Digital transformation has entered the lexicon of many companies over the past couple of years.
Business leaders have been jumping feet-first into embracing technologies, excited by the prospect of a digital-first approach transforming how they operate.
While the pace of investment in digital transformation has accelerated, thanks to a combination of the pandemic and supply chain challenges, some companies may end up getting ahead of themselves. The consequence of this is that many firms may find that their digital transformation strategy hits a brick wall.
“Digital transformation isn’t a process that takes you from A to B to unlock radical growth. Businesses that engage in one-time digital transformation projects invariably end up disappointed when they’ve spent a larger-than-expected budget over a longer-than-expected period, and their business hasn’t transformed,”
James Addlestone, chief strategy officer at performance marketing agency Journey Further.
Instead of thinking of digital transformation as a "one-off radical change", companies need to see it as “a constantly changing and evolving mission,”
Glenn Griggs, director of sales at Ricoh UK.
Approaching it in this way and not as having a fixed end point, will help companies to successfully navigate the stages of digital transformation. “There will always be more to do,” Griggs adds.
This mindset is critical if companies want to take their digital transformation to the next level. But there are other things to consider.
Getting your digital house in order
Successful digital transformation projects require s defined purpose. From a strategic standpoint, this means all parts of a business need to be aligned. But the mistake some companies will make is digitising different parts of the business without joining them up.
Optimising siloed functions has “some tactical relevance” but will likely lead to the transformation being “compromised further down the road”, says David Hughes, solutions consulting director at PTC, a technology specialist supporting companies in multiple industries along their digital transformation journey.
Data and how it can be accessed by every part of a business should be at the heart of a strategy.
A 2020 survey of 800 IT leaders from around the world, by MuleSoft, found that 89% of respondents cited data silos as an obstacle to reaching digital transformation targets.
“Getting your digital house in order is about removing the silos that different departments operate in and creating a digital thread of information that flows through the entire business,” says Hughes. “This should help to identify the issues and opportunities in each area and work through how digital transformation can have a positive impact.”
Once companies have improved the flow of data through their business, they need to consider how trustworthy the data is, observes Shaun Connolly, head of international strategic services at software company Precisely. “Analysis is only as good as the data it’s based on, and the cost of getting that data wrong is now greater than ever too.”
If companies want to improve the insights they have access to and, in turn, take digital transformation to the next level, then “a strong foundation of data integrity, where the data is accurate, consistent and provides the right context” – is a must, Connolly adds.
The importance of people
Driving actionable insights that can help to take digital transformation projects to the next level requires more than investing in the latest technologies, though.
A common misconception is that digital transformation starts with the IT department. Companies identify a function or process that needs improving, buy the technology hoping it will be a game-changer and then get the IT department to start the systems integration work. Yet the technology might not deliver the desired results because the impact on the wider business wasn’t considered from the start.
“Digital is only part of the story. A transformation journey is not just about technology, it's about people and processes too. The former is often the easiest of the three to solve,” says Lee Foster, chief technology officer at Opencast, which develops end-to-end enterprise solutions. Foster previously led global IT enterprise and solution architecture functions at Sage.
“It should not and does not rest on the shoulders of a single team. It’s an organisational change that can impact every area of business, which is why digital transformation projects need to consider people, processes and systems in their thinking,”
Will Smith, Senior Strategist at Equator
“Companies need to bring their people with them as their engagement and buy-in is critical. By making sure your people are onboard, you can reduce the risk of your transformational efforts stalling.”
Lee Foster, chief technology officer at Opencast
Creating the right culture
Creating buy-in requires identifying employee challenges and barriers, as well as providing the training and reskilling or upskilling employees may need. A KPMG survey this year of CEOs in Canada found that six in 10 cited a lack of the right people with the right skills as the reason their strategic roll-out is being held back.
Employees may be resistant to change, for example, but simply firing them and hiring replacements may not be the best move. Not to mention, it can be costly. Instead, companies should do their best to identify potential gaps in employee knowledge and focus on reskilling and upskilling, providing them with the right tools to succeed in their role and the right environment in which they can innovate, argues Smith. Employees should then become more comfortable with the new tools and processes.
It’s often not about new leaders, but about the current leadership embracing new ways of thinking.
An employee culture that embraces change is more likely to be prepared to quickly pivot business operations. “Companies will undoubtedly encounter challenges along their digital transformation project, which can change the course of projects,” says Smith. “It’s essential that teams have degrees of flexibility to allow projects to realise the core vision and target state.”
Communication is critical.
“Like any project, feedback and review act as touchpoints to ensure objectives are being achieved and that the new systems being put in place are working for all the people and serving their intended purpose,” says Griggs.
Communication and feedback can also help companies to know when to press pause on their digital transformation. In their rush to transform their businesses, many might push too hard. Sixty-eight per cent of the CEOs in Canada in the KPMG survey said accelerating their digital transformation efforts since the pandemic had led to burnout. The figure was 65% for CEOs in the UK.
Pressing the pause button is an opportunity for companies to take stock and re-evaluate their strategy, before putting their foot down on the accelerator again and taking digital transformation to the next level.
Griggs thinks that working together instead of in silos “will probably need multiple department leaders at different moments of its lifecycle to ensure effective collaboration”. This, he says, can make the difference between success and failure.
Still, digital transformation projects should be allowed to fail to a certain degree, providing there are no costly implications. “A culture where the success or failure of a project determines individual success leads to fewer people wanting to embrace digital transformation,” says Addlestone.
Digital transformation should lead itself
Once the culture is in place, the people should be able to deliver the digital transformation strategy without the need for top-down management. Done right, companies shouldn't require new leadership to take their digital transformation to the next level.
“It’s often not about new leaders. It’s about the current leadership embracing new ways of thinking, ways which will create the culture changes to empower their teams to make an impact,"
Will Smith, Senior Strategist at Equator
Griggs agrees. “It requires a clear vision of the path the company is on and its objective. Leaders should understand the steps and actions needed to achieve success at every stage of digital transformation.
“It doesn’t necessarily require new leaders.”
What is required, though, is a long-term commitment from business leaders to have in place the support systems and tools that employees need to drive this continuous, virtuous circle of improvement and innovation.