What Is the Role of Digital Transformation Leaders and Executive Sponsors?

Executive leadership and sponsorship are among the most critical success factors in digital transformation. However, many executives do not fully understand the depth of their involvement and the responsibilities required to drive such projects toward success.

A digital transformation initiative isn’t just a simple project to hand off to the IT department or lower-level management. It’s an organizational shift that demands a high level of engagement from leadership to align the company’s goals, culture, and overall strategy.

Digital transformation isn’t merely about technology upgrades or implementing the latest systems. It encompasses the adoption of new business models, reimagined processes, a shift in organizational culture, and redefining how customers are served. As a result, leadership involvement is crucial in setting the tone, ensuring proper alignment, and guiding the organization through inevitable challenges. Without strong leadership, digital transformation projects often struggle, leading to cost overruns, missed deadlines, and even complete failure.

At Third Stage Consulting Group , our team and I have seen firsthand the difference between projects where executives are deeply involved and those where leadership remains distant. Projects that succeed are those where leadership drives the process, provides clarity, and maintains a clear focus on the broader business objectives.

This article will explore the critical roles executives must play to ensure the success of their digital transformation initiatives. You can also learn more by watching my video on the topic below:

The Role of the Executive Steering Committee

One of the most common ways executives participate in digital transformations is by serving on the Executive Steering Committee. This committee’s role starts with one of the most fundamental aspects of any project: justifying and approving the project itself. The steering committee evaluates the necessity of the transformation, aligns it with corporate strategy, and ensures that the project provides sufficient return on investment (ROI). Many executives believe their responsibility begins and ends with signing off on budgets and giving the green light to project plans, but their involvement should extend much further.

The Executive Steering Committee must function as a governing body, overseeing the project throughout its lifecycle. This includes maintaining a strategic view of the project and ensuring alignment with broader business goals. Without this ongoing oversight, projects can veer off course, often becoming more focused on technical details and less aligned with the business's strategic objectives.

The steering committee’s responsibilities extend beyond the initial approval to the continuous oversight of the project’s progress. Committee members should regularly receive updates on the project's status, including potential risks, issues, budget tracking, and timelines. These updates help ensure the project remains on track and can be adjusted quickly if things go awry. Additionally, steering committee members should act as a critical decision-making body when changes in scope, strategy, or implementation are necessary.

Digital transformation projects often face unexpected challenges. Whether it’s resistance to change, unforeseen technical issues, or challenges related to employee adoption of new systems, the Executive Steering Committee plays a pivotal role in navigating these obstacles. For example, many digital transformations require changes in business processes, which can be met with resistance from middle managers or employees who are accustomed to existing workflows. In such situations, the committee can provide the authority and influence needed to enforce changes and keep the project moving forward.

The Executive Steering Committee should include representatives from across the organization, including departments such as finance, operations, IT, and supply chain. Cross-functional representation ensures that the project benefits the entire organization rather than one particular department. For instance, IT might be focused on system uptime and security, while finance is more concerned with cost-effectiveness, and operations may prioritize process improvements. A well-balanced steering committee ensures these diverse perspectives are considered.

The steering committee's importance cannot be overstated, as it serves as the project's guiding force. While many executives intuitively understand the need for high-level oversight, they often fail to recognize the other critical aspects of their role, which leads us to the next important element: the executive sponsor.

The Importance of the Executive Sponsor

In addition to serving on the steering committee, appointing an executive sponsor is critical for every digital transformation project. The executive sponsor acts as the internal champion of the project and is responsible for ensuring it stays on track. Surprisingly, many organizations either fail to appoint a specific sponsor or rely solely on the steering committee for this role. Without a dedicated sponsor, projects can lose momentum, suffer from poor decision-making, or fail to get the necessary buy-in from key stakeholders.

Ideally, organizations should appoint a single executive sponsor who takes full ownership of the project. Having multiple sponsors can dilute accountability and lead to confusion when it comes to decision-making. Some organizations lean toward appointing the CIO as the executive sponsor since digital transformations typically involve new technology. While this might seem like a logical choice, I often advise against it, unless the project is purely technological.

Instead, the executive sponsor should come from the business side of the organization rather than the IT department. For cross-functional transformations, the COO or head of operations is often the best choice for the role. This is because operations executives have a broader understanding of the organization’s end-to-end processes and how the different departments work together.

A CIO, while critical in managing the technology aspects of the transformation, may be too focused on the technical details. This can lead to a project that is overly tech-driven without proper consideration of the business impact. Similarly, a CFO might be overly focused on financial aspects, such as controlling costs, which could lead to underinvestment in critical areas of the project. By appointing someone who understands the business holistically, the organization ensures the project aligns with operational goals, customer needs, and long-term business objectives.

For example, in projects that involve HR or finance technology, it might be appropriate to appoint the Chief HR Officer or CFO as the sponsor. However, for broader digital transformations that impact multiple functions, operational leaders typically yield better results. They are better positioned to see the big picture, make strategic decisions, and navigate the project’s complexities.

The executive sponsor should be more than a figurehead; they must be actively involved in the project, making decisions, resolving conflicts, and removing obstacles that could delay progress. When challenges arise, such as resistance to change or budgetary constraints, the executive sponsor must step in to ensure that the project stays aligned with the organization's strategic vision.

Providing Project Oversight

The executive team's role in providing project oversight is crucial to the success of any digital transformation. This role goes beyond merely checking on timelines and budgets. It involves actively ensuring the project remains aligned with the company’s broader strategic goals and objectives. Digital transformations bring significant changes to an organization’s processes, people, and culture, and these changes must be carefully managed to avoid risks that could derail the project.

Project oversight means that executives should not be passive observers. They should ensure that the project team identifies, assesses, and mitigates risks throughout the project lifecycle. This can involve anything from keeping an eye on escalating costs to identifying potential bottlenecks in the implementation timeline. Furthermore, executives must be prepared to make tough decisions when necessary, whether it's reallocating resources or adjusting the project’s scope.

While providing oversight, it’s essential that executives strike a balance between being hands-on and avoiding micromanagement. The project team needs the autonomy to execute the day-to-day work, but they also need guidance and direction from the executive team to stay on track. Regular oversight meetings, in which the project team reports on progress, risks, and upcoming milestones, are an effective way for executives to stay involved without micromanaging.

Executives should also be wary of over-reliance on third-party consultants and system integrators. These external teams can provide valuable expertise, but they can also present an overly optimistic view of the project’s progress. It’s critical for executives to trust but verify the information they receive from consultants and dig deeper when necessary to ensure the project remains aligned with the organization’s goals.

For example, many system integrators are financially incentivized to prolong projects or add complexity to justify their fees. Without proper oversight from the executive team, the organization may find itself at the mercy of external consultants, leading to cost overruns and project delays. Executives must maintain control over the project, ensuring that decisions are made in the organization's best interest.

Additionally, executives should recognize that digital transformation is not just about implementing new technology. Significant business decisions must be made throughout the process, and these decisions will likely affect the organization for years to come. For instance, decisions around process redesign, workforce restructuring, and changes to business models should be guided by the company’s long-term strategic goals.

Decision-Making and Alignment

Major decisions during a digital transformation should never be made in isolation by the project team or the technology vendor. Instead, these decisions need to be guided by the overall strategic direction of the company. Executives play a crucial role in ensuring that the project aligns with the organization’s long-term goals.

The project team may focus on the operational details of the transformation, but executives need to provide the high-level strategic vision. This includes making critical decisions about how the organization will operate in the future, which processes will change, and how different teams will need to adapt. These decisions are pivotal to the transformation's success, as they directly impact the organization's ability to achieve the expected ROI from the technology investment.

For example, if a digital transformation involves implementing a new ERP system, the project team will focus on configuring the system and migrating data. However, executives need to think beyond the technology and consider how the ERP system will enable the organization to achieve its broader business goals, such as improving customer service, reducing costs, or expanding into new markets.

Moreover, executives must ensure that all levels of the organization are aligned with the transformation’s goals. Alignment is not just about the project team or other leaders; it extends to the entire organization, including frontline workers. Leaders must communicate the vision and the reasons for the transformation clearly to all employees, ensuring that everyone understands the changes and their role in the new business landscape.

A lack of alignment can lead to resistance from employees, which can ultimately derail the project. Executives must proactively address concerns and ensure that employees feel involved and supported throughout the transformation. This might involve additional training, resources, or ongoing communication to ensure everyone is on board.

Internal Ownership Over External Dependence

One of the most critical challenges executives face is balancing reliance on external consultants and system integrators with developing internal capabilities. While external experts bring valuable knowledge, executives need to ensure that the organization builds its competencies to sustain the transformation long after the consultants leave.

Executives should foster an environment where internal teams are empowered to take ownership of the project. This means reducing the dependence on external vendors and ensuring that the project knowledge and decision-making authority reside within the organization. Not only does this provide greater control over the transformation, but it also ensures that the organization has the internal resources to maintain and evolve the system in the future.

Many organizations fall into the trap of letting third parties dictate the direction of the transformation, which can result in misalignment with the organization’s broader goals. By maintaining internal ownership of the project, executives can ensure that the transformation supports long-term business objectives and enables the company to continue innovating and evolving.

Building internal capabilities also ensures that the organization can adapt to future changes. Digital transformation is not a one-time event; it’s an ongoing journey that requires continuous improvement and innovation. By developing internal expertise, the organization will be better positioned to evolve with changing market conditions and emerging technologies.

Conclusion

Digital transformation is a complex journey that requires active and engaged executive leadership. The role of executives in these initiatives goes far beyond simply approving budgets and receiving status updates. From leading the Executive Steering Committee to appointing a dedicated executive sponsor, overseeing project progress, making strategic decisions, and ensuring organizational alignment, executive leaders are at the core of a successful transformation.

At Third Stage Consulting Group , we have guided many organizations through the highs and lows of digital transformation, and one of the key takeaways is that executive involvement is critical at every stage. By taking ownership of the transformation, providing oversight, and aligning the project with strategic business goals, executives can lead their organizations to successful, long-term outcomes.

If you’re embarking on a digital transformation journey, I encourage you to evaluate how engaged your executive team is in the process. Remember, successful transformations start with effective leadership.

For further insights into digital transformation best practices, I invite you to explore our Digital Transformation Report, which offers a wealth of knowledge from our years of experience guiding organizations through these complex projects.