Building a digital transformation strategy: A guide to creating your transformation road map
Building a digital transformation strategy: A guide to creating your transformation road map
Digital transformation is more than a technology initiative. It is a cultural shift that brings together people, data, and processes – from across the business – to create a better customer experience and become more resilient and competitive in a digital-first world. And a successful digital transformation strategy must take all these facets into consideration.
But success is not easy. Since businesses started keeping data on transformation initiatives back in the 1970s, the failure rate of corporate organizational change projects fluctuates around 60% to 70%. And it is no doubt a similar story as far back as you’d care to go. Steam engines, assembly lines, and computers were all new once, and people had to move out of their comfort zones not only to learn them – but to embrace them. And once they did? That’s when the innovation and power of those new technologies really kicked in.
There’s no question that the future is digital. Digital transformation is no longer a nice-to-have; it is a must-have essential for any competitive business. But making it happen is no longer simply an IT or technological initiative.
A 2020 Oxford Economics report surveyed 3,000 executives across 10 industries, including automotive, banking, consumer products, insurance, industrial manufacturing, oil and gas, professional services, public sector, retail, and utilities. This research revealed that digitalization – and basically all business transformation – works best "when every part of an organization, including its external partners and customers, is agile and interconnected. Executives need to ensure that high-quality information is flowing across their entire business ecosystem, allowing all participants to interact in ways that advance the goals of the organization."
So, how do you get to this agile, interconnected state? What tips will help you chart a road map for business transformation – and improve your chances of success?
Seven steps to create your digital transformation strategy
Because software solutions and new technologies are at the heart of a digital transformation, some business leaders have approached transformation as if it were simply an IT upgrade. They’ve kept team leaders and customers on a “need to know” basis, building a high wall around IT and systems stakeholders – then suddenly springing a new fully-formed tech stack on the workforce and customer base.
As the growing number of transformation success stories has shown, this is clearly not the best approach. The companies that get the fastest, most powerful results from their transformation approach it as a journey not a sprint – with many steps along the way. They start with analysis and self-assessment. They seek input and subject-matter expertise from their software partners and every area of their business. They communicate milestones and benefits early on to both their customers and staff.
But before beginning a series of technological transformation steps, the best businesses start with a cultural and strategic project plan and a robust transformation road map. The seven steps below are some of the first needed to ensure a successful digital transformation strategy.
1. Assess where you are in your digital transformation initiatives.
The first step is to audit your existing assets and business systems to determine your technological capabilities. This is also the time to assess your competition, your market, and your current place in it. What are the coming trends and risks? Which opportunities are you best positioned to seize right now? What do you most need to work on? What are the most likely risks facing your business? And importantly, what contingency plans do you have in place for such events?
This is also a good time to look at your current workforce and see where there may be skills gaps or chances for training and upskilling.
The better the picture you have of your business – and its current strengths and weaknesses – the better placed you will be to make the most informed decisions about technologies and digital transformation.
Your marketing team has been doing this kind of analysis for years. Take a page from their playbook and prepare a digital transformation SWOT analysis.
2. Establish realistic KPI’s for your digitalization journey.
Key performance indicators (KPIs) provide a foundation for cultural and technological transformation in any business. Instead of generalized goals like “be more resilient” or “improve productivity,” KPIs attach defined and achievable milestones and targets to your transformation initiative. When setting KPIs, it’s important to first be realistic. Then, be sure to engage with subject specialists across the business to be sure that you fully understand the impact and potential of each of the departments and functions within your business.
A good software vendor can provide you with guidelines and templates to help you simplify and strategize the execution of a solid and robust KPI structure.
3. Identify top priorities and quick wins to inform your digital technology choices.
We know digital transformation is a process and doesn’t happen overnight. That said, business and team leaders have a bottom line and need to demonstrate the value of a transformation initiative as early as possible. However, the answer lies not necessarily in looking for the most impressive-looking processes to digitalize, such as robotic automation. Instead, the best route to a quick win is often to look for processes within the business that could deliver the best rise in profit (or drop in loss) or contribute to the most meaningful boost in customer satisfaction and growth.
The insights you gather from your initial business assessment and technology audit (mentioned above) will help you best define your top priorities, strongest opportunities, and greatest threats. Work with your software partner and your digital-savvy team leaders to best determine the right digital solutions to get powerful early wins.
4. Make digital transformation change management a top priority.
When it comes to digital transformation strategy, it’s not implementing the technologies themselves that causes problems; it’s short-sighted planning, poor communication, and silos.
Traditional corporate hierarchies are often insular, with massive blind spots from one part of the business to the next. In contrast, the fundamental concepts behind transformation and intelligent business technologies are connectivity and agility. As seen in the 2020 Oxford Economics report, highly interconnected organizations are better able to work quickly and adapt to changing circumstances, and are likely to prove more resilient than businesses with siloed departments.
The solution to silos and disconnected processes must start with an open mindset from business leaders, collaboration across the business, and a commitment to change.
5. Use data-driven insights to drive your digital transformation strategy.
Data-driven insights can support a smoother and more efficient business transformation. And, as Oxford Economics reports, robust data management and analytics can improve and optimize a range of business operations.
For digital transformation to succeed, businesses must first understand their data management processes – particularly in relation to the “five Vs of Big Data” – and take steps to ensure their data is secure, available, and accurate.
Then, the data can be leveraged by modern digital systems, such as cloud ERP, that allow businesses to scale, adapt, and grow in myriad directions.
Of course, if your current data management practices or ERP system aren’t quite up to scratch, that doesn’t mean you can’t proceed with your digital transformation initiatives. It only means that you’ll want to work closely with your software vendor and your in-house data specialists to make sure you establish good data governance protocols early on in the project.
6. Look to customers as a driving force in your digitalization journey.
None other than Amazon’s Jeff Bezos is quick to point out that: “If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the Internet, they can each tell 6,000 friends.” A primary driver for digital transformation is finding better ways to attract, retain, and engage with customers – finding digital solutions to make your customers’ experience more rewarding and personalized. A good early-stage marketing and communication strategy can help ensure that your customers are looking forward to the digital future with your company – and that they understand the benefits and new possibilities. In this way, you can help ensure that your customers’ reviews and social media posts will help to champion your digital transformation initiative, rather than unexpectedly knock the wind out of it.
Customer feedback and input are increasingly at the forefront of business planning. In a Deloitte study, more than 80% of business leaders surveyed reported customer feedback to be “core input to business decisions,” versus only 45% who held that view in 2013. In a specific example, an SAP Insights research study identified an influential market segment, called the Passionates, that cares deeply about many global issues, such as climate change, healthcare access, and income inequality. If your business doesn’t show that its values align with theirs, they won’t buy from you, work for you, or even respect you.
7. Establish a digital transformation road map and get the right people in place.
Building on your SWOT analysis, now you need to look more carefully at the 5 Ws and how you’re going to transform.
- Why: Have you kept pace with technological innovation? Are you meeting customer demands? Are you lagging behind competitors?
- Where: Where is your business today, both internally and within the greater global market?
- What: What are your goals and targets, and how will you measure and track their achievement? What technological and cultural transformations are best for you?
- Who: Who are the people you need to include on the journey (including staff and customers) and how can you best define new roles and learn from them during this process?
- When: When will all your teams be ready, and how soon will they start?
A digital transformation road map provides the strategic framework to help you capitalize on opportunities and roll out new systems and processes as quickly and seamlessly as possible.
You should ensure that your technology vendor offers services to assist you in preparing and executing your unique road map. This means not just helping you integrate your new software and tools but working with you to optimize your business processes and identify new business models. Support and solutions that are tailored to your business help you get the best return on your investment – to adapt more quickly to evolving customer demands and to be more agile and responsive to both opportunities and threats.
As your business grows and changes, your software can evolve right along with you. Every action and step you take toward your digital transformation goals helps your business and your operations be more visible and better able to respond to risk and change – with resilience and flexibility.
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