How to achieve digital transformation success
I’m not saying that McKinsey is wrong when it states there are 21 keys to successful digital transformation, but that does seem like a lot of steps and processes when you consider how rapidly businesses adapted to the COVID-19 crisis. Offices went virtual overnight, production lines were transformed, and distribution, customer service and almost every other aspect of most businesses were impacted unexpectedly.
The same report from McKinsey says that only 16% of companies consider their digital transformation projects to be successful. But yet again, look at the way in which, during the global lockdown, things kept working. There is a lot we can learn from how digital transformation was delivered at the beginning of lockdown, specifically, in terms of the key steps that are worth focusing on.
What is digital transformation?
Digital transformation can mean many different things, ranging from a basic technology refresh or cloud migration to entire business process re-engineering. One definition of digital transformation I like is the use of new, fast and frequently changing technology to solve problems. It is about transforming processes across an entire organisation and using technology to achieve beneficial business outcomes and deliver more value to customers.
Today, most digital transformation projects use technologies like cloud computing, artificial intelligence and analytics to disrupt established business practices with powerful new products and services.
What do you want to achieve?
Anyone embarking on a digital transformation project must be able to identify what is driving the need for change. This forms the basis for the vision and leads to quantifiable goals. It also means that success is more easily identified.
The biggest difference between success and failure in digital transformation stems from having a clear set of objectives. We know from our experience within Logicalis that projects with clarity in terms of what is to be achieved are more likely to succeed.
In fact, our latest annual CIO study confirms this. It concludes that the key to successful implementation of technologies and digital transformation projects is to create key performance indicators that are like milestones to meeting top-line objectives; reducing complexity, aiding management and leading to company-wide participation. In the case of the lockdown, business continuity was a clear goal for many organisations, and this clarity really helped deliver a successful outcome.
Another critical success factor is collaboration. Digital transformation initiatives are typically broad in scope. Re-thinking business models is a multi-disciplinary endeavour that will probably change numerous underlying processes, from customer-facing ones through to back-office functions. Technology can alter inputs, streamline workflows and transform business outcomes. Organisations need complete alignment to deliver this in a seamless fashion.
Leadership is crucial
Digital transformation requires oversight. It isn’t a process that can be left to individual departments. Someone must be responsible for keeping all the elements pulling in the right direction to ensure the project stays on track and proceeds at pace.
Passionate oversight must come from the top. In our experience, transformation projects are more likely to succeed when senior managers foster a sense of urgency for making transformative changes, encouraging employees to challenge old ways of thinking and experiment with new ideas.
It’s also important to pick the right leaders for the job, which might involve bringing new, digital-savvy talent to an executive team.
Communication is key
Executive commitment is a key component in successful digital transformation, but it has to go beyond the C-suite. The larger and more complex a company becomes, the more important this is. Indeed, businesses with fewer than 100 employees are 2.7 times more likely to succeed in their digital transformation than those with over 50,000 employees.
C-level executives must drive transparent communication throughout their company, starting with ensuring that managers at all levels are on board. These managers will play a vital part in what must be a two-way communication process, explaining the company’s objectives and how they will affect employees. COVID-19 made communication straightforward because there was a clear crisis bringing absolute clarity for many organisations – this is incredibly important for those who needed to adapt rapidly.
Success comes from listening to workers’ ideas, concerns and questions. People may worry that a new AI system will put them out of work, for example, when in reality their roles might be changing for the better. In other cases, employees may have concerns that a change is unrealistic in practice and may need rethinking. Effective and clear communication resolves these concerns and helps people put their focus back onto delivering the project outcomes.
IT is a powerful partner
The IT department’s role in a digital transformation project is critical. However, the impetus for the transformation must come from the business, with the IT team understanding the business objectives and offering technology solutions to achieve them. We do, however, often see the IT department in charge of the entire transformation programme. Citing our latest CIO Survey again, over a third (38%) of respondents believe IT departments are responsible for leading innovation and digital transformation projects.
IT must be able to offer the technology skills that support digital transformation, leading components of the project, but the overall responsibility for an organisation’s change programme has to rest with the C-suite.
The pace of change necessary to make these projects work is often unprecedented, in part because systems must constantly adapt to both employee and customer feedback – making agile development crucial. IT should develop systems in short sprints, allowing stakeholder input to steer iterative changes.
For that to work, the barrier between technology development and deployment must disappear, bringing DevOps to the heart of the project. Developers become responsible for the deployment of their code, meaning that they can get changes to production quicker. That in turn relies on cloud-based infrastructure that developers can quickly spin up using automated tools.
Making the business case
One element that wasn’t necessary or possible in most responses to the pandemic was preparing a proper investment case, detailing both the financial cost of change but also the benefits, pitfalls and traps. Let’s face it, there was an urgency that meant staying operational took priority over cost or benefit analysis. Going forward, I would encourage everyone embarking on a digital transformation journey to ensure the business case stacks up. It helps achieve buy-in from within the business and creates a clearer sense of purpose.
So, yes, digital transformation may sound like a daunting challenge that takes a lot of heavy lifting, but we have seen it can be done rapidly. Recreating the clarity, shared sense of purpose and urgency that COVID-19 brought, along with strong leadership, may be the key to ensuring that we can all continue to evolve and adapt as effectively in the future.