Member Article

5 steps to 'demystify' your digital transformation strategy

As an IT leader, hearing “what’s our digital transformation strategy?” may be enough to send a shiver up your spine.

However daunting it may seem, one of the biggest challenges of digital transformation is the fact that the term has been so widely applied, it’s now something of a cliché, or as Forrester suggests, has “come to mean so many things that it’s almost meaningless.” Nevertheless, it has become such a key driver of eminent change in the global economy that it takes a courageous business to not have a digital transformation plan in place.

Digital transformation is prevalent – with figures from Gartner revealing that 79% of corporate strategists say it is “reinventing their business”. But what it actually means will vary for every organisation, and therefore, mapping the right path to achieving a shared understanding within the business and getting buy-in to a digital transformation plan depends on being clear on this definition, purpose and constraints.

Taking a brief step back from the technology alone makes a difference. As the Enterprisers Project CIO community says, “love it or not, the business mandates behind the term – to rethink old operating models, to experiment more, to become more agile in your ability to respond to customers and rivals – aren’t going anywhere.”

By adopting these three core principles, businesses can begin to refine their approach and discover what digital transformation means for them – not for everyone else – and how to find the correct path to go down. That’s no easy task, but here are five useful steps to consider:

1- Understand that digital transformation is a business transformation

Before you commence on any digital transformation strategy, it’s crucial to start by understanding your key business drivers and strategic priorities. Digital transformation is not a technology box-ticking exercise and any strategy must focus on business objectives and explain how digital transformation will benefit the business.

More broadly, you also need to gauge what level of change your organisation can effectively resource and enforce. This is necessary because change brought about by digital transformation is so much more than technology upgrades or increased 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 ‘digital savvy’ leaders, but they also need to build relevant talent and skill sets throughout their organisations.

Engaging with the bigger picture requires a willingness 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, for example, an organisation may have been unable to sufficiently update entrenched, analogue business processes to support a whizzy new digital customer interface.

2 - Acknowledge the broader business environment

It is important that businesses identify external pressures and challenges covering key areas such as their markets, processes, regulatory environments, 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 non technological 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.

3 - Examine your technology options

IT departments often don’t have the time or skillset 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 deciding on technology choices, review 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 to eventually be 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.

4 - Set performance measures

KPIs offer IT leaders the possibility to set a shared understanding of digital transformation within the business and maintain an ongoing discussion. 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 over. 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.

5 - Find the best partners

It is rare for organisations to embark on the digital transformation journey alone, so tech partnerships can ensure your approach is future-proof and flexible enough 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.

Digital transformation carries a mixture of both risk and reward. Whether you have just started your journey, or have already embarked on it, if you’re establishing and evaluating objectives, progress, challenges and benefits, it can completely reinvent your enterprise and pay huge dividends.

This was posted in Bdaily's Members' News section by Node4 .