Digital Transformation: IT is an enabler, not the gatekeeper

Digital transformation (DX) is an important enterprise-level initiative which, in the opinion of many industry insiders and advisors, must be embedded into the structure of an organization. DX done right is pervasive throughout the organization; however, without an understanding of technology’s existing place in it, it can be extremely difficult to achieve the desired outcomes. A lack of understanding of the business-IT relationship & technologies can prevent changes from being made in the most efficient way. In addition, failure to recognize the importance of the organization culture poses significant risks to the entire digital transformation project / program. If a business doesn’t have a comprehensive and board perspective strategy and isn’t already on the road to digitizing at least some operations, its competitors are quite likely to be.

Digital transformation is a paradigm shift that must be supported by collaborative, adaptive, and inclusive company culture. All successful digital transformations start with a problem in the business that requires attention; however, most of the failed transformations are the results of starting with technology, and not finding a specific problem that people can get behind solving. According to Michael Gale (Strategic Oxygen) in an interview with Bruce Rogers (Forbes), “84 percent of companies fail at digital transformation because they're not prepared to change behaviors.” They focus too heavily on technology and not on value.[1]

The entire context includes problem(s) to solve, benefit(s) in doing so, coupled with the people to solve it, processes to adjust, technology to deploy, and the cultural shift to sustain it. If the complete context isn’t present to drive, support and sustain changes, then it’s very likely to fail. Strategy, processes, business operations, and people’s everyday work are all touched by digital transformation — so technology must work alongside the business and in tune with the culture for the changes to be sustainable.

Although there can be many aspects to digital transformation, let’s look at a few of the key elements that are applicable and present in successful digital transformations - at a minimum, you must do these to be digitally transformed.

Prerequisites to Success

It’s too easy to deploy new technologies - simply purchase and install hardware / software and turn them on. However, transformation doesn’t really work that way. The prerequisites we suggest do not need to be overly complex, but they should be used to assure a shared vision, purpose, and methodology for the scale and scope of the program. The basic idea here is to be prepared for digital transformation and you’ll find introducing new technology is not as complex or fraught with roadblocks and problems as it could be. To help, the following should be considered to help prepare the organization (top-down / bottom-up) for new technologies / changes and to make sure the transformation is smooth and well-received.

Assure a broad perspective: People, Process, Technology, and Culture

A failure to quickly adapt to technological and business process changes leaves businesses sitting back on their heels, struggling to keep up with competitors that are using digital technology to streamline their processes and daily activities. To aid competitiveness, understanding the current and emerging technology solutions are essential for defining any transformation journey. For many organizations, it means discovering or reaffirming your understanding the current situation (via strategic planning, application rationalization, and enterprise/business architecture modeling), consolidating / migrating marginally used platforms, and readying to access the more recent innovations is only part of what is required to sustain transformation at a cultural and practical level.

As businesses begin to overhaul operations, they often hit unexpected brick walls with the culture. Studies by McKinsey and others reveal that over three-quarters of organizations claim transformation projects were far from revolutionary or transformational and are simply technology refreshes driven by IT. Importantly, digital transformation projects should not be driven by tech alone - technology is secondary because without the business support and engagement, overhauling the company’s operations defaults to a technology refresh. To be successful, digital transformations must include people, process, technology, and culture – all playing a crucial role in transformation success.

Independent consultancy: an objective, advisory and participatory set of eyes

Before any digital transformation project can begin, limited consultation can be highly beneficial to establishing a ‘native’ in-house environment conducive to assuring success. These projects require an organization to complete an assessment of its technology as well as assessing its internal culture, organization, and processes. This provides a baseline for change and can aid in establishing how things will change when changes are introduced to transform operations (an Operational Technology or IIoT perspective). Taking stock of the business can also ensure that continuity exists within the culture despite technological changes taking place.

Sampling of Pillars to Digital Transformation Success

Leadership Vision & Strategy

The vision and strategy are both important tools of strategic planning, and thus help to shape the organization to achieve the desired future. Apply a balanced scorecard governance model for evaluating the Business-IT condition and improving it. When assessment and associated metrics reveal problems / concerns, we collectively agree to create a strategy for confronting the crisis (the threat to operation excellence).

• Vision and Strategy – Leadership must articulate and sell the integration vision to the workforce and engage the teams comprising the program throughout the process. It’s important for senior staff to understand what digital transformation will look like and the impact it will have across the organization. Transformation cannot be spearheaded by one person alone, but rather enabled by a cross-functional / inter-disciplinary team. Redesigning systems and upgrading technology products is not a guarantee that digital transformation will be successful. If you fail to align digital transformation with the business & staff values and behaviors, there is a risk that employees will be less motivated to succeed and default to current practices and methods. They will become disillusioned towards the changes and the process may falter, which is why those in leadership roles must engage with the transformation process. A trademark way to assure alignment of strategy & tactical activities is to craft a balanced scorecard (BSC). Developed uniquely for the company, BSC enables maintaining focus and moving in a cohesive, consistent direction - including the overarching objectives, measuring key performance indicators (KPIs), targeting for the KPIs, and the initiatives that can help reach those targets. These four elements align with the company’s mission, vision, and values, and develop in four different perspectives: business (financial), customer, internal business processes, and learning and growth. These perspectives, taken together, give the scorecard the “balanced” approach.

• Governance – The governance process should be designed to improve decision--‐ making for investments in discretionary projects and to improve the alignment of technology across the organization. Additional governance processes, external to the organization but influencing / constraining resources, include the enterprise project portfolio management & enterprise architecture capabilities – these may (at times) be key strategies to leverage technology in the pursuit of enterprise goals. Enterprise IT Governance is a component of corporate enterprise governance that fosters buy-in from the top-down & bottom-up to assure engagement and achieving a broad-based consensus-building structure, authority, process, and membership in a framework – spanning investment decision-making, transparency, strategic alignment of enterprise and IT, resource allocation and management, performance management, stakeholder engagement / accountability, collaboration and cooperation, standards and policy, business case justification and ROI, accountability, and more. Influencing the direction of technology investments to ensure business success by Balancing short- & long-term and internal & external (customer-directed) investments; Strengthened stakeholder engagement & participation; Diversifying Risks and Opportunities; Increased Organizational Agility; Innovative cross-functional boundary Initiatives; and, Improved collaboration, cooperation, communication and coordination of all highly interdependent areas.
• Transformation Office (TO) and Transformation Management Plan (TMP) - Examining the business must be sanctioned and driven by the senior leadership team, typically through a Transformation Office (or similar). Reinforcing the change-management goals. An effective transformation office will always reinforce the transformation culture: during the TO meetings, at executive committee meetings, in reports and updates, during problem-solving discussions, and in communications to the rest of the organization. The TO is charged with coordination and custodianship of the transformation management plan that owns & steers successful execution of a well-designed transformation plan is required, with clearly identified roles, responsibilities, and accountabilities. The suggested transformation office model drives results through standardized, regular, periodic, action-oriented meetings. These basic principles help successfully manage and deliver initiatives on-time, within budget, without surprises, and with repeatability and sustainably. Transformational changes completely overhaul how an organization operates - longer-term changes that address the organization’s technological identity, ranging from entire overhauls of data systems (IT) to new technologies (with OT). Governance helps leaders understand how their technology investment transforms the workplace. Transformational changes represent a strong, longer-term return on investment.

Technology Baseline and Refresh

Technology baseline is a fixed reference point reflecting the characteristics and attributes of the current enterprise. A periodic replacement of equipment ensure currency and continuing reliability of equipment and/or improved performance, speed, capacity and capability.

• Application Rationalization – For successful transformations, organizations aim to reduce the complexity of the application portfolio and the related IT costs. Application Portfolio Management (APM) is a discipline to assess individual and application portfolios to justify ‘value’ and to make better decisions regarding the future state. Application rationalization (ApRat) initiatives are highly successful when the application portfolio is clearly aligned to the business strategy and business outcomes. To improve operating efficiency, companies have pursued ApRat strategies that are closely tied to Enterprise Architecture (EA). Together these can unveil the relations between business processes, applications, and underlying infrastructure – identifying misalignments, redundancies, and excessive expense in the application landscape.
• Enterprise Architecture / Business Architecture - Enterprise Architecture (EA) is the process by which organizations standardize and organize IT infrastructure to assure alignment with business strategies, goals & objectives. Some strategies support digital transformation, IT performance reporting, and the modernization of information and operational technologies (IT & OT). EA analyzes, designs, plans and implements enterprise components that aid successful business strategies. In many organizations EA is a trusted advisor and partner who helps business units structure projects and policies to achieve desired business results. It stays on top of industry trends and technology disruptions using architecture principles and practices. Business Architecture (BA) develops and maintains the business capabilities of the enterprise (and business units / lines of business) in line with the corporate business strategy, as well as contributing to the business-IT strategic plans.
• IT Service Management –IT service management (ITSM) is the process of aligning enterprise IT services with business and a primary focus on the delivery of best services to end-users. ITSM is built around processes and practices and gauges the end-to-end delivery of IT rather than its development. ITSM measures the operational efficiency of a solution in meeting the service level expectations and how technical IT manages these systems to deliver the desired service level. ITIL (Information Technology Infrastructure Library) provides a comprehensive suite of best practices, procedures, standards, and an authoritative framework for ITSM which aids governing IT services in a structured format and ensures meeting service standards both within the organization and/or across third-party service providers.
• Technology Refresh - Technology has and will continue to evolve throughout most industries and across organizations. Many organizations have not kept pace and have even delayed updating technologies under the guise of saving money;  however, now there is a need to maximize efficiency, and technology seems to be a great way to do that. A disconcerting way to attempt technology currency would be for a company to decide to dive into digital transformation and move from on-premises/on-site technology to Software / Platform-as-a-Service (SaaS or PaaS respectively) or cloud technology. Unfortunately, just doing a technology refresh in this fashion is not in and of itself a digital transformation.

Business Model & Process Changes

Business model change is not limited to one industry but applies to almost all industries. An example would be was how companies that typically have business-to-business (B2B) models are thinking about also moving to business to consumer (B2C) or direct to consumer (DTC) strategies. These types of shifts are considered business model changes.

• Stakeholder Engagement - Engaging stakeholders & executive sponsors is crucial to the success of any organizational transformation. There must be a clear vision derived from a strategic planning process, and an effective strategic plan that can succeed only from stakeholder engagement and accountability.
• Portfolio Governance | Investment Rationalization | PPMO Operations – A disciplined change management process is essential for assuring on-time, high-quality, within budget, and meeting expectations requires a consistent management process.
• Training - One of the ways digital transformation can fail is when employees are not well-trained beforehand. When introducing new technologies into an organization, it is critical to understand the impact on the workforce; and whether the organization is ready to accept the technology; and, what the implications of re-training / re-skilling will be. In addition, transformations can take time, and training is not always a ‘one-and-done’ and should be woven into the fabric of the program. Staff will absorb / learn technology at different rates. Training should be ongoing throughout the program with periodic refreshes to remain abreast of changes and new methods.

Cultural Change / Cultural Shift

Digital transformation is a paradigm shift that needs to be supported by collaborative and supportive company culture. From a cultural perspective, introducing smaller steps alongside a ‘big bang’ approach to digitization may complement the rhythm of the business and can be motivational for employees who can see the changes taking place in real-time – preventing employees from feeling alienated by technology that they don’t yet understand. Transactional changes are useful for establishing employee confidence and ensuring that they remain engaged throughout the disruption, whilst allowing a business to remain competitive. There are also longer-term benefits to this approach. Introducing smaller changes will encourage staff to be receptive to larger, more transformational changes that shift how the organization interacts with technology on a deeper level. 

• Cultural Change - Differentiating between transactional and transformational changes in digital transformation ensures that culture comes first, which supports the process from inception. If this framework isn’t in place to support the changes, then it’s more likely to fail. Strategy, processes, business operations, and people’s everyday work are all touched by digital transformation — so technology must work alongside culture in order to be sustainable. Culture is too often ignored and expected to evolve along with technology changes, it doesn’t! Cultivating the cultural change environment enables employees to more engaged and accepting of the coming digital transition and company transformation.
• Innovation - Innovation is about looking at everything the organization does and asking, "how can we improve it?" Many organizations want to establish a culture of innovation that encourages staff to take risks that lead to breakthrough improvements in products and/or processes – but how to do this often eludes leadership Organizations should focus on changing critical behavior – here’s a starter set: · Building collaboration and cooperation across the enterprise – Innovation is a team sport that requires collaboration and cooperation across the organization strata, among silo-ed business, functional units, across facilities, and with external partners; · Balancing operational excellence with innovation - Achieve operational excellence and reduce costs while ideating & developing new methods & products. Leadership must lead and demonstrate innovative behaviors that generate value to the business — before others will follow; · Motivating an intrapreneurial spirit – measure, recognize, and reward innovative efforts; and, · Emphasizing speed and agility - Innovation happens best when people move quickly. This requires a sense of urgency and agility to help disrupt the status quo to develop methods to quickly identify, select ideas, and then operationalize / commercialize them through prototyping.
• Continuous Improvement: why can't it be improved? Many organizations endeavor to create high-value solutions –designed based on input from collaborative and cooperative teams comprised of production workers, designers, business analysts, IT experts, and others, along with a selected supplier integration expertise and embedded team members. While many organizations set out on these efforts, it’s often without engagement across the enterprise and without clear accountability for results. These organizations don't broadly communicate strategic initiatives because they're consumed with the day-to-day management and not on what the organization should be doing. Continuous improvement can be easier through stakeholder engagement and a Transformation Office.

Putting the Pieces Together

An organization’s transformation program success is about having an empowered culture that refuses to be a prisoner of precedence. Many people think innovation is finding that next big thing (that new shiny, magical tool); however, truly innovative cultures recognize it is a multitude of small things that break the bonds of past precedence and the status quo. An innovative and transformative organization seeks out staff who truly have ideas and who have a track record of being able to excite others - bringing them along in a new way of thinking. Oftentimes, insights come from people from outside the organization or industry that can help it to see things differently, especially when “it’s the way we’re always done it”, or that “it’s been done this way for years”.

The transformation includes innovation advocacy that requires questioning the status quo. It's establishing that intrapreneurial culture throughout the organization - not just from the top-down, but rather from the bottom-up - and a decision-making governance model that involves asking, "what should we not be doing?".

If we applied a Lean approach, we would encourage one to question ‘why’ we do something. Without a reason, we should then ask "well, what would the impact be of not doing that?"

Final Thoughts

Digital transformation — the use of technology to improve performance or the reach of the enterprise. Most industries are using newer digital technology to support analytics, mobility, social media, and smart process devices; as well as improving the use of traditional technologies such as ERP to change customer relationships, improve internal processes, and deliver on promised value propositions. 

Transformation initiatives must be connected to something bigger and broader to really deliver sustainable, long-term value.  Will the technology be used five years from now or just for the first year or less of its life? Many projects can start an idea and a conversation, but they are not an innovation in and of themselves, and all too often they’re certainly not transformational. Another misconception about a transformation is that innovation is commonly only stressed in the executives of organizations; however, the innovative culture must exist throughout the organization with an easy way to get innovative ideas from the front lines into consideration. Even if a leadership team has innovative thinkers, it must be encouraged throughout the organization and its culture. If innovation isn't happening on the front lines and in the management ranks of an organization, it's not happening — it’s just lip service, plain and simple.

Many organizations claim they're innovative, but it’s often just that they’re doing projects. The word is over-used because they believe it’s important. In these organizations claiming to be innovative, there is often a culture that pretends to be innovative - a culture that is truly innovative is hard to find.

Find, nurture, empower, support and channel innovation to deliver the results and outcomes the organizations’ needs. Companies move forward with transformations at varying paces and experience varying levels of success. Some transform many parts of their organizations while others do only the basics. Some encounter organizational issues or other challenges that prevent them from transforming successfully. The best combine process change activity with strong leadership to turn technology into transformation. Leading change requires leaders and managers to have a vision of how to transform their organization.

Digital Transformation is about the people, processes, and the culture of the organization, as much as it is about the technology initiatives. The long-term sustainability of a transformation requires organizations to engage high-potential and passionate employees, equip them with skills, and hold them accountable for and celebrate their contributions to the effort. 

GETTING STARTED

Engaging an in-flight initiative requires a Discovery, Triage, or Initial Approach to clarify what is happening and ascertaining facts from fiction. The engagement should begin with an assessment of the overall current program to assure a solid understanding of the scope and scale of other existing programs and to identify and gaps requiring immediate attention.  proposing a single workstream conceptually conforming to the following process flow. 

 Duration: No more than 3 weeks

Initial Work Stream: Review/Triage the current program

This approach integrates both Business Change and Technology Exploitation and includes, but is not limited to:

A.    Review the current management and technology plans;

B.    Interview key stakeholders;

C.     Review current testing strategies and compliance monitoring for testing, as recommended by CMS and industry groups as best practices (including scenario-based testing);

D.    Analyze results and evaluate opportunities for optimization and any gaps in the current plans and/or strategies; and,

E.     Provide recommendations with estimates regarding the level of effort, costs, and timing – as well as the assessment of the potential impact on the current process remediation plans.

F.     Prepare / refine Program Management Plan – REPLACE the prior ‘rule book’ with the right rules!

[1] https://www.forbes.com/sites/brucerogers/2016/01/07/why-84-of-companies-fail-at-digital-transformation/#458276ed397b

Don Gleason - Chief Administrative Officer at DGCpartners LLC - a small, innovative, veteran-owned, and independent management consulting firm helping clients gain control of costs and schedule for their most strategic initiatives – building, driving, and mentoring teams in best practices to ensure sustainable change management discipline and business transformation success. We've been there and done it – “we don’t bring the bus; we bring the best!” - in industries from manufacturing and healthcare, to finance and government services, we bring a hands-on approach rooted in industry & process knowledge and executive-level IT experience. Our processes scale and leverage industry-leading best practices around process execution, budgeting, operational efficiencies, business process and IT outsourcing, and improving Business-IT decision-making.

If you need help determining where to start, we’ll help you triage your situation and together we can craft a management plan and make things happen...

To get you started on the right path that uses your team to assure a sustainable transformation & change management - Reach out to me here on LinkedIn, Twitter, or through DGCpartners

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