How Do Organizations Get On Board with Digital Transformation? [Employee Buy-In and Alignment]

Written By: Eric Kimberling
Date: February 1, 2023

Getting internal buy-in is one of the most important success factors for a digital transformation but one of the common questions we get from clients is how do we get internal buy-in into our digital transformation? That's exactly what I want to talk about here today.

One of the most common or most important success factors for any successful digital transformation is ensuring that you have internal buy-in into the overall initiative. I think a lot of people understand that on the surface but it's frequently asked, what does that really mean? How do I get buy-in without forcing people to have to go through the change? 

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Clarifying Roles

Before we dive into the ways that we drive internal buy-in and alignment, it's important to understand and clarify what the internal rules are. Typically this is one of the first ways that you can get buy-in from the organization and this all starts with leadership. If we focus on the executive steering committee, the overall executives and managers and stakeholders within the organization that are really driving the organization, oftentimes that's where we need to start clarifying roles and responsibilities.

One of the first things we need to clarify with these internal leaders and other key stakeholders within the organization is that this is not an IT project. Too often, organizations don't fully buy in and commit to a project because the business leaders and business stakeholders focus on the IT angle of the transformation and assume that it's an IT project. Therefore, someone else presumably in the IT department, will drive this transformation for me and I'll just provide input along the way as needed and that's an expectation that needs to be said early on, that that's not true. In order for this project to be successful, we need the business to drive the technological changes, the organizational changes, the operational changes and some of the key decisions that need to be made.

Now building on that concept is the idea that there's also key business decisions that need to be made. It really doesn't have a lot to do with technology or the project itself, it has to do with the business and the overall transformation. If you're going through a digital transformation and one of your stated objectives is to create a common operating model role and consistent business processes and we're going to consolidate certain business functions, those are all major business decisions, that's not something that's just going to happen because you implement new technology.

Finally, it may seem like it goes without saying but it's really important to clarify here, is that they just need to provide overall leadership. What we mean by that is not just leadership in the business sense, the way they always do day to day but leadership and making some of the tough decisions and doing some of the hard work as it relates to a transformation.

There's a lot of hiccups, curveballs and pitfalls along the way through any digital transformation and a project team is going to struggle if they don't have clear leadership, clear direction and someone who's supporting them. So, leaders first and foremost need to understand that they have a significant role in this project, it's more than just signing the check and approving the product status reports every couple weeks, it's a lot more than that, there's a lot of rolling up the sleeves and doing some of the hard work that's important to make a digital transformation successful.

What I'm going to do next is, I'm going to share just three examples of decisions and buy-in decisions that need to be made as a digital transformation team and more specifically as a leadership team and I'm going to describe how those decisions get made and what some of the implications are to help you understand how you might use this same approach to help drive some of the decision making and buy-in that you need for your digital transformation.

There are key business decisions that need to be made by the leadership team as part of a digital transformation and what I want to do now is talk about three common decisions that leaders need to make as part of their digital Transformations.

One of the most important decisions that need to be made as part of a digital transformation is are we going to have standard processes across the entire company or are we going to have more flexible processes. This is a decision that a lot of organizations struggle with, they struggle with the idea of if they should go with standard, common business processes that will be used across the organization or are we going to have different functions or different locations have more flexible operations. This is especially important for multinational organizations, when you're operating in different markets, you have different cultures you're dealing with. You have to take into account different business processes and different organizational structures, this is where this becomes an even more important decision.

A lot of organizations grow organically and they also grow through merger and acquisition and when you grow through merger and acquisition, this becomes important as well and what often happens is they find themselves stuck on how to make this decision. Now, the key thing here is this, we've got to agree on are you going to lean towards standard processes, are we going to lean toward flexible business processes. What we do to get buy-in and to really get alignment with our clients is we'll work with them to define where on the spectrum do they think they're going to fall and you can almost imagine a rating of 1 through 10 of where they might fall on the spectrum. 

As you can imagine, if you were to do this with your project team, you might get different answers. Different people have different visions and diverse opinions on what direction they think the project should go but in order to get people aligned and ultimately bought into the project, we need to get on the same page here as it relates to standard processes versus flexible processes. Often what we'll do is we'll look at where are the individuals on the leadership team are on the spectrum and how clustered together or how disparate they are and if they're disparate or they're different in their opinions and we know we need to work through that to get them all aligned, we also look at where they are today versus how much of a jump they're making one direction or the other.

We know for example, if you're going to move from one extreme, where you've got a completely decentralized, flexible set of business processes and you're trying to move toward a common operating model with standard processes, that's a really big jump for a lot of organizations compared to an organization that might make more of an incremental change. So getting this alignment and clarity is really an important first step to ensure that you get buy-in into the overall project.

One other thing to note that's really important is that when you're making this decision or you're trying to figure out where on the spectrum you fall, a lot of times people are looking for that silver bullet, that easy answer that solves all the problems without creating new ones and that's just not realistic, no matter where you fall on the spectrum, no matter where you are today versus where you're going in the future, you're going to trade one set of risks for another. It's really important to have that conversation of understanding what those risks are so we can be deliberate and make the conscious decision of what risks we're willing to accept and which ones we aren't.

One of the risks of standard business processes is you lose flexibility and that might mean that customers might not be happy, it might mean that your employees are gonna have trouble adjusting to the process and it might mean that your transformation is going to take longer because you're moving over to a standard set of business processes. Those are all just examples of some of the downside risks, even though on the surface, it sounds like we're solving a lot of problems by just having one common set of business processes. 

Maybe that's the risk you're willing to take but the key here is we want to understand what those risks are, understand the trade on offs and ultimately align on that. Once we've done that and once we work through the messiness of getting that alignment, now we've got a leadership team and overall stakeholders that are going to be bought into the direction we're headed in our transformation.

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Vanilla Vs Customized Software

Another big decision that organizations need to make as part of their digital transformation, as part of getting buy-in into the process, is the idea of vanilla versus customized software. So on one hand, you have vanilla, sort of off-the-shelf software, you're using the software as it was configured. You're buying software that has pre-configured ways of doing things or you can use customized software and this is going to require going in and recoding things. It's usually not an either/or decision, usually you're somewhere in the middle but it's more a matter of where on the spectrum you fall.

An overwhelming majority of our clients realize that they're not likely to find commercial, off-shelf software that's going to do everything they need it to do and in order to address that they're probably going to have to do some level of customization. That doesn't mean they need to go the extreme and just build their own software or completely customize an off-the-shelf package but it does mean there might be selective times where they need to do that.

A key thing to note here with vanilla versus customized software is you might have different answers for different parts of your business. In other words, you might find that, for example, your accounting and finance function is something that's relatively standard across industries and there's consistent ways from a regulatory perspective that you have to do accounting. In those cases, you might be more inclined to stick to a vanilla type of solution but if you're a complex engineer to order manufacturer or you have some sort of customer facing technology that's unique to you, gives you a competitive advantage, you might be more inclined to lean a little bit more towards the customized angle. You might come up with different answers depending on different parts of your business, it's not just one answer and it's certainly not an either/or answer, it's a matter of figuring out where you fall on the spectrum.

A third example I'll share with you here today is the age-old debate of do we change our business to fit the software or do we change the software to fit our business? That's another decision that's required to get buy-in into the overall direction and strategy for the transformation.

We can change the business to conform to the way the software works or we can change the software to fit the way the business needs to work and this is somewhat related to the previous item we talked about here when we discusses whether to use vanilla software or customized software. We want to make sure that whatever decision we come to here is aligned with this but here we're not focused on software and technology, we're focused on the business, really the business strategy that we're going to go through. Again, here you look at where on the spectrum we fall, are we going to just change our business to fit the software?

The good news with this is, if we change the business to fit the software, we don't have to worry about customization and the risk that goes along with that. The bad news is if we change the business to fit the software, we're going to have more organizational change management issues. So again, we've addressed one risk but now we've created another one. Same with changing the software, if we change the software to fit the business, the good news is now we know we're not going to water down our competitive advantage or we're not going to be a commodity, vanilla sort of operational model but the bad news is now we've introduced risk of customizing software. Maybe we're adding third-party bolt-ons and it's creating additional technology risk and integration risk, so, we've solved one problem but introduced another.

So again, this conversation, this understanding of trade-offs and risks and prioritization of risks and trade-offs is something that's very important to align on make sure we understand where we are so that we can ultimately get the buy-in that we're looking for from the entire leadership team and ultimately the entire organization.

Once we've gone through these three things you can create a strategy and you can take ownership of the project in a way that's custom to what it is you're trying to accomplish in the ways you've aligned and bought in as an organization. Preparing by going through these steps up front is critical, you're going to be a lot more successful than if you wait or just ignore these decisions until later.

The last thing we will say about this as well is you want to make sure that you do this on your own and let your business drive these decisions. Your system integrator and software vendors are probably going to have really strong opinions here because it's self-serving. For example, they're going to want you to have standard processes because that fits the commercial, off-the-shelf software model. They're probably going to want you to follow vanilla processes or at least a software vendor is going to want you to have vanilla functionality because it plays with the strengths of their software. However, your system integrator might want you to do customized software because they'll make more money if you customize the software.

Those are just a couple examples of how you need to make sure you make these decisions and do what's right for you and recognize that outside parties might have some biases that may or may not be right 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. 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. https://www.thirdstage-consulting.com/reports/2023-digital-transformation-r

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.

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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