Activities of a Digital Transformation program

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Digital technology is increasingly changing the way individuals and organizations function, radically changing society. Consumers have more choice and control over suppliers, product lifespans have been reduced, and humans interact in physical and virtual realms. Citizens’ demand that those changes are reflected in the way governments are elected, govern, and provide services.

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Digital technology has also changed the way people are managed and expect to be managed. It has also changed the way we live and work, leading to a demand for new products and services, which are often fundamentally different to those previously offered.

Typical activities of a digital transformation program

The activities of a digital transformation program will be determined by its scope and objectives. A single initiative to modernize a technology component will be very different to an initiative aimed at bringing a new digital product to market. Both will be different to a program aimed at transforming several lines of business, to benefit from a new digital supply chain.

There are innumerable diverse examples of projects, initiatives, and programs available online, each as unique as the organization that created it and the scope of program it was designed for. To narrow digital transformation down to just one implementation framework is not only impossible, but certain to result in failure.

Instead, this article will use two scenarios typically labelled as digital transformation programs, and outline the major activities that are likely to be included in each. Note that the sequence of these activities might change depending on the purpose and scope of the initiative. Rather than replicating what another organization has done, you should forge a path that works for your own.

Scenario 1: Building capabilities to become a digital organization

This scenario is often referred to as a ‘digital strategy’, but more accurately it is a program of initiatives, which is used to build the capabilities needed for an organization to become a digital one. This could involve automating existing business elements, or changing digital business and operating models to compete digitally.

In this scenario, the organization will appoint a digital task force to define and implement the digital transformation program. The task force will consist of senior leaders and experts in technology, customer experience, and the organization’s business.

Throughout the program, the task force will use an approach such as Kotter’s eight steps (see the organizational change management practice guide) to lead the changes. These steps do not need to be strictly adhered to or performed sequentially, but rather are included as an example. The steps are often performed iteratively and incrementally, according to the organization’s needs and strategy.

Digital transformation is not effective if driven by a single leader; therefore it is important to establish oversight. The organization must ensure the following:

• Good governance The organization must ensure that digital transformation happens within the strategy and policies set by the governing body, and is managed consistently across all impacted units of the organization. This can be established through a steering committee.
• Leadership A digital task force consisting of key leaders and experts will need to lead the digital transformation.
• Collaboration The program must specify how the organization’s various units or functions will be involved, how communication will work, and how decisions will be made.

Perform digital capability assessment

This might be part of the digital readiness assessment, but is more of an assessment of the organization’s current capabilities, regardless of what its objectives are likely to be. Note that this should have been completed as part of the strategic assessment of the internal environment.

Identify digital use cases

These use cases define how the organization intends to use its digital capabilities, and which digital capabilities are underdeveloped or missing. For example, an organization that identifies customer experience management as an important digital capability might find that it does not have customer journey maps, or any methodology or supporting technologies, for this capability.

Use cases might show that they need to create customer journey maps for key services or products, establish feedback loops to obtain customer suggestions and feedback, measure customer satisfaction across the entire customer journey, define key metrics to identify where improvement is needed, and develop a methodology to orchestrate these.

If a digital business model and operating model have been defined, the capabilities need to be mapped, and the organization needs to quantify the maturity level of each capability.

Develop vision and goals

The organization’s strategy will define its purpose, vision, and desired position, and the opportunities it wishes to pursue. It must also articulate its definition of what digital means to the organization, and what digital capabilities it needs to have to achieve that definition. The digital transformation program will build the capabilities the organization needs to achieve those strategic objectives, with the following caveats:

• If a digital readiness assessment has been conducted, the team will use it as a starting baseline. If not, this assessment should be included here.
• If the strategy has not been defined, or has not specifically referenced the need for digital transformation, it must be defined or revised before further work on the digital transformation program is conducted. The organization might decide to use the digital transformation program to define its digital strategy, but it must then find leaders who will be responsible for its strategy to the program, and expand the strategy’s scope.
• When the strategy has been defined, the digital task force can use it to confirm or define a vision for the program (which should reflect the strategy’s vision) and to set specific goals for the program.
• The digital transformation program must be defined within the policies and constraints defined in the strategy and its business and operating models.

Architect changes

A review of the organization’s strategy and its artefacts, especially enterprise architecture information, will help the team to identify which components of the current state are already digitized, which are partially digitized, and which are not digitized. It will also identify any components that do not yet exist, and which have to be created or obtained. The team will then architect all areas that need to be changed. This might include documents, processes or practices, activities, infrastructure, applications, data sources, organization structures, roles, and skills. The architecture management practice guide provides additional details on these concepts.

Define roadmap

The digital task force will group the changes into initiatives or projects and sequence them. Examples of groupings might be by system, architecture, process, department, geography, or product line.

The grouping of these activities does not necessarily have to be the same for each project or program. For example, the digital task force might decide to digitize all paper records from all departments first, then move on to a function-by-function basis to assess and transform each function’s individual business processes.

As each set of activities is put into place, the team will learn from its experience and will need to adjust future plans. The roadmap should therefore show incremental units of work, rather than a multi-year timeline of final deliverables.

Implement with feedback

The digital task force charters projects or programs for each group of activities, assigns an owner for each group, and ensures that plans and budgets are defined for each group. It also ensures that resources and funding are made available as needed. Each project or program should take care to define incremental units of work, with iterations so that feedback can be provided, data collected, and the project or program adjusted as lessons are learned or key assumptions or technologies are changed.

Measure and improve

Although each project or program will measure its progress and the quality of work, there is a risk that changes in each iteration might cause a deviation from the enterprise strategy. Or, the digital task force might learn something that renders the current strategy less effective. Measurement and improvement here, therefore, relates to the effectiveness and efficiency of the digital transformation project or program itself, but also the overall impact of the program on the strategy and vice versa.

Scenario 2: Conducting a single digital transformation initiative

In these types of digital transformations, one or more stakeholders find an opportunity to use digital technology to do something better, faster, or cheaper.

This implies that the organization has already achieved a level of digital maturity and is making incremental improvements. However, it might imply that it has no digital strategy and is simply allowing itself to develop digital capabilities as and when needed. This is a dangerous practice, as it could result in fragmented, duplicated, or diverse solutions that are expensive to manage, integrate, or maintain. If this is the case, the organization should strongly consider creating a formal digital strategy and ensuring that all innovation is effectively coordinated.

These types of transformation tend to be limited to a single organizational unit, product, value stream, or practice. Although the stakeholder might view them as strategic, they are generally operational or tactical in nature. Examples include a new feature in a product, a quicker method to process orders, and a technology that stores data with a lower cost and faster access.

These are not digital transformation programs as such, but if there are enough of them across a large enough part of the organization, they will present a significant source of transformation to the organization. These initiatives need to be carefully managed and coordinated to ensure that:

• there is no duplication or overlap between them
• a business case has been defined for each one, and there is a clear return on investment and available funding and resources
• they are consistent with the organization’s digital strategy and will help the organization to achieve its vision and objectives; in some cases, they may be counter to the strategy and should be stopped; or if they accelerate or better realize the strategic objectives, the strategy might need to be reviewed and revised
• they comply with strategic policies and architectural guidelines.

These initiatives follow the standard approach for managing projects or programs. However, there is a major difference: project management is used to deliver outcomes for which a plan or standard business case exists.

Often, however, an individual digital transformation initiative does not start as part of an overall plan or standard business practice. Instead, it introduces fundamentally different ways of working. It will not be initiated through standard project management practices, but will require a different approval and planning mechanism.

When approved, the activities that manage these initiatives are similar to those in any standard project or program, with some significant differences:

• additional evaluation of the initiative’s impact on the organization’s strategy
• lessons learned from these initiatives tend to be more far-reaching; for example, a successful implementation might require an evaluation of whether the architecture change could be relevant for other parts of the organization
• results or status are reported to strategic leaders, who use them, together with other metrics, to determine the strategy’s effectiveness and relevance; deviation from anticipated results could lead to decisions to rapidly change the scope of the project or terminate it altogether.

Detailed information on project management activities and approaches can be found in the ITIL project management practice guide.

This is provided through the way the organization manages innovation, and this subject can be described in more detail in a separate article.

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