The challenges and opportunities of digital transformation

The push by agencies to undertake digital transformation efforts creates myriad opportunities for contractors but while the trend is on the upswing, there are still obstacles and challenges companies need to consider.

To explore this issue deeper, Washington Technology convened a roundtable of leading executives to share their insights on what the opportunity means for the entire government contracting market and how they are positioning their companies and working with customers to take advantage of the benefits digital transformation can deliver.

While the discussion was on the record, we operated under "Chatham House" rules in that comments by executives will not be attributed to them or their companies. See the sidebar to view who attended.

To discuss digital transformation it’s important to first understand what that means. It became clear during this discussion that the definition often depends on the customer and what they are trying accomplish.

“You are taking these digital technologies and putting them against agency problems,” one executive said. “It is very much about the outcome and about improving the outcome or transforming the outcome.”

Technologies of transformation often include artificial intelligence, machine learning, cloud computing, robotic process automation, data management and analytics solutions, edge computing, digital twins, sensors and the Internet of Things. On the horizon are other emerging technologies such as 5G.

A digital transformation effort doesn’t include all of these technologies, but can bring together multiple technologies to create a solutions. One common thread often is data.

So much data has become available over the last decade thanks to the development of so many technologies, which means the challenge now is harnessing that data.

“The technology landscape is so different and now there is this prevalence of data and the ability to mine the data and draw value,” an executive said.

Agencies and their contractor partners can re-imagine what’s possible because of the data, the roundtable group said.

For example, one executive shared how the Army Futures Command is rethinking what combat vehicles should look like. They can build a model and get a new understanding of performance under a variety of operational scenarios and even weather conditions.

“Having that information and getting real-time drives better decision-making,” the executive said.

While the technologies that enable digital transformation are critical, our group of executives often turn to the people and culture issues that need to be considered.

“The technology exists, so it really isn’t about that,” one executive said. “It’s about applying it and making sure that people are ready to accept it and move forward.”

Workforce, customers and the end users also were topics of discussion.

Executives used terms such as “digital dexterity,” “digital native,” and “digital fluency” to describe the characteristics the workforce -- both contractor and government customer -- needs to drive digital transformation.

“We have a long way to go,” one executive said. “There is an art and science to preparing people for a digital environment.”

This means keeping the workforce current with emerging technologies, regardless of whether they consider themselves a technologist.

In many ways, digital transformation is a mindset or way of thinking about problems and outcomes that is then enabled by technology.

One executive used the example of SpaceX (which since we held our roundtable won the $2.9 billion lunar lander contract) and how that Elon Musk-run outfit has disrupted the aerospace market.

“What SpaceX has done is not continue the evolution of the rocket from World War II. Instead they said, Hey, we have new materials. We have new technologies. What would a rocket be if we had the same requirements levied on us from 1945?” the executive said.

Not getting stuck with the attitude of “this is how we’ve always done it” is critical. Several times, executives talked about the need to look at the outcomes and mission results the customer is looking for and then building back from there.

What you want to avoid is just picking up current processes and moving them to a new technology platform, they said.

While many customers were already moving in this direction, the COVID-19 pandemic was an accelerant for changing how work gets done.

“COVID has really made us rethink how we’re going to go to market in this new world,” an executive said.

Workforces are scattered now and this presents a challenge and opportunity. One challenge is security because the points of attack have expanded. But the opportunities are great. For example, hiring doesn’t have to be dictated by location and proximity.

“Why not hire the guy in Oklahoma instead of just the guy in Fort Meade?” one executive said.

Because of COVID, companies changed policies and procedures that focus on people to ensure their safety as well as productivity. The consensus among the executives is that many of these changes are permanent and that the future workforce is less about a set time frame for being at work and more about the end result.

In fact, the focus on outcomes came up several times during the discussion and in two primary contexts -- how the workforce operates and what the customer wants. For the workforce, it means focusing on whether the employee is meeting deadlines and delivering quality.

For the customer, the contractor’s role is to unpack what they need and what they want. This understanding can guide contractor decisions on education and training for their workforce, what technologies to apply to the problem, and how customer processes may need to change

When bringing this approach to the customer, it’s important that the company has gone through the transformation already.

“It’s hard to deliver transformation to a customer if you haven’t embraced it yourself,” an executive said.

Challenges with customers remain, however. The biggest challenge is how contracts are structured.

“It is hard to introduce a new mindset on existing contracts because acquisitions can be so narrowly scoped,” one executive said. “It can be an incredible challenge.”

The openness to change and new ways of doing business can vary widely from customer to customer, so you have to choose carefully. A big hint is the structure of a procurement.

“If they are just buying hours, you can’t apply a digital transformation solutions,” an executive said.

While the response to COVID drove many positive changes in how contractors deliver solutions to the customer, there is concern that the pendulum is already swinging back. That would have a significant impact on the ability to hire and retain personnel.

“I’m really worried about the commercial space going virtual and my customer going backwards and wanting people on premises,” an executive said. “I can’t compete with the commercial space if they are virtual and from their beach house and I’m in downtown D.C.”

But others were cautiously optimistic.

“We proved we could do things that we all knew we could do before but in many places there was a lack of confidence or willingness or courage,” another said.

In many ways, digital transformation is inevitable. But it will not look the same for all customers. Different agencies have their own comfort levels. Some rely on data that is siloed in legacy systems. Others have cultures that are slow to change.

“Digital transformation isn’t about what it means to us. It’s about what digital transformation means to our customers,” an executive said.