What AI and ChatGPT Taught Me About Our Digital Transformation and ERP Clients

Over the past few weeks, I've had the opportunity to engage with 20 different clients from various regions of the world, all at different stages of their digital transformation journeys. As someone who speaks to 3 to 5 clients each week, I take copious notes during these discussions to track patterns, identify challenges, and develop solutions.

To gain further insight, I decided to analyze these notes using AI to identify common themes and lessons that might not be immediately apparent. The results were both enlightening and surprising.

In this article, I will share these insights and discuss how they can inform the broader digital transformation landscape. You can also watch my new video outlining these points here:

1. Outgrowing Legacy Systems: A Catalyst for Change

One of the most consistent themes AI identified was the fact that many organizations are outgrowing their legacy systems. This observation, while seemingly straightforward, carries significant implications. These organizations are not merely upgrading their technology for strategic advancement; they are doing so out of necessity. Their existing systems are no longer capable of supporting their current operations, let alone future growth.

The sheer scale of growth these organizations have experienced has rendered their old systems inadequate. This constraint on scalability has forced them to seek new solutions that can better accommodate their expanding needs. This trend underscores the importance of scalability in technology solutions. It's not just about meeting today's demands; it's about ensuring that the technology infrastructure can grow alongside the organization. This insight is crucial for any company embarking on a digital transformation journey. The focus should not only be on replacing legacy systems but also on selecting solutions that can scale with the business's future growth.

2. Cultural Shifts: The Often Overlooked Challenge

Another surprising insight was the prevalence of cultural shifts as a significant challenge in digital transformations. This wasn't something I initially noticed in my conversations, but AI revealed it as a common undertone. Many organizations are not just changing their technology; they are undergoing significant cultural transformations.

These cultural shifts vary from company to company. Some are attempting to transition from acting like a small business to adopting the practices and mindset of a larger organization. Others are working to unify disparate business units under a single organizational culture. Some are striving to foster a culture of innovation, agility, and nimbleness. The common thread is that these cultural changes are critical to the success of their digital transformations.

This finding highlights an essential truth: digital transformation is not merely a technological initiative. It's a comprehensive organizational change that requires a shift in culture, mindset, and behaviors. Organizations need to approach their digital transformations with a holistic view that encompasses both technology and culture. Without addressing the cultural aspects, even the best technology implementations are likely to fall short of their potential.

3. Growing Pains: The Reality of Scaling Operations

Growing pains were another prominent theme identified by AI. As organizations expand, they inevitably encounter operational challenges. These challenges are often exacerbated by outdated technology that cannot support the increased demands of a growing business.

The struggle to scale effectively brings the focus back to the importance of aligning technology with business goals. It's not enough to simply replace legacy systems; organizations must ensure that the new technology supports their broader objectives, such as improving operational efficiency, enhancing customer experiences, and enabling future growth. This alignment is where the real value of digital transformation lies.

Moreover, growing pains highlight the critical role of change management in digital transformations. It's not just about implementing new technology; it's about bringing people along for the journey. Organizations must invest in change management strategies that address the human side of transformation, helping employees adapt to new processes, systems, and ways of working. Without this focus, the growing pains of digital transformation can become insurmountable obstacles.

4. Data Integration and Accessibility: The Need for a Holistic View

Data integration and accessibility were significant pain points for many of the clients I spoke with. Organizations are increasingly recognizing the importance of having a holistic view of their data. They are not just looking for reports or historical data; they want actionable insights that can inform decision-making and drive business growth.

However, many organizations struggle with data silos, where critical information is scattered across multiple systems. This fragmentation makes it difficult to get a complete picture of the business, leading to inefficiencies, errors, and missed opportunities. The manual processes required to gather, clean, and analyze data from disparate sources are time-consuming and prone to mistakes.

This finding reinforces the importance of data integration in digital transformation. Organizations need systems that can seamlessly connect and integrate data across the enterprise, providing a single source of truth that can be accessed and utilized by all stakeholders. This capability is essential for making informed decisions, improving operational efficiency, and driving innovation.

5. Managing Consultants and Software Vendors: The Need for Control

Another interesting theme that AI identified was the challenge organizations face in managing consultants and software vendors. Many clients expressed concerns about maintaining control over their digital transformation projects. They wanted to ensure that they had visibility into what their consultants and vendors were doing and that they retained ownership of the project.

This finding is particularly relevant given the nature of our work at Third Stage Consulting. One of our core services is empowering clients to take control of their digital transformations. We provide the tools, frameworks, and guidance needed to manage consultants and vendors effectively, ensuring that the client remains in the driver's seat.

However, this theme also highlights a broader trend in the industry. Organizations are increasingly wary of handing over too much control to third parties. They want to ensure that their digital transformation projects align with their strategic objectives and that they can steer the project in the right direction. This desire for control is a positive development, as it encourages organizations to take a more active role in their digital transformations, leading to better outcomes.

6. Regulatory Compliance: A Moving Target

Regulatory compliance emerged as a critical concern for many of the organizations I spoke with. While this isn't entirely surprising, given the nature of industries such as food and beverage manufacturing or construction, what was unexpected was the extent to which organizations are struggling to keep up with changing regulations.

Many organizations are finding that their current systems are not capable of maintaining compliance with evolving regulatory requirements. This challenge underscores the dynamic nature of the regulatory landscape. As regulations continue to change, organizations need systems that can adapt and ensure compliance without requiring constant manual updates.

This finding is a reminder that digital transformation is not just about improving operational efficiency or customer experiences; it's also about ensuring that the organization can meet its legal and regulatory obligations. Organizations need to consider regulatory compliance as a key factor when selecting new systems and planning their digital transformation strategies. Failing to do so can result in significant risks, including fines, legal challenges, and damage to the organization's reputation.

7. People and Human Challenges: The Human Side of Transformation

The importance of people and human challenges was another major theme identified by AI. This finding was refreshing because it validated something I've always believed: that the human side of digital transformation is often the most challenging and the most critical to success.

People-related challenges can take many forms. Employees may resist change, struggle to adapt to new systems and processes, or lack the skills needed to operate in a transformed environment. These challenges are often underestimated, leading to issues later in the transformation journey.

Addressing these challenges requires a strong focus on organizational change management. This includes training, communication, and engagement strategies that help employees understand the reasons for the change, what it means for them, and how they can contribute to the success of the transformation. By prioritizing the human side of transformation, organizations can significantly increase their chances of success.

8. Fiscal Realities and Financial Justifications: The Bottom Line

Finally, AI highlighted the importance of fiscal realities and financial justifications in digital transformation. While it's no surprise that organizations are concerned about costs, what was surprising was the extent to which they are now focusing on financial justification.

Organizations are not just looking at the cost side of the equation; they are also considering the potential return on investment (ROI) of their digital transformation initiatives. This focus on financial justification is a relatively recent development, driven in part by economic uncertainty and the need to ensure that every investment delivers tangible value.

This shift is a positive one, as it encourages organizations to think strategically about their digital transformations. Instead of viewing these projects as cost centers, they are beginning to see them as investments that can drive growth, improve efficiency, and enhance competitiveness. By focusing on the financial justification, organizations can ensure that their digital transformations deliver real value and support their long-term business objectives.

Lessons Learned and the Path Forward

The insights provided by AI analysis of my client notes offer valuable lessons for any organization embarking on a digital transformation journey. From the need to outgrow legacy systems and manage cultural shifts to the importance of data integration, regulatory compliance, and financial justification, these themes highlight the complex and multifaceted nature of digital transformation.

At Third Stage Consulting, we are committed to helping organizations navigate these challenges and achieve success in their digital transformations. By taking a holistic approach that considers both the technological and human aspects of transformation, we can help our clients realize their full potential and achieve their business goals.

As you reflect on these lessons, I encourage you to consider how they apply to your own digital transformation journey. What challenges are you facing, and how can you address them to ensure success? If you'd like to discuss your digital transformation journey further, please feel free to contact my team and I directly. I'm always happy to brainstorm ideas and provide guidance based on our experience working with organizations around the world.

Thank you for taking the time to read this blog. I hope you found these insights valuable and that they help you on your path to digital transformation success.