How to Kick Start a Digital Transformation Strategy

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eng-0303-digital transformation strategy

Wondering where to start when it comes to getting your digital transformation strategy off the ground? Well, you’re not alone. A recent study by IDC found that by 2023, digital transformation spending will grow to more than 50% of all ICT investment (from 36% today); this is the largest growth in data intelligence and analytics to date.

While digital transformation offers a wide range of advantages, which we’ll cover, it’s not the simplest of concepts to get your head around. So to help answer some of your questions, this article will discuss the ‘what, why and how’ of a transformation strategy framework.

Why launch a digital transformation strategy?

Digital transformation refers to the reinvention of business operations by drawing maximum benefit from technology. By integrating new technologies, companies aim to solve traditional enterprise problems or create new and optimised processes to help them evolve into a more competitive organisation.

There is a strong correlation between companies who are making significant inroads with their digital transformation strategy and how successful they become. A study by Gartner found that 56% of CEOs have seen improved profits after carrying out digital improvements. Beyond profits, digital transformation advantages also include:

1. Improved customer experience
2. Cost reductions
3. Consolidated operations
4. Improved decision making through enhanced analytics and technology
5. Improved productivity
6. Minimalising risks

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Digital Transformation Strategy Goals & Priorities:

The term ‘digital transformation’ is extremely broad and encompasses a range of different initiatives and components. While no two digital transformation strategies are the same, one similarity they often share is their goal. Common strategic priorities that digital transformation aims to achieve include: Optimised customer experiences, reduced costs by increasing efficiencies, improved insights, connecting the dots by consolidating data vendors, increasing agility, optimising internal communication. We'll cover each of the priorities in more detail below.

Creating a Digital Transformation Roadmap:

Turning digital is not a solution in itself, strategy drives digital transformation, not technology. Roadmaps help executives plan and coordinate digital-first strategies and the capabilities that make delivering innovations possible. Without a roadmap, executives are at risk of buying tech with no clear understanding of their role in driving digital transformation priorities and outcomes. Ensure your company is equipped to drive change throughout the organisation and read our digital transformation strategy roadmap tips below.

A digital transformation roadmap will help you define and manage your business model transformation efforts in a coordinated and effective way. The roadmap starts by assessing your organisation’s digital maturity today and moves on to your future vision. Only then can you identify opportunity and threat gaps that need to be optimised with the support of innovation. Finally, the road map details what you're going to do to plug those gaps and how you're going to measure if you've been successful.

When developing a digital transformation framework, it’s best practice to avoid focusing on individual technologies and instead develop your strategies through the lens of transforming the enterprise. This requires you to take a step back and asses your current situation, which brings us to the first step...

1. Conduct a digital capability assessment

To understand where you need to transform you first need to assess and benchmark where you currently are. Start your ‘state of digital’ assessment by evaluating your current processes and the pain points that go with them. When it comes to pain points, research what they look like for the rest of your industry too. Benchmarking against your competitors is vital, especially in the age of rapid innovation. Say, for example, your digital transformation efforts aim to reduce processing time from 20 minutes to 10 minutes, but your competitors are doing it in 5 minutes, it won’t take long for you to fall behind the industry standard and become irrelevant.

Keeping your pain points in mind, now ask yourself:

1. How are we going to design for innovation, optimisation, agility and scale?
2. Does our current digital infrastructure (software, apps, tools etc) address our future needs?
3. What role will our solution partner/s play in helping us successfully move forward?
4. Does the organisation have the required skillset to overcome the challenges through digitalisation?
5. Is the company culture ready, and more importantly, willing to adapt to change?

Once you’ve established the pain point/s you want to tackle, you then need to decide on the tech you’re going to implement to resolve it. If you’re struggling with where to start, Digitalist Magazine found 50% of companies view data/ analytics as the prime technology enabling change. This is closely followed by the internet of things (42%) and artificial intelligence and machine learning (40%).

2. Create a clear vision:

Using insights from your current state of digital assessment, make a clear statement around how you’re going to plug the gaps you’ve identified. Start by articulating a vision, keep it simple and aligned with your overall company vision.

Successful visions almost always include priorities (what), outcomes (why), relevant KPIs (how) and hold certain people/ teams accountable (whom).

If your organisation fails to see the importance of your vision, they won’t buy into it or act upon it. Your vision is best communicated by change evangelists. When sharing the vision, have your change evangelists concentrate on both the bigger and smaller pictures, framing discussions in terms of how change impacts the overall business goals, as well as employee’s day to days. This will increase the chances of your vision resonating.

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3. Set goals and objectives:

By setting goals and objectives, you're less likely to digitalise aimlessly. When setting yours, make sure they’re focused on improving the overall business, instead of individual processes.

While there's no one-size-fits-all approach to transforming, the end goals of the initiatives tend to centre on the below:

Optimised customer experiences:
In order to survive this increasingly competitive business environment, companies must create customer-centric strategies. Enterprises that focus on transforming the customer experience by modernising customer touchpoints and customer-facing strategies benefit from hyper-personalisation, increased brand relevancy, and agility. Ultimately, by shifting focus and paying attention to what customers want, they’ll improve client acquisition and retention while simultaneously reducing spend and foster a competitive advantage by doing so.

Reduced costs by increasing efficiencies:
By creating a business transformation framework that focuses on optimising business technology and operations, for example shunning manual interventions in favour of tech that can automate tasks and projects for them, executives can better evaluate processes and identify problems further in advance. This often leads to cost-per-transaction savings. Moreover, efficiency speeds up process flows and leads to a much leaner organisation.

Improved insights:
One of the greatest competitive advantages of digitalising processes and frameworks is improving your ability to track and analyse data. By leveraging advanced technologies like machine learning, data mining and statistics, a company is better able to predict what is likely to happen next. This insight is commonly applied to solve a business problem, unveil new opportunities, or to forecast the future. Members of the c-suite who leverage such insights to make data-led corporate decisions minimise risk, reduce costs and improve revenue.

Connecting the dots by consolidating data vendors:
While data innovation brings about access to more business-critical insights than ever before, it has also made the landscape increasingly difficult for management to navigate. Navigating this noisy data landscape is difficult when data sources are scattered and do not integrate with each other. This has led to major strategic decisions being made based on fragmented data sources, resulting in poor alignment and reduced comparability of data. To overcome this data fatigue, enterprises are beginning to transform how data is collected, analysed and stored via consolidation strategies. By doing so, their aim is to introduce cost-effective procurement processes, streamline business workflows and increase robust decision making.

Increasing agility:
Sustainable market leadership stems from having the ability to quickly spot, adapt, and react rapidly. This can be in light of a threat or an opportunity. Either way, businesses that fail to be agile and meet the demands of their industry environment will struggle to survive. Staying ready for ‘the next big thing’ is crucial, as is being proactive. While we’re not superhuman and we can’t have our eyes on everything all of the time – technology can. It’s worth bearing in mind that it can also hinder agility if it’s outdated. With that being said, we’re seeing more and more enterprises creating digital transformation strategies to eliminate slow legacy IT systems in favour of more nimble and responsive stacks that are better able to keep up with market trends and demands.

Optimising internal communication:
As the saying goes, “no man is an island”, yet we still see many divisions in companies act that way. Certain types of digitalisation fuel internal collaboration, something that’s needed to ensure all employees are aligned and working towards the same end goals. Employee engagement is a hot topic right now, and rightfully so. By optimising communication, employees can learn from their peers. Reducing siloed working also helps processes flow more effectively as workforces become more productive, systematic and consistent. As a result, organisations become more efficient.

Your digital transformation roadmap should include short, medium and long-term goals since transformation must be viewed as being continuous. You’ll find the timeframe for transformation objectives are typically longer than your average functional objectives as they’re formed from long-term visions. To ensure your SMART objectives are achievable and realistic, they need to be adaptive and approached with agile execution.

In terms of metrics, Gartner suggests selecting 5-9 metrics to track, report and act on. Gartner also states the best metrics have a clearly defined and defensible causal relationship to a business outcome, focus on a defined audience, can be understood by a non-IT audience, and drive action.

4. Communicate:

When it comes to introducing new workflows that change how a business and its employees operate, stakeholder buy-in is crucial. There are many barriers to digitalisation (which we'll explore in a little while), but poor communication is one of the biggest.

Don’t underestimate the power of storytelling. This is becoming a popular means of gaining employee buy-in. Moreover, don’t overlook the importance of giving employees a voice. Their feedback is fundamental since they’re the ones most likely working with the processes you’re trying to change. Giving them a voice can help break down rigid company structural hierarchies and also open up innovative thinking.

5. Execute:

You'll find implementation will fail if you purely focus on technologies without investing in the organisation's ability to ensure impact. Digitalisation isn’t just about tech, it’s about people, processes and infrastructure. Training must take place prior to executing changes, especially if there’s a skills gap. This will also help foster cultures that are receptive to change. Depending on the type of transformation, you may decide to launch the change all at once or introduce it gradually. Either way, create a detailed timeline and continuously communicate this with the organisation.

Partnering with expert consultants and service providers can help with technical aspects of the installations and can guide you on best practice. In fact, research has found that 88% of firms are using third-party providers for at least one component of their digital transformation efforts. How much support you’re getting from your technology partners should be considered prior to bringing them on board.

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6. Measure:

Business transformation is a journey, not the destination. As such, it should be seen as a continuous learning process, one that’s progress needs to be regularly measured. Digital transformation measurement should be part of the planning process, considered well before implementation. Since transformation involves a company stepping into unknown territory, you’ll most likely find holes in the framework that need to be patched up – and that’s ok! Transformation doesn’t happen overnight; the important thing is that you’re starting. Only then can you benefit from a competitive advantage.

Overcoming Common Digital Transformation Barriers: 

While digital transformation is a strategic focus shared by many organisations, the c-suite sometimes struggling to implement changes and evolve. In fact, Forbes reports 84% of businesses who engage in digitalisation end up failing to make their efforts a success. At Meltwater, we frequently have conversations with executives trying to get their head around the new digital economy and digital transformation barriers preventing their success. In light of this, we’ve included top transformation barriers and suggested solutions to overcome them. Be mindful of the common barriers when starting the rollout of your transformation initiatives so you can put plans in place to eliminate them. 

Resistance to change:
It’s widely known that people don’t like change, we also see this is the case for some industries more so than others. Resistance stems from various roots, with reasons spanning difficulties justifying transformation, competing revenue sources, fear of job loss/ change in job role etc. Getting to the bottom of why there’s resistance is important as only then can you truly tackle it. Bear in mind that each stakeholder has their own priorities, therefore the resistance reasoning may vary depending on who you speak with.

Suggested solution – focus on culture:
Don’t underestimate the power of company culture since culture greatly impacts how employees act towards change.

Aim to build a small group of evangelists within your organisation rather than starting with mass adoption. Focus on developing a team of executives who lead by example, take a “digital first” approach, and have an open-mind and entrepreneurial spirit. Have those evangelists drive peer advocacy and set out to dispel digitalisation myths within the wider organisations. Encourage them to practice personal mastery so they're mindful of the impact their patterns of thinking, feeling and behaving have on the people and situations that surround them. For example, it’s foolish to believe investing in technology means you’re transforming your company. In order to truly transform, technology needs to be supported by a workforce who are willing and able to create change. This is up to both the company’s peer advocates, as well as their technology partners to drive.

Since personal mastery revolves around the idea that leadership starts with ‘you’, it encourages a sense of responsibility and accountability amongst your advocates. Hopefully this will trickle down into the general work force and create a company culture that’s agile, adaptable and also open to change.

Poor communication:
It’s not uncommon for digital transformation projects to fail due to poor communication, lack of vision, and vague objectives. Keeping your communication line open is critical. Research by McKinsey shows companies are between 8 and 12 times more likely to succeed with business transformation when good communication is apparent.

If you’re not honest about progress, outcomes and impact so that stakeholders know where they stand, employees are likely to stand against you and not with you. It’s important for everybody who is involved to be addressed and just as important for them to feel heard too.

Suggested solution – keep all stakeholders updated at every stage

In order for your digital transformation strategy to be a success, there needs to be clear direction from management. Explain the current state of the digital economy, the smaller picture (how the transformation will impact them in their day to day) and the bigger picture (how this will help the company in relation to the competition). When communicating your vision, start from the business model or the customer experience instead of starting from an inward goal such as digitising legacy operating processes.

Make sure your people understand what you’re doing, why and where you currently are in terms of progress. Don’t be afraid to give employees a voice, after all, they’re the boots on the ground. They’re the ones who are most likely working with the processes you’re trying to change. Giving them a voice can help break down rigid company structural hierarchies and open up innovative thinking.

Legacy technology hindering processes:
Your digital transformation framework is only as successful as the foundations it sits upon. Known as the Achilles’ heel of transformation, legacy tech is blamed for a lot of failures, 50% of them according to Nimbus Ninety.

Many companies still rely on rigid legacy systems and it’s this reliance that hinders the adoption of new technology. The problem is that replacing those systems is complex, but also, more often than not, new implementations fail to match previous systems in performance or functionality and companies also can’t afford to experience blackout periods while legacy system are paused.

Suggested solution – review them before you replace them

By understanding the current workflow of your enterprise framework and the impact technology has on them, you gain critical insights into what happens when you move particular pieces of the puzzle. Take time to work with your tech partner and review operating differences before replacing legacy systems, this will help you to expose the business logic hidden away in legacy technology. Don’t make a knee jerk reaction and pull the plug on your legacy tech either. Instead, build new transformational solutions in parallel so you can slowly switch business operations across. A strong implementation stage is key to success.

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Failure to plan for continuous improvements:
Think of digital transformation as the ongoing process towards better understanding of how technology impacts the relationship between your brands and consumers. The key here is the ‘on-going relationship’. This means that once initiatives are fully implemented, the change effort does not end. 35% of executives claim that a lack of clear transformation strategy as their biggest roadblock. This isn’t too surprising considering many forget to plan for continuous improvements and wash their hands of digital transformation as soon as the implementation stage is complete.

Suggested solution – connect transformation to daily work

Having a systematic flow for developing your workforces’ capabilities and identifying, sharing, and improving upon best practices increases your chances of success. All stakeholders need to understand how their work relates to the overall transformation vision. By making it personal to them, employees will be more engaged in identifying flaws in processes and reporting back. Continuous communication needs to be present for continuous improvements to be implemented.

Lack of training:
Sometimes failure in digital transformation frameworks stem from the fact that employees, including management, lack confidence in their own digital skills. Lack of digital talent hampers acceptance towards change. While on the surface it may look like your workforce favour systems they know and are comfortable with, this often masks their insecurities. It's therefore wise to invest in executive education.

Suggested solution – continuous learning opportunities

As mentioned, digital transformation process is about continuous improvements – and this should also be matched with continuous learning opportunities. You can ensure this through regular and consistent touchpoints, training sessions and a strong onboarding (and re-onboarding) from your technology partners. This will allow your team to develop the necessary skills needed to maximise transformation impact. Moreover, training your team to become the workforce of the future will empower them as they’ll feel more comfortable with adopting changes and working in new ways. Don’t be afraid to rely on your tech partners when it comes to local support. They should work as an extension of your team to guarantee you get the most of the tools and technologies you’re investing in.

Hopefully the above points have helped shed some light on the role digital transformation in helping your enterprise evolve. If you’d like to discuss more about what this could look like for your organisation, pop your details in the form below and we’ll be in touch.