A Step by Step Guide To Digital Transformation

Written By: Eric Kimberling
Date: December 5, 2022

There are a number of key steps and sequences of activities that need to happen in a successful Digital Transformation but what exactly are those steps that you should take? That's what we want to talk about in this article.

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There's a number of key work streams and activities that need to happen in a digital transformation and they need to happen in a certain sequence throughout a transformation. I'm going to talk about these different steps today in sequential order but there's also a shift in the digital transformation space that's moving more towards an agile project-based approach. Agile is essentially removing the sequential nature of some of these activities and putting them more in parallel so you're able to deploy technology and get value faster out of the technology. Some organizations however will still go through more of a sequential, step-by-step process, while others will do more the parallel agile approach. Whatever approach you're taking, even if it's agile, these are the major steps and sequences that need to happen in any sort of digital transformation.

Technology Evaluation

The first step in any successful digital transformation is the technology evaluation process and even though it's a first step, it's actually a pretty robust and complex first step. The reason for that is because there's a lot of different technologies available in the marketplace. There are ERP systems which are Enterprise Resource Planning systems, there's CRM or sales automation technologies, there's HCM or HR types of technologies, Supply Chain Management technologies, best of breed business intelligence and many more. All of these systems are different solutions that organizations might be leveraging. 

The technology evaluation step in the process is really important. One of the key foundational aspects of technology evaluation is defining what your business requirements are. What is it that you want to be able to do as a business in this future state and not only are you identifying what those business requirements are but you're also prioritizing those business requirements.

The next important step in the tech evaluation phase of the project is to identify what potential systems you should be evaluating. With dozens, if not hundreds of different enterprise technologies available in the marketplace, it's not feasible that you're going to get a full evaluation of all those different technologies, nor should you. Many of those systems just aren't going to be a good fit for your organization, so, the key here is to identify a short list of technologies and do a deep dive into that short list. For more tips on how to get to that short list and how to streamline your tech evaluation process, I've included this YouTube video.

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Software Design

The next step is to start designing the software. We take our business requirements that we defined during the evaluation phase and we build on those requirements to define further what our business processes will look like. This step, we're really bridging the gap between business needs and technology needs. In the design phase, the technologists or the technical implementers will take those business requirements and translate them into technology requirements and into meaningful technical specifications that they can then use to configure and maybe even customize or develop the software in a way that's going to best support the business.

Typically, at the end of the design phase, you're going to have a milestone or a sign off point where the technical implementer or the technologist will ask the business to sign off on the requirements and the technical specifications that have been defined. That's an important milestone, make sure that you get that sign off and that you're all on the same page and have approval before you move into the build phase.

Once there is alignment on the design of the technology, its now time for the build phase. This is where the technical implementer will do the wrench turning, they'll do the configuration, the customization, anything they need to do to actually build that software and that meets the business and technical requirements that have already been defined.

This is actually a fairly complex process, especially if you're evaluating enterprise-wide technologies or technology that impacts multiple functions and diverse parts of the business. Next, we need to configure the system and make sure we understand not only how the steps work within the system but how each of those steps affect and impact other parts of the system. We're not just building individual building blocks, we've got to put all the pieces together into a workable solution, from end-to-end business processes, so this build phase is very important and this is where the technical competencies become most important and this is arguably the most technical part of the entire implementation.

Software Testing

Once we've built the software, we then need to test it. There's actually multiple iterations of testing. The first two iterations are more technically focused and the third one that I'll mention is more business focused. The two technically focused iterations of testing are first the unit testing as it's commonly called. Unit or software testing is basically just confirming that the way the software was built or meant to be built actually works the way that it was intended. So we're looking at a specific transactional workflow and one tiny segment of an end-to-end business process and making sure that that workflow works the way it needs to from a technical perspective. 

Once we've tested and validated that each of these individual building blocks of the processes are working appropriately, then we have to look at integration testing. This is where we look more to the end-to-end business processes to make sure that all these different pieces tie together and integrate properly throughout the process. This is also where we test the integration points to other systems. If we have multiple systems we're deploying, the integration test phase is where we'll make sure that data is flowing properly between different systems or maybe even just different modules within the same system. The end result is that we're making sure that we're testing the entire end-to-end cycle.

The third iteration actually has multiple iterations on its own and that iteration is called user acceptance testing or sometimes it's referred to as conference room pilots. This is where the business gets involved in the testing process. The business is not just testing to make sure the technology works, presumably that step is already completed by the technologists in the first two testing phases, instead they're analyzing if this works for the business. In other words we know that the software works technically but does it work in line with what the business needs are. This is a great opportunity to validate that the business requirements are being met, to identify exceptions or workarounds or things that might break the process with its current design. Additionally, it is a way to also gain ownership and buy-in into the process and get the business involved. This isn't just an I.T project, we have the business involved throughout all three phases of testing. 

One thing that's really important to have in terms of deliverables is our test scripts, these are scenarios that are laid out in common business scenarios, end-to-end business processes and workflows that people can follow during the testing process and document what's actually happening. We're going step by step, much like a training manual and we're identifying and documenting how the process works, what the inputs are, what the outputs were, what the end result was, where any issues or deficiencies are in the process and that's a way to capture issues and potential problems in the testing cycle so that the developers make corrections. 

Then you go through the testing cycle again to confirm that all pieces work seamlessly. That's why you have multiple iterations of testing, not just on the technical side but perhaps more importantly on the business user acceptance testing side. It is vital to have multiple iterations so you have plenty of time to capture and address some of those issues that are inevitably identified in most, if not all user acceptance testing.


The next step in the process is go-live. This is the step where we officially launch the new system and this is really important for a number of reasons. One is because this is the culmination of all the work that's been done throughout the entire digital transformation but secondly this is where we learn whether or not our efforts have been successful.

If we're successful, then great, we can carry on but if things aren't successful, that creates a multitude of problems, which is what a lot of organizations struggle with. This is the stage where so many organizations fail in their digital transformation efforts. They fail because they didn't do one of the earlier steps properly or they didn't do it thoroughly enough to where when they go live, they run into material operational disruptions. This is why it's crucially important that as part of our go-live or leading into our go-live process, that we have a clear and definitive go/no-go decision.

This is where you look at everything that's been completed in the project, everything that's incomplete, as well as all the risks in the project. You have to make a qualitative decision based on qualitative information to understand what the risk profile is to go-live at this moment vs a later date. The go/no-go decision is really important and you want to make sure you get that right and understand what the risks are of going live. 

Every go-live has risks, once we go-live, either across the entire company or just for certain processes or different locations within the organization, our job now is to provide go-live support. This is where typically you will ramp up support to make sure that there's people involved in the digital transformation project that are out on the shop floor, they're out in the field supporting people that use the system day to day. 

Keep in mind that at this point, this is where the rubber meets the road. Until now, the project itself has been isolated to a relatively small group of people within the organization, the project core team, the subject matter experts, the change management team, people that were involved in deploying the technology etc. When you go live, you're cascading that technology throughout the entire organization, which is why there's so much risk. 


This is where the team typically shifts its focus from designing and building to now supporting the actual operations going forward. The last major sequential activity within a digital transformation is post go-live support. This is where we provide ongoing support to the operations, to the employees and to the front line users of the technology to ensure that we're not only solving problems and helping them through the inevitable hiccups that happen during a transformation but that we are also remediating problems, providing ongoing training support, helping the team get used to and comfortable with the new processes and the new technology.

Oftentimes, software vendors and system integrators will refer to this phase as hyper-care. This phase is meant to provide go-live support and ensure that we stabilize operations. More importantly, we need to provide enough life support that we actually maximize the ROI and the results from the technology so that we're actually performing better than we were before the go-live. This is why so many organizations are underwhelmed by their digital transformation projects, they don't spend enough time after go-live to optimize and make sure they're getting the full business value out of what they just spent all this time and money deploying.

We have talked about some sequential activities that happen throughout a project, unless you're in an agile environment of course, you might blend or blur together some of these sequential activities or consolidate them into smaller phases but in general it's been a sequential series of activities. In addition to these steps, there's also some parallel work streams that are arguably even more important than anything I've talked about so far and these are activities that span across the multiple steps and sequences in the process and provide value throughout the project.

The first is organizational change management. We need to be working on organizational change management throughout the entire project, that includes everything from defining what the organization is going to look like, assessing organizational readiness, identifying what the change impacts are to the organization, training communications and any additional tasks that are wrapped into the organizational change management bucket. 

Many people think that just by deploying technology you've improved your process but really all you've done is provided a tool to potentially improve your process. It's necessary to roll out that process and change our process to fit the technology so that we're aligned and we actually get the value we expect to get. Then there's architecture and data so anything to do with architecture which essentially relates to multiple systems and how they integrate, how they tie together and how data flows throughout the systems is a really important work stream. If you think about it, one of the biggest assets in a digital transformation is the data and the results and the outputs you get from the technology and if you don't have good data, you don't have good architecture and integration you're not going to be able to achieve that goal.

Finally, you have quality assurance. Quality assurance is really a program management sort of a risk mitigation tool that's meant to ensure that the project is not only completing the steps in the process but you're completing the steps in the process in a way that meets quality standards and Industry standards for digital transformations. More importantly, you're making sure that the steps and the sequences that I've talked about result in an output that aligns with what it is you expected to get out of the technology. 

If you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, we would love to give you some insights. Please contact me for more information eric.kimberling@thirdstage-consulting.com

Be sure to download the newly released 2023 Digital Transformation Report to garner additional industry insight and project best practices.

Kimberling Eric Blue Backgroundv2
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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