Digital transformations can surface serious challenges for organizations. Especially those aiming to adapt to the changing business world or within emerging markets. If your deployment involves an emerging market, there are some particular nuances that you ought to be aware of, and that is the topic that I will be talking about today.
When you are part of a digital transformation that is going to affect emerging markets, developing countries, or under-established economics, you oftentimes face different unique challenges.
Connectivity
Reliable infrastructure can be very challenging in emerging markets. It is often the case when connectivity becomes a big test for organizations, especially when deploying a cloud-based technology.
It’s pivotal to consider the end-users when they are remotely accessing the connectivity.
How will it affect the digital transformation?
What new technology got deployed and how do you communicate it to frontlines?
What training is needed?
What will be required for operational support?
What will new day-to-day operations look like?
We had a client deploying a cloud-based ERP system to ninety different countries in emerging markets where connectivity was a challenge. As a solution, we looked for a hybrid approach combining on-premise backups of information and a way to work around during connectivity disruptions. The same would happen with the cloud-based solution. It is pivotal to understand the technology from usability, operational, and IT infrastructure perspectives.
Another common type of technology solution implicates the parent company or the company’s part that is based in a more advanced or reliably internet-connected environment. It involves the aforementioned to operate from a cloud-based-type solution. Then, if the local offices have their own on-premise technology, or if the solution is a focused-type, it could be integrated back to the core solution used by other parts of the organization. This approach is oftentimes seen with ERP deployments.
For example, office financials and inventory management might be managed within the core ERP system, but the local offices might have their own technologies to manage their operations. In this case, you would integrate back to those back-office technologies at the home base. That is one way how to use technology differently in this environment, but regardless, it is important to recognize this risk and have a good plan that addressed the potential connectivity issues.
Maturity Assessment
Global organizations share some common aspects, such as cultural diversity, different backgrounds, and education levels. This implies that there is an inevitable fluctuation in the capability’s maturity levels.
In other words, some offices or locations will be more advanced, knowledgeable, and ready for change. Therefore, you will need to be aware of the degrees of skillsets, maturity, and capabilities that each location is equipped with, and address it from change management and implementation strategy perspective.
For instance, a European-based company deploying to offices in Africa might find that, in addition to the previously mentioned connectivity issues, the local markets in Africa have a less-educated workforce compared to the corporate office in London, a very well-established city with a highly educated workforce. Cultures and backgrounds are different; hence, it is crucial to recognize this variation and how those different parts of the organization will be addressed based on those capabilities.
Change Management
The essence in conducting a capability maturity assessment beforehand as part of a digital transformation, especially for one involved with emerging markets, is that you have a preparatory understanding of the organization. Ultimately, you can tailor the change strategy and overall transformation strategy to accommodate that variation. Once you have understood those capability levels, you can come up with a strategy that is the most suitable for your organization.
Cultural diversity within an organization will reflect on its peoples’ different responses to change, learning, and how to achieve better learning, as the impact will be completely different on offices in different countries or different cultures. Some other nuances to consider from a change management perspective are how to tailor our change management activities to fit it to the local culture.
In addition, people’s ability to change can vary. The ability to adapt can also be dependent on the location, which should not be regarded as good or bad, or right or wrong. It is only a matter of understanding the differences and how particular emerging markets adapt to change so that an enabling strategy can be created. Culture, language, and communication are crucial factors of the nuances that you need to understand.
Cost & Exchange Rates
Another consideration involves dealing with an emerging market where exchange rates are not favorable, especially when buying from a more advanced economy with favorable exchange rates on its side.
The software and technology can be prohibitively expensive for that emerging market because of those exchange rate considerations. Therefore, having a full understanding of the real cost is crucial, besides making sure that the overall total cost of ownership, acquisition strategy and the overall investment make sense.
Many emerging market organizations get in over their head financially because of some of these mentioned considerations.
For example, the software ends up being overly expensive or the implementation itself ends up becoming overly expensive. These are elements that you need to make sure that they are understood and that you have right-sized and adjusted the overall technology roadmap and strategy to fit your cost parameters and budget within that local emerging market.
In parallel, you should be looking at the cost and exchange rates to make sure you know the total cost of ownership for your transformation, the business value, and the ROI of that investment. For some more expensive labor markets and more advanced economies, efficiently optimized labor can save cost and have a huge impact on your business case and ROI. However, labor efficiencies will not benefit when dealing with an emerging market where labor costs are low.
In the latter case, it might be cheaper to hire more people or dedicate more personnel to solve a problem rather than investing in overly expensive technologies. This careful cost assessment is not unique to emerging markets, you always want to do business case and ROI analysis for any organization, but in emerging markets, in particular, you need to recognize that the traditional metrics, traditional outcomes, or outputs might look different than a business case.
Resources
I hope this piece help illuminate considerations as you envisage digital transformation in an emerging market. To define the digital strategy and implementation roadmap that makes the most sense for your organization, I encourage you to check our annual 2021 Digital Transformation Report, which includes software reviews and independent rankings of different types of technologies, as well as best practices to keep in mind as you embark on your digital transformation journey.
If you have questions regarding digital transformations in emerging markets, please don’t hesitate to reach out to me directly. I am happy to be an informal sounding board as you move through your digital transformation journey.
