Summary: Digital transformation–the reinvention of an organization through the use of digital technology to improve performance–is a priority for many businesses these days. However, it’s a complex task. Many businesses dive in without truly understanding the process. In this article, we explore 5 important questions to ask before you start.
The world is going digital, yet many businesses are unprepared. The technologies, skills, and processes they have in place do not translate to a digital world.
The good news: Business leaders recognize this fact, and are doing something about it. In fact, the Wall Street Journal found that digital transformation topped the CIO Agenda for 2017. Business leaders recognize the need to adapt their organizations to today’s digital world.
The bad news: It’s a complicated journey. In fact, many businesses get into digital transformation without fully understanding the extent of the project.
Here’s a great article written by someone who has been through the process many times. As he explains, businesses initially jump into digital transformation with excitement. But, he finds that “when I probe survey respondents for key details about their initiatives, I often find that there is still confusion about the process.”
The fact is, many businesses underestimate digital transformation. It represents uncharted territory. They’ve been operating a certain way for so long, they’re not prepared for the changes that come with digital transformation.
How can you best prepare your business for your digital transformation journey? It all starts with the right questions.
Today, let’s explore this topic. As this topic is big, I’ll break it up into two parts. We’ll cover 5 questions in this article, and the remainder in a future article. Sound good? Okay, here are 5 questions you must ask before beginning a digital transformation journey.
1. How will you measure the value of your digital transformation?
This is one of the most important questions to ask in any project, but especially with digital transformation. Too many businesses dive into digital transformation without being able to clearly describe how they plan to measure success.
The problem is, many companies start their digital transformation for the wrong reasons. They see that everyone else is jumping on board, and they need to keep up. But, they don’t identify their business goals for the project before they start. They’re “going digital”, but don’t know exactly where it fits in their strategy.
As explained below, this is the most important step you can take in a digital transformation journey. Make your goals as detailed as possible, and refer to these goals throughout the project to ensure you’re staying on course.
“Organizations must understand the ‘why,’” explains Peter Sheldon, VP Strategy at Magento. “Identify the outcomes they want to achieve with digital – whether better customer experience, products, internal processes – and work backwards from there. This is something worth taking into account, particularly if the changes you’re making to your organization don’t necessarily map back to your existing or core KPIs. It’s important to consider what other indicators you can monitor and gauge value from throughout the course of the digital transformation and beyond. This is also to avoid layering technology simply for the sake of layering on technology. From the start, planning what outcomes you want to see and that matter to your organization will better help you map metrics over time and pinpoint the key KPIs you want to achieve.”
2. Have your key stakeholders bought into the project?
“You need to understand who the stakeholders are in your project as early as possible,” says Kyle White, Co-Founder and CEO of VeryConnect. “If any group or individual is missed out, it can cause significant disruption and potentially derail the entire project. In the worst case, you will have missed business critical needs that cannot be easily addressed later in the implementation process. To avoid this you need to start by identifying all stakeholders, both internal and external, including the team who use the system, your customers, and the technical infrastructure teams. You then need to involve each of these stakeholders when gathering the requirements, and in the communication of the project from inception to post-deployment review.”
Digital transformation isn’t a small project. There will be unexpected difficulties along the way. The project may go over budget. It may take longer than anticipated. Like any project, issues will crop up.
Why am I saying all of this?
No, I’m not trying to discourage you from digital transformation. I mention this to highlight the importance of buy-in. If key stakeholders are not completely bought into the idea of digital transformation, the project will likely derail at the first sign of problems. Leaders across your business need to understand the importance, and be dedicated to its success.
“Digital transformations often impact every department and person in a company, and without buy-in from the top, it won’t succeed,” says Antonella Pisani, CEO & Founder of Official Coupon Code. “Everyone needs to know that it’s an important project and an imperative.”
3. What talent do you need to successfully execute your digital transformation project?
Digital transformation requires modern skills–which is something that far too few businesses possess. The fact is, finding the right talent to take on a digital transformation initiative is a major stumbling block for some.
This article explains the growing talent gap in more detail: “The central importance of talent reflects a broader issue in the IT field today: a structural mismatch between in-demand roles and the skills and experience of the talent available in the marketplace.”
How bad is the talent gap right now? According to the survey mentioned above, only 17 percent of businesses have the right skills to tackle digital transformation.
“Whether you’re revamping a website, digitizing customer experience or automating marketing processes, you need the right people to get the job done,” says John Reed, senior executive director at Robert Half Technology. “And as more companies invest in digital initiatives, recruiting and retaining professionals with the necessary skills and experience to support them is getting harder. Our research shows that roles like front-end web developer, mobile designer, UX designer and data scientist can see higher than average increases in starting salaries for 2017. In addition to offering competitive pay, companies must be prepared to move swiftly once they identify strong candidates or risk losing them to other opportunities.”
4. What kind of team and resources do I need to sustain this new digital business?
Let’s take the last point one step further. It’s not enough to bring on talent on a short-term basis.
Digital transformation isn’t your typical project. You can’t hire temporary help to complete the project and then go back to normal when it’s done. When you’ve completed the project, your business operates differently. The team and skills you have right now might not translate to a digital business.
“A digital business — whether a product or service — relies on reliable software and a great user experience,” says Skot Carruth, CEO at Philosophie Group, Inc. “Organizations new to digital vastly underestimate the cost and expertise required to develop, sustain, and continually improve the software platform that the business runs on. It requires a different mindset from traditional software investments. Traditional software investments are usually thought of as a capital expenditure — an up-front investment that provides an ROI in the future. But transformed companies see software development as an ongoing investment. You can’t simply build and launch. You have to have a team.”
In order to succeed, you must have a plan and a team in place to deliver new (digital) solutions quickly. In some cases, this means you must hire new employees. In other cases, this means you must bridge the gap with software tools. Whatever the choice, plan for this change before you begin.
5. How will you manage employee perception of and response to the change in approach?
Don’t be fooled by the name. Digital transformation is about more than technology.
When you undergo a digital transformation, some aspects of your business are bound to change. Employees might have to learn new skills or processes. Their daily routine and tasks might change.
You’ll find that this is often the most difficult part of a digital transformation initiative. How are you going to manage your employee’s response to this change?
“In order to kick-start digital transformation, internal teams need to be on board,” says Rich Fitchen, GM of North America, Bizagi. “Having a strategy in place to help inform, educate and aid employees that will be affected by the digital transformation will help set up the process for success. Internal attitudes toward change will either positively or negatively affect the process and can de-rail it altogether, so explaining the reasoning for digital transformation, laying out how employees will be positively impacted by the change and what they can expect will help them prepare for and cope with the transition.”
Summary
These are just 5 questions to ask before beginning a digital transformation journey. Stay tuned for more questions in a future article! If you would like to add anything to this list, I’d love to hear it. Feel free to share in the comments.