What Is Digital Transformation and How to Scope A Project with Confidence
July 24th, 2019 (Updated 03/23/2021) | 7 min. read
By Duncan Hendy
“Start small, think big…”, Steve Jobs once said, and nothing could be truer of digital transformation. Transforming a company born before the digital age, from one trapped in a past of legacy IT systems and manual processes to one that uses superior technology as its unfair advantage, can seem like an insurmountable task, and if your project scope is flawed, then chances are it will be impossible.
But small changes, enacted immediately, can have a big impact on your business, persuading senior management that having a digital transformation project plan, especially as regards to pricing, is not only a good idea – it’s absolutely crucial for long term survival. Nobody can afford to be left behind. Make no mistake: digital transformation can be costly and painful in the short term, but if you want to be part of our shared digital future, then continuous innovation and modernization of IT systems are essential.
The Keys to a Successful Project Scope
Tangible Goals and Timelines
Every digital transformation pricing project needs metrics and a solid timeline to gauge success. But, what to measure? Cost savings, revenue, improved performance of agents, the satisfaction of employees and customers? The short answer is: You should be measuring whatever is most important to the executive board. To find out exactly what that is, the board needs to be welcomed (and, in some cases, dragged) into the digital transformation project planning process and consulted throughout to focus and clarify expected outcomes.
KPIs should be simple and easily measurable to avoid transformation fatigue, where employees can’t handle any more change, giving up on their goals. Larger goals should be broken down into distinct, bite–sized phases. If you’re wondering whether your goals are straightforward enough, simply ask yourself: “Would this be understood by the non-IT workers in my company?” External benchmarking can be useful, but when formulating your KPIs, try not to follow the herd, what’s important to your organization and industry will be completely different from that which is important to others.
Thinking that the challenges of digital transformation lie solely in infrastructure and applications would be a mistake. In fact, this is usually the easy bit. As is so often the case with any kind of organizational change, the biggest barrier lies in company culture. You will need to transform reactive, inflexible, process-focused employees and teams into empowered, customer-focused innovators, hungry for continuous improvement. Your company culture is what got you to where you are today, but if it’s set in stone, it will keep you there too.
How can you affect such a change in collective culture and mindset? It starts with the tone at the top – less push, more passion, less management, more leadership. Senior management should be speaking in terms of enhancing company-wide collaboration; super-charging efficiency; boosting agility; and reimagining IT development, delivery and operation. Even office design can be re-considered to encourage greater inclusivity, engagement and openness. It’s important to foster an entrepreneurial mindset in all staff and this means that experimentation and a certain level of failure are actively encouraged in pursuit of yielding new capabilities and results.
Of course, you need to be sensitive to the emotional impact that attempting to change company culture can have on employees: resistance is a natural response. The key is to emphasize that existing traits have been responsible for success to date and that it’s not a case of ‘out with the old, in with the new’. Instead, it’s an introduction of new ways of thinking that complement existing traits and company heritage. This is an easier pill to swallow.
For any digital transformation project to be a success, you need a high caliber team in place, headed up by a great CIO. The CIO should be an ambitious digital pioneer with a fierce drive to create new efficiencies and digital dexterity at every level of the organization. There has been a 60% increase in technology skills required for all non-IT roles over the past four years, so transformation needs to reach way beyond the IT department.
A CIO should shift IT away from maintenance and support systems and towards the shaping of overall business strategy through digital transformation project management. A great CIO will drive digital transformation by revitalizing legacy systems (or rip and replace where required) to enable new technologies and eliminate complexity. They will augment complex decision making, continuous problem solving and rapid pattern recognition, breaking down skillset silos and reorganizing IT workers into multiskilled, results-oriented teams focused on overarching desired outcomes, not specific development steps.
The CIO is no longer predominantly a technical person: A broad understanding of market, industry and customer needs are arguably even more important than technical prowess. After all, many cloud-based SaaS offerings can be procured and operated without any assistance from IT whatsoever.
HR leaders, in conjunction with CIOs, need new hiring strategies in a company undergoing digital transformation. Specialized skillsets, say for initial testing, are often only needed for short periods. Adding new full-time employees to the payroll might be unnecessary in these instances. Indeed, CIOs may wish to make the most of external talent ecosystems like business partners, vendors, start-ups, academics or incubators.
Getting Buy-In and Budget
Buy-in and budget go hand-in-hand: the greater IT-business alignment, the better the buy-in and the higher the budget. In order to achieve said alignment, communication and collaboration between IT and senior management are critical. Interaction should take place at every stage, from the planning process through to all key meetings, lighthouse projects and PoP/PoC demonstrations.
It should be made abundantly clear to senior management what constitutes success or failure, and CIOs must temper broader expectations. Digital transformation takes time, costs money and there will invariably be some scope creep. Companies undergoing such changes must trade a service mentality for an investment mindset, where money spent today = money made tomorrow.
Kickstarting digital transformation projects with simple, small-scale pricing transformations can have a direct demonstrable impact on ROI and the potential to become quickly self-sustaining. This will increase buy-in and decrease skepticism and friction in the early stages.
The Challenges and Risks of Digital Transformation
Digital transformation promises automation of processes at speeds faster than we can even conceive of today. But this comes with inherent risks too: When errors are codified into automated processes, they too are repeated, again and again, cascading with potentially catastrophic results. Digitalization magnifies risk, removing control from project leaders, who cannot possibly fully understand these incredibly complex machines and systems.
Privacy is also a major issue. Consumers are increasingly looking to protect their data and are prepared to take action, sometimes legal, in order to do so. Removing oneself from social media is a visible current trend symbolizing widespread fear of privacy breaches. The landscape is continuously and rapidly evolving in this area and governments are poised to step in with new regulations.
IoT devices pose another set of risks, which are largely beyond the scope of this article. Needless to say, autonomous vehicles, failed thermostats and even smart toasters can cause varying degrees of physical injury and even death. Hacking and other forms of cybercrime add an extra dimension of risk.
Regardless of these challenges though, by far the biggest risk to your company is the risk of doing nothing. Those companies that are not willing to enact a digital transformation project plan, or manage their plan poorly, will ultimately become redundant and obsolete. It’s just a matter of when.
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