 seems to be hastening plans, how should companies maximise their chances of success?
All the timelines have shrunk
Well, for one, invest in developers. You may have read Rose’s comments a few months back.
Speaking of an accelerated shift to embrace DevOps with CI/CD, he said, “Now every company is trying to get apps to be cloud-enabled or cloud-native. These are best practices and companies are having to rush to get there. The pandemic has compressed the time that companies are taking to get to CI/CD.”
How compressed? “Everything we forecasted for the next year is now happening in the next three months.”
What’s interesting about Rose’s company, CircleCI, as well as the others reporting project acceleration within their customer bases, is how much they depend on developers to embrace their products.
To ensure minimal friction to adoption, CircleCI and its ilk pave the way to developer adoption with open APIs, open source, and cloud services. This has always been good practice, but it’s paying even bigger dividends of late.
On MongoDB’s recent earnings call, for example, Dev Ittycheria, the company’s CEO, started off by advising, “While we can't predict with certainty how long or how severe the Covid-19 global disruption will be, we are seeing clear signs that the current environment is only accelerating the secular trends of which we are a long-term beneficiary.”
“Secular trends” is one of those fancy finance terms that has nothing to do with religion and everything to do with things continuing over the long term. Those “secular trends” include a shift to modern software platforms that enable enterprises to embrace microservices, open source, and more.
Even with customers in highly challenged industries... the digital trends are accelerating [because] people want to move to more modern cloud native stacks [and] because software is powering almost every business and they want to use that as a competitive advantage…. Covid and the pandemic [are] basically causing... even the most technically conservative or cautious customers that just staying [with] a legacy technology is not the place to be. [Companies] need [the] ability to move quickly and they need to be able to change directions quickly to respond to new threats or seize new opportunities.
This same refrain is echoed across other developer-savvy companies, including Fastly (“Companies are increasingly recognising the importance of digital transformation not only to survive during these uncertain times, but also for long-term success. [W]e are seeing this trend accelerate”).
This is in addition to Twilio (“Covid-19 has drastically accelerated digital transformation projects across many industries”), Elastic (“companies... accelerating their digital transformation... and try[ing] to figure out how do they go and be there for their [remote] employees to make sure that they continue to close business”), and more.
Which brings us back to... you.
Maximising the odds of success
The first and, arguably, the biggest determinant of success is culture. Digital transformation, though it depends on technology, really isn’t a technology thing. It’s a people thing. Gartner rightly calls out that a shared vision is essential to making digital transformation a reality.
Which starts from the top.
This may seem counterintuitive, given that these developer-led companies mentioned above are the ones seeing such success. After all, developer-oriented businesses have tended to rely on “bottom-up” adoption, as developers download open source software or swipe their credit card to use cloud services. This leaves “the CIO as the last to know,” as I’ve written before.
However, don’t confuse the importance of developers, who are essential for building the transformative applications, with the executives who pave the path to transformation by giving the organisation permission to change. In the current climate, executives can cut through uncertainty by charting bold goals and aligning the company around them.
That said, one of the primary things that has kept companies from truly embracing digital transformation is, well, change. For a team asked to embrace a document-style database like MongoDB, for example, it can be scary to abandon the comfortable routine of a relational database.
Wise leaders will therefore ensure training is a key part of digital transformation efforts, such that new processes and technologies become opportunities for growth, not sources of anxiety over keeping one’s job.
It’s clear from public statements and other signs that digital transformation is finally happening. What’s less clear is how well individual companies will fare. Those that let developers figure out the technology, while executives issue strong, top-down direction, will navigate the change best.