3 Stages of Business Transformation

Written By: Eric Kimberling
Date: May 7, 2021

No matter the type of digital transformation, there are always three stages to a successful business transformation, with the third stage being the most important. If a company does not reach the third stage of transformation, the project can be chalked up as an ERP failure. It happens more often than not, but there are specific strategies that you can implement to make sure you and your team make it to the finish line.

You have probably noticed by now that our company name is Third Stage Consulting Group, and we chose that name for a reason. If you think about it, digital transformations are somewhat of a rocket launch. Historically, there have always been three stages of a rocket launch. The first two boosters, or stages, if you will launch the rocket up into space. However, the third stage launch from those boosters gives the rocket the final push into space to reach its ultimate speed and fall into orbit.

Like a rocket launch, the third stage of a project is what allows organizations to realize their launch into the stratosphere. This analogy holds true whether you are implementing an extensive ERP system such as Microsoft Dynamic 365 or a flexible CRM such as Hubspot.

Unfortunately, many digital transformations fail to reach the third stage. They fail to get off the ground, they fail to fight gravity, and they find trouble in getting past the inertia that all digital transformations have to navigate.

What are the three stages?

First Stage

Roughly 10% of companies are unable to get past this stage.

  • The software and partners have been selected.
  • Implementation has begun but is not completed.
  • There is often a high degree of turmoil.

Second Stage

Roughly 80% of companies are unable to get past this stage.

  • The base implementation has been completed, but there is still room to go to reach the full scope of implementation.
  • This is often where companies experience budget and timeline overruns.
  • Operations can experience disruption is organizational change is not managed correctly.

Third Stage

Roughly 10% of companies make it to this stage.

  • Implementation is completed as expected.
  • There is self-sufficiency and continuous improvement.
  • The organization has adopted the technology into their day-to-day processes.

What are companies that find success in their transformation doing differently?

Process Alignment

Organizations that are reaching the third stage of their launch prioritize making sure their team is aligned, from top to bottom. They don’t simply defer to the technology and assume that the technology is going to solve their problems. Instead, they define how they want to solve the problems and what they want their operations to look like. Once they have that strategy and foundation to build on, they use the technology to automate that process.

To find success in your digital transformation, you need to have a clear vision of what you want your business processes to look like after the implementation. This includes doing an in-depth gap analysis of your current processes and making sure all stakeholders are aligned on which processes to keep, what processes to create, and what processes to automate via the new system.

The conversation of process alignment is two-pronged. First, it’s an upfront decision in determining business process alignment and making sure all parties are on the same page. Second, it’s making sure that the technology is going to be embedded with the processes you and your team have aligned on.

Software Selection

Be wary of how software vendors and system integrators position themselves. They will send a sales representative into the room to talk about the various ways your company’s procedural problems will disappear with the implementation of their software. They will discuss all the ways your data will work seamlessly in the new ERP software and will woo you with its intuitive functionality.

Now, that may be true at the granular level of how transactions work within a software system. However, it will rarely be true at a high level of how you want your business to function. It’s one thing to get the technology to do what you want it to do, but it's very different to figure out how to embed those functionalities within your day-to-day operations.

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Organizational Change Management

It’s mission-critical to keep organizational change management at the forefront of the project straight out the gate. Oftentimes, companies start thinking of OCM practices when they are getting close to go-live. However, it’s those companies that have kept their team and culture on their mind from the beginning that will be able to optimize their digital transformation initiatives.

The companies that are seeing success in their transformation projects define what people's roles and responsibilities will look like in the future. They take the time to determine the future state of the organization. Most importantly, they take the time to start rolling out changes to the organization before they get to go-live training.

Be forward-thinking in all aspects, but especially when it comes to how your organization will handle and adapt to the new changes coming down the pipeline.

What can you be doing differently to reach the third stage of success?

Ask the right questions.

To reach the third stage of a digital transformation, an organization must be future-focused and big picture-oriented to understand how new technology will mesh with business processes and organizational culture. How will our business processes flow? How will our existing technology interact with the new ERP system? How is data going to flow? Where's that data going to reside? How are we going to manage the master data longer term? These questions aren't necessarily critical to implementing technology per se, but they are essential to optimizing the full business value out of your digital transformation.

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Respect the data.

Another piece to a completed puzzle is the quality of your data. If you want to reach the third stage of your digital transformation, don’t let data be an afterthought. Take the time to scrub your data so that the data points migrating into your new system are accurate and clean. You will also need to ensure that you have a master data management process in place to avoid corrupting the data. You’d be surprised how often people aren't tracking or maintaining the data the way they should, and it results in the corruption of your data. A master data management process will enable data to remain clean, even after implementation.

Once you take care of the data, it’s also important to strategize on how you will manage data security. Cybersecurity is more important today than it has ever been before simply because technology is continuously evolving and advancing. The way you secure and store your data will play a pivotal role in how well your company will operate as time goes on, and how protected you will be with every advancement.

We pride ourselves on our ability to help organizations navigate to the third stage of their digital transformation, and we have only gotten to this point after years of experience. If you are in the midst of a digital transformation and would like feedback on how you can get your team to the finish line, feel free to contact me directly. Happy to be an informal sounding board for any of your transformation needs.

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Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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