Do We Need to Change Right Now? Here Is a Case for Digital Transformation.

Written By: Eric Kimberling
Date: December 16, 2022

There are a number of external pressures that are causing organizations to rush into digital transformations but NOW is not always the right time to go through a digital transformation. What we want to do today is talk about whether or not you really need to go through a transformation right now.

We find that many companies are facing a great amount of pressure to go through a digital transformation and to go through a digital transformation now! Software vendors and sales reps are pressuring you to buy new technologies, you have industry analysts that are telling you that if you don't go through a digital transformation now, you're going to die as an organization. At the same time, technology is changing at a very rapid pace, so all these external pressures are putting great amounts of stress on organizations to go through digital transformations immediately. That being said, it's not always the right time to go through a transformation now or at the very least it's not always the right time to go through a comprehensive digital transformation now. What we want to discuss today are the things to think about as you define the digital strategy that makes the most sense for you in determining whether or not a digital transformation is right for you right now.

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Technology Changes

The first thing that you have to think about as an organization is the pace of change within the technology space. Technology is advancing at a very rapid pace, there's constantly new capabilities and workflows being developed within tech, there's completely new emerging technologies like artificial intelligence and robotic process automation, just to name a few. 

There's an assortment of technologies that are evolving and providing new capabilities and opportunities for you to improve your business. That's one thing you have to look at, where are you today with your technological landscape and your internal capabilities and where could you be if you had more modern technology implemented in your business. At some point, most organizations find that that gap becomes so large, that they need to make the change or they at least feel like there's a strategic reason to do so.

The other thing that organizations are facing in terms of technological change is the fact that so many enterprise technology providers are sun setting and decommissioning their legacy systems. You have systems like SAP R/3 and ECC or PeopleSoft, J.D. Edwards and Microsoft Great Plains. Those are just a few examples of some of the software products that are being sunset and decommissioned in the coming years. It's not just that software vendors are officially stating that their products are being decommissioned, it's also that even if they're supporting their products longer term, they have newer products that they're putting more R&D dollars into. Those technologies are emerging and developing at a faster pace than the older legacy systems so regardless of the cause, you have these technological landscape shifts that are creating the need or the opportunity to change and go through a digital transformation. The question then becomes, is that enough of a reason for us to go through a digital transformation.

Digital Strategy & Alignment

In addition to the technological landscape changing, it's also important to look at your digital strategy and the alignment of your digital strategy with your overall corporate strategy as well as your organizational goals and objectives. If you find that your current enterprise technologies support your corporate goals and objectives, then now may not be the ideal time to go through a digital transformation but if you find that there's a lot of gaps in your digital strategy, your overall organizational strategy and the actual technologies you have today, then now may be a good time to start your digital transformation.

The important thing here is to assess and determine your interest and tolerance for a digital transformation now, through the lens of your overall organizational strategy goals and objectives and ensuring that whatever it is you do, whether you do or don't move forward with the digital transformation, you want to make sure that it's supporting those longer term goals and objectives rather than just investing in new technology for investing in new technology's sake.

Risks and Kind of Change

Any digital transformation comes with a significant amount of risk and change to an organization. You're going to have operational changes, you're going to have impacts to people's jobs, you're going to have new job skills and requirements, you're certainly going to have technological and integration challenge  you've got to deal with, so there's a lot of internal impact that a digital transformation is going to have on your organization.

There's a variety of changes that will impact your organization, so it's important to recognize that there is a risk that comes along with your decision and it's important to assess the risk in terms of how big the changes are and how hard it is going to be for your organization to adapt to these new technologies. 

You may find that your finance team is chomping at the bit, very excited about new technologies because they have such dated technologies at the moment but you might find that your sales organization has a world-class CRM system in place already and they might resist the change. You might have manufacturing or warehouse types of people that are operating manually so any sort of digital technologies implemented in their jobs is going to entail a pretty massive change for them, for example. You need to understand the magnitude of the change and then assess the risk of that change and determine ultimately, is it worth the risk, and if the answer is yes, it is worth the risk, then we've got to figure out how we're going to manage that change and mitigate those risks along the way.

Unless you have gone through those steps, it's hard for us to answer the question of whether or not you should go through a digital transformation now. What we would say is, if you're not ready to address these risks and mitigate these risks, then now is probably not the right time to go through a digital transformation.

Change Management is Critical

It's important to recognize that change management will be absolutely critical to your success, even if you're going through a relatively incremental sort of transformation and certainly if you're going through a massive quantum leap of a change within your transformation. Change management is going to be the key to whether or not you succeed. Whichever decision you do make, make sure you adequately and completely address organizational change management. Make sure you have the right change strategies in place that make the most sense for your organization and make sure that you invest heavily in this space to augment the investments you might make in new technologies.

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Change and transformation is not an all or nothing proposition. It's not necessarily that you need to either do nothing or go through a massive digital transformation, it might be that you land somewhere in between, you take more of an incremental lower risk approach. 

Software vendors will certainly tell you and they would love if you went through a massive transformation and just bought tons of software. You have to recognize their bias for what it is and set that aside and do what's best for you as an organization and once you understand the magnitude of change, the risk of change, the level of alignment with your overall organizational goals and objectives.

Once you've done all necessary steps you need to define the timeline that makes the most sense for you as an organization, even if you've committed to a say an incremental transformation and you're gonna have a fairly narrow scope of new technologies and process improvements you're rolling out, chances are there's going to be pressure for you to go through that implementation very quickly, because the faster you can go through that implementation, the sooner the software vendors and consultants are going to make money. You have to resist the temptation and determine what the right pace is for your organization.

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. Feel free to reach out to me here with any questions you may have 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. https://www.thirdstage-consulting.com/reports/2023-digital-transformation-r

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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