Advice for Digital Transformation Executive Sponsors and Steering Committees

Written By: Eric Kimberling
Date: April 24, 2023

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Executive sponsorship and leadership are among the most critical roles in any digital transformation project. However, executives and their project teams often don't know what an executive should do to be effective in a digital transformation. In this article we will discuss how we would approach being an Executive Sponsor.

Vision for digital transformation

As an executive sponsor, the initial step would be to clearly define and articulate the vision for the digital transformation. This involves stating the purpose and outcomes of the digital transformation and how it aligns with the organization's business strategy. It's crucial to emphasize the necessity of the digital transformation and how it supports the overarching business strategy.

It's important to note that some organizations embark on digital transformations out of necessity. Their technologies are outdated, vendors have discontinued their legacy products, and their old systems can't support growth. While there are valid reasons for pursuing a digital transformation, it's essential to establish a clear vision and strategy to generate enthusiasm and support among the employees and the organization.

To define the vision for the digital transformation, it's important to articulate in detail the goals and objectives of the transformation. For instance, if the aim is to improve the customer experience or increase sales, this should be communicated clearly as a reason for the transformation, along with how the initiative will support this objective. The idea is to translate the broader strategic goals of the company into specific goals for the transformation to create a clear direction and understanding of what the digital transformation will achieve for the organization. As your executive sponsor, this would be my first step.

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Engage Business Stakeholders

The next step after defining a clear vision for the digital transformation is to engage business stakeholders. This involves involving key leadership throughout the business, such as the CFO and their direct reports if the digital transformation will impact the Finance organization, or the CEO and their direct reports if it will affect operations or manufacturing. While the CIO, IT director, and IT department will be involved from a technical perspective, engaging business stakeholders is even more crucial.

This is an important point because business involvement is essential for project success. As an executive sponsor, I cannot make the project successful alone. However, engaging the right people and obtaining their buy-in can contribute to its success. Furthermore, involving business people who are part of the global business operations, rather than just the project, is crucial. Therefore, the next step would be to ensure that I engage the right people, engaging key business stakeholders throughout the project.

Define the Future State Operating Model

As an executive leader, the next step is to define the future state organization, including the operating model. This involves answering high-level strategic questions to ensure that the digital transformation aligns with our objectives for the future state operating model.

This is where the organization defines the desired improvements that will result from the transformation. The focus is on defining major business process improvements and overall process redesign, rather than the specific details of transactional workflows and technology enablement. The objective is to define how the organization can better service customers, become more efficient, and achieve other strategic objectives.

The future state operating model translates the defined vision into an operating model of what the organization aims to become.

Emphasize the Human Components of Change

The next step for me as the executive sponsor is to focus on the human aspects of change. After defining the vision, engaging key stakeholders, and outlining the future state operating model, it is important to address how we will handle the impact of the transformation on people. This is a critical aspect that requires attention. It involves understanding the effects of the change on people, providing effective training to ensure adoption of new technology and processes, and determining how the future state organization will look in terms of roles and responsibilities. As an executive sponsor, it is imperative to prioritize the human component of change.

To achieve this, it's essential to define a clear change strategy and management plan. As an executive sponsor, I would emphasize investing considerable time in addressing the human components of change, more so than focusing on technology. Even though it is a digital transformation, it is primarily a human transformation, and we must emphasize that workstream within our digital transformation.

Establish Project Governance and Roles

As an executive sponsor of a digital transformation, the responsibility lies with me to ensure the project's success, timely completion within budget, minimize operational disruptions, and deliver business value. For these objectives, it is crucial to establish strong project governance to keep the project on track. This is a task that cannot be outsourced to system integrators or technology providers but needs my direct involvement. The organization needs to establish project parameters, management approach, and engagement strategy with system integrators, software, and technology providers.

This involves establishing an internal program management office or team to oversee the project and third-party vendors. Some executive sponsors may make the mistake of hiring the system integrator to provide program management and have their team report up to them. However, this approach puts the system integrator or technology vendor in charge of the transformation, which is not ideal. As the executive sponsor, it's important to be in charge of the transformation, with the technology provider providing their expertise within the context of our program management and project governance.

A video explaining the difference between program management and project management is available, with a link included here. Watching the video is encouraged as it provides more detailed information through a whiteboard session, discussing the distinctions between the two types of management and how effective program management can assist an executive sponsor in ensuring project success. 

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Establish Clear Metrics and Accountability

As an executive sponsor, it is important to establish clear metrics and accountability for a project. This includes defining the expected project duration and budget, determining who is responsible for the project, and ensuring that the project stays on schedule and within budget. Additionally, it is crucial to ensure that the project delivers the expected business value. Defining metrics upfront is the first step in this process, which can be accomplished through a business case and cost-benefit analysis. It is important to consider both the cost of the transformation and the expected benefits, with the latter being more significant in terms of optimizing business value. Organizations can lose value by focusing solely on minimizing costs upfront, which can ultimately lead to reduced business benefits in the long term. Using a cost-benefit analysis as a foundation, metrics can be established to hold individuals accountable for achieving the expected ROI in the initiative.

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Stay Involved

As an executive sponsor, it is important to remain involved throughout the entire transformation process. Simply setting the vision, approving the plan and budget, and delegating work to others is not enough. This approach can lead to problems and the project team may lose sight of the purpose of the digital transformation and the potential business value it can bring. It is crucial for the executive sponsor to sign off on and approve process and technology improvements resulting from the project. Setting high-level vision parameters does not guarantee that the project will be executed as envisioned. Staying involved allows the executive sponsor to help the team navigate the process, mitigate risks, identify resource needs, and make difficult decisions.

As an executive sponsor, it is important to remain engaged throughout the project, even more so than you may initially think. This level of engagement will benefit you in the long term. I hope this advice has provided guidance for those who are executive sponsors or part of an executive steering committee, as well as for project managers and teams who may be seeking direction on the role of their steering committee.

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.

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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.

Author:
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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