Digital transformation has shifted rapidly up business leaders’ agendas, spurred on by a rapid and near-universal shift to digital ways of working.
Indeed, in our 2023 CPO Report time and time again, a strategic approach to digitalization was cited as a key focus for our procurement leaders and their teams.
When executed well digital transformation investment enables organizations to mitigate risk and drive the growth agenda.
It is tempting for organizations to rush into transformation, jump straight to solutioning and rely on a software platform to try and solve their business issues. But much like a house, a transformation program needs strong foundations. Not completing these foundational stages will ultimately lead to the organization getting lost on the journey and encountering inherent overspends.
So how can businesses put the foundation in place for an effective digital transformation?
Alignment
It sounds basic, but failure to align digital strategy with the overall business will fail to provide the results. Similarly, without the wider objectives in mind, it’s likely digital transformation program will lack a coherent direction and focus.
Factor in the change
Digital transformation is far more than just a new IT project or program. It requires the buy-in of the whole organization, and every department needs to be engaged to understand the touch points, how data is used and the program’s costs and impacts.
Those leading the transformation should also know that words matter. Terminology needs to be used consistently across every of the business to ensure the same level of engagement and understanding.
Perhaps most importantly, leadership must be prepared to wait. In some circumstances parts of a digital transformation do not necessarily provide an immediate ROI, but it is still the right thing to do for the organization in the longer term.
Putting the customer first
Businesses must be clear on the use cases for digital transformation and reflect the desired business outcomes and customer needs, rather than just functionality.
At the core of transformation is simplification and improved customer experience, but there are wider questions business leaders must consider:
- How do customers prefer to engage and on what channel – web, chat bot, phone, social media?
- What problem needs to be addressed in simplifying your processes? Can automation create efficiencies or will it detract from the customer experience?
- Which existing processes and practices work and what would a new and improved system will look like?
Without clearly understanding the use cases, organizations can easily buy a solution where a significant part of the functionality is underutilized or not used at all.
Once use cases are locked in, the business can work with IT teams to review options available in the market and decide on a best of breed or enterprise solution approach.
The business case is key
Without the right due diligence, planning and costing, a budget can easily be consumed before 50% of a transformation program is completed. This can lead to a show of no confidence from leadership or the board very quickly and ultimately curtail or stop the transformation entirely.
Those leading the digital transformation therefore need to be clear on benefit realization and set expectations early and clearly. This can be done by:
- Ensuring your value framework captures and reflects both costs and benefits, with the ability to flex the model for earlier or later delivery
- Setting out each stage of the transformation and costing these realistically
- Developing realistic working processes and accounting for budget uncertainty
Data governance is key
Data governance and retention is hard, and everybody in the organization has a different view. Legal and compliance will tell you to keep everything forever, for example, while other units will advocate a more slimmed down approach. Without strong data governance, the cost of data can exponentially rise.
Historically organizations’ data has generally been stored in siloes, and sharing of information has been inconsistent. This has led to organizations having duplicate records, contradictory information and no single source of truth.
To manage this, businesses must:
- Create a data governance strategy with guiding principles, processes, team roles responsibilities, a steering committee and an overall data governance owner
- Understand where all data sources are, what type they are and what volumes
- Centralize and democratize availability of information within the organization
- Ensure transformation programs have data quality, initial de-duplication, harmonization, mapping, cleansing and migration of data, co-existence strategy and ongoing management
Well-implemented digital transformation can completely change any business and deliver real competitive advantage. However, business leaders need to ensure that they have solid foundations in place on which to deliver truly impactful change.
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