Before diving into best practices, it’s important to fully understand what a digital transformation is. At a high level, a digital transformation occurs when a business implements new software into their organization. Depending on the organization, however, what a digital transformation really is and looks like can change with context. Depending on the business’s characteristics, each digital transformation will likely require a full business analysis to understand just what it’s going to take to be successful, to navigate the pitfalls, and to avoid common failure points.
Although digital transformation can mean different things to different organizations, the same best practices always stand from transformation to transformation.
Each business is unique, and there is no ‘one size fits all’ software selection or implementation strategy when it comes to digital transformation. Rather, a software implementation should align with what the future state of a business will be in, say, 5 to 10 years. Think of the software your organization chooses as the bridge over the gap between your company’s current state and future state. For some, the right software is an extensive, full-service ERP system, and for others, it may be a best of breed, specific software such as a CRM or HCM.
To understand the extent of the software that would be the best fit for your company, it’s important to look under the hood. Are you looking for incremental or traditional improvement, or are you completely rethinking your business model? Define your path forward and then execute software implementation in a way that aligns with your business model.
Don’t cut corners
There are five common pitfalls to navigate when it comes to digital transformation.
- Overlooked change management
- Misalignment on strategic objectives
- Management of the system integrator
- Lack of clarity on business processes
- Difficulties with data migration
Of these five challenges of digital transformation, only one has to do with technology. Thousands of companies adopt the same technologies, and while some see success in the implementation, many fail dramatically. The success of an implementation will weigh heavily on processes and people. The ways to combat these challenges usually take time, energy, and money – three things project leadership most often cuts corners on, whether it’s intentional or not. When certain factors of digital transformation are under-budgeted, operational disruption will most likely occur at the time of go-live.
Businesses will too often try to minimize the cost without thinking of the long-term implications, such as how much more it will cost to fix an error that occurred during launch. In fact, 51%-54% of businesses experience material operational disruption at the time of go-live, and a majority of businesses are faced with an increase of the initial investment of their overall digital transformation. In short, a successful business will liberally budget their digital transformation early on in an effort to avoid a massive financial and technological headache down the line.
Pay attention to the people
It is all too common that businesses believe, in hindsight, that they spent too much money on technology and not enough on proper organizational change management. It is a proven concept that when leadership pours into the people on their team and aids their team in the adoption of the new processes and technologies, the success rate is higher.
Test, test, test
There are a few key variables within a business that has the strongest impact on operational disruption. More often than not, those variables have to do with processes and people rather than technology. These variables include:
- Clarity of defined business processes
- Investment in organizational change and training
- A level of executive alignment among key stakeholders and the digital transformation project team
- Time and effort spent during acceptance testing and conference room pilots
It’s imperative to make sure business processes are well defined. An organizational assessment of your business and what the resulting software implementation will do to each process it touches is just one piece of the puzzle. Every single scenario that your operations will experience on the new platform must go through end-to-end testing. By doing so, you ensure that you fill all the holes and address all the potential issues before it’s time to go live on the new software. Getting ahead of the game by testing real-time data and predicting curveballs can prevent an operational failure where it counts.
There is truly so much to discuss in what makes a full-scope digital transformation successful. In addition to what was stated above, make sure to keep these tips in your back pocket as well.
- A successful digital transformation is not about luck. Successes are similar and demonstrate common patterns, just as failures do. Take a look as some ERP failure case studies and familiarize yourself with what you should and should not to do.
- Start with a clear digital strategy. Don’t rush the transformation, and consider your long-term vision for the company and how technology can play into your organizations future state. Furthermore, only consider short-term strategy within the context of long-term implications.
- Let business drive technology. Improvements on business processes should be the driving force behind implementing new technologies and the software selection that will set your organization up in the years to come.
- Set realistic expectations on time, cost, and resources. Beware of industry hype or consultants pulling in multiple directions. Set a comfortable tempo for your digital transformation and take ownership of your digital transformation rather than relying on 3rd parties to guide you through the process.
- Always prioritize people and processes in any digital transformation, and know that there will never be a silver bullet. No one technology or strategy will fix your operational issues.
There is much more to the picture that illustrates a successful digital transformation, and it’s important to get the guidance you can trust on projects of this capacity if you’re unclear of what you should be doing. If you have further questions on best practices for software implementation and digital transformation, please don’t hesitate to reach out to me directly. I’m always happy to be an informal sounding board for you and your team.