Five steps to help refine your digital transformation strategy
Wed 20 Nov 2019 | Tom Needs
How can organisations really start reaping the benefits of digital transformation? Tom Needs, COO at Node4, outlines his top five tips
These days, asking an IT leader to explain their digital transformation strategy to you can be enough to cause them to tense up and begin to sweat. But why is this?
The term ‘digital transformation’ has been used so widely and often over the past couple of years, that it’s becoming to be known merely as another buzzword. Forrester has even gone as far to describe it as a term that has, “come to mean so many things that it’s almost meaningless” – but digital transformation is still very real, with Gartner suggesting that 79 percent of corporate strategists believe it is “reinventing their business”. And, as it is behind a huge amount of change in the global economy, these days, you’d be pushed to find an organisation that doesn’t have some sort of digital transformation roadmap.
However, digital transformation means something different for every business that begins to undertake it, and it’s important organisations take into consideration the company’s purpose and limitations before buying into it.
One way to do this is to simply take a step back from the technology. The Enterprisers Project CIO community has shared three core principles that businesses should be thinking about achieving when it comes to digital transformation – “rethink old operating models”, “experiment more”, and “become more agile in your ability to respond to customers and rivals”.
Taking these points into consideration, then, businesses can start to refine the approach they are taking when it comes to digital transformation and discover what specifically the term means for themselves. It’s certainly not an easy task, but it is the best way for organisations to begin to move forward. With this in mind, here are five steps to consider, to help demystify digital transformation:
Understand your key business drivers
Potentially the most vital place for organisations to begin before beginning their digital transformation strategy, is understanding the key business drivers and strategic priorities. It takes more than just ticking digital transformation off the to-do list – the strategy needs to focus on the business’ objectives, benefitting the company overall.
Additionally, it’s important to measure the level of change the business is able to effectively resource and drive, as change that is brought about by digital transformation is more than just upgrading technology or increasing IT investment. Research published by McKinsey illustrates the considerable effort required, arguing that technology is “only one part of the story”. Success depends on some radical activity, from reimagining the workplace and upgrading the organisation’s ‘hard wiring’, to changing the way you communicate. Not only do businesses need to have the ‘digital savvy’ leaders, but they also need to build relevant talent and skillsets throughout their organisations.
Looking at the bigger picture also requires a readiness to learn lessons from those who report success, to ensure that digital transformations do not “fall short in improving performance and equipping companies to sustain changes.” This has happened to many a digital project as, for example, an organisation has been unable to sufficiently update entrenched, analogue business processes to support a whizzy new digital customer interface.
Recognise the broader business environment
Businesses need to recognise external pressures and challenges covering key areas such as their markets, processes, regulatory environment, competition, and supplier and customer ecosystems. Time and effort should be put into researching where to invest and how digital transformation strategies are being applied in relevant businesses and industries.
This underlines the need to focus digital transformation more broadly than tech procurement, because, as Gartner argues, “the nontechnological aspects, if not addressed, can mask the depth of organisational transformation required and become serious inhibitors.” Industry inertia, for example, can lead to the failure of digital transformation projects. You might have a shiny new customer-facing process, but if it relies on a partner who can’t support digitally transacting in this way, it will never achieve its promise.
Take into consideration the technology available
IT departments often don’t have the skillset or time to develop a comprehensive roadmap for change and transformation. Add to this the bewildering choice of technology providers out there pushing the digital transformation message, and the resulting complexity of a digital transformation project “can be a killer”.
Before you start making technology choices, consider your current IT estate carefully and map out both current and ideal future states for core infrastructure and applications. There are important decisions to be made about legacy business applications and this map will help you to research the options for modernisation. There is a lot of noise in the industry about being ‘cloud-first’ and for many, the idea is to plan for everything eventually being in the cloud. However, it’s worth noting that it’s not the only option for legacy applications and some of the first movers into the cloud have not seen the cost and performance benefits they planned for.
Put key performance indicators (KPIs) in place
KPIs offer IT leaders the chance to set a shared understanding of digital transformation within the business and maintain an ongoing dialogue. The temptation is to evolve existing IT focused metrics, but with an objective as broad as business transformation there is a good case for starting again. Consider what it means to your organisation to be a digital business; can you demonstrate and measure the impact on customers, speed of operations, data exploitation and the rate of innovation?
There are many digital transformation KPI lists available on the internet, but this is another temptation best avoided. Your KPIs need to be both industry specific and organisation specific. IDC has created a helpful digital scorecard for CIOs thinking about how to best fashion their KPIs. With shared understanding as a goal, your metrics need to interest and engage your organisation’s leadership team. They also need to reflect the fact that digital transformation is a long-term programme.
Choose the right partners
Few, if any, organisations will be able to make the digital transformation journey alone, so tech partnerships can ensure your approach is future-proof and flexible to adapt with changing demand and technology. Look for partners who, in Forrester’s words, can ‘define digital transformation’. The right partners should be able to demonstrate an understanding of your business, markets, competitive pressures and opportunities. When you’ve started narrowing down your options, ask for evidence that they can successfully apply technology to deliver genuine transformative change. Otherwise, you risk missing the target by simply moving from one set of technology vendors and service providers to another, without addressing your wider objectives.
There’s no hiding from the fact that digital transformation brings with it a broad spectrum of reward and risk. However, no matter where you are on the journey, if you take into account the above five tips, you can look at refining your approach, enabling you to really reap the benefits digital transformation has to offer.
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