How to Fix Digital Transformations Stuck in The Past

Written By: Eric Kimberling
Date: January 13, 2022

Though digital transformation has evolved over the years, but there's also a lot that hasn't changed, which in my opinion, should. I've been in the digital transformation space now for about 25 years.

It's impressive how much has changed in the space since the 90’s. Emerging technologies are on the rise, artificial intelligence, internet of things, Factory 4.0. A lot of cool stuff is happening in the tech world.

With that said, there are also aspects that have largely stayed the same. If I were to rewind and look at how things were back in the late 90’s when I began my career, it's amazing how many similarities and patterns there are to the way things still are today. That's a huge problem, because a lot of the same mistakes that were made 25 years ago are still being made today.

Focus on Technology

One thing that has not changed much at all, if at all over the last 25 years, is the fact that digital transformations are largely focused on technology. It's about what the product can and can't do. It's about building stuff and deploying technology for people to use, and too little focus on the other, less tangailbe details that are very important.

One of the first key lessons here is that we need to stop focusing so much on technology and consider the other components of successful digital transformations. Things like organizational change management, business process improvement, project management, risk mitigation, and executive sponsorship.

Ultimately these are the intiatives that will cause the project to succeed.

Technology Changing Faster Than Organizations

I have covered how things have not changed over the years in ways that they should. Now, I want to talk about one thing that has changed, and that is a good reminder of how transformations should be managed.

Technology is still shifting at a faster rate than organizations. Back in the 90’s, they changed fast, but not as fast as they do in the 2020’s.

Now there is more effecient technology, data, integration points, and more ways to leverage technology in ways that we never could have imagined 25 years ago. That chasm that divides the way technology is changing and the way organizations are changing has just grown. We must look inward at our own organization, and our own people to figure out how much can we realistically expect to change.

One of the most important things to remember, especially in these changing times, is that being aligned on the technology front, the people front, and the process front brings more success than failure.

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Misunderstanding of Change Management

Back in the late nineties when I started my career, there was a misunderstanding of change management. The people side of change, the human adoption side of change, that's still true today. In fact, I don't see much difference at all in the understanding of change management, in the ability to execute change management effectively.

Now, you certainly have things today that you didn't have before. You have Prosci Certification, so you can get formally certified in change management. This is a big improvement in the industry. There are employee adoption tools that allow you to learn better and teach technology better. That's been an improvement as well. Those are just two small components of what it takes to be effective in strategic organizational change management.

Today, most executives and project team members still don't understand change management to the degree that they need to execute effectively on the change management front. If we're ever going to change for the better and make digital transformation successful as an industry, we're going to have to figure out this change management thing, because that's what's holding back the industry probably more than anything at this point.

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Poor Project Management

I'd say the project management discipline is mature. There's a lot of good training tools and methodologies to manage projects effectively. Even with that, today and even 25 years ago when some of those same frameworks were still in place, people haven't really been effective at project management in general when it comes to digital transformation.

Keep in mind, it’s not because they're bad project managers, or it's not because the tools and the methodologies aren't out there, It's because there's a fundamental lack of understanding of how to project manage a digital transformation, which is much different than project managing other types of projects. For example, oftentimes project managers will focus on building technology and capabilities, but not organizational change components.

The key here is to figure out, how can we be better project managers by focusing on the right things within the projects. Focus less on the things that are either not going to make your project successful and-or are going to be money pits and distractions from what really matters.

Poor Executive Sponsorship

Just as there has been a fundamental misunderstanding of what change management is, and what it takes to make change management successful for a digital transformation, executive sponsorship is something that hasn't changed much at all, or the lack thereof. Organizations 25 years ago struggled with the fact that executives weren't on board and weren't supporting the projects of the way they should.

The clear direction of the project was off, and they weren't making key and tough decisions in many cases that needed to be made as part of their digital transformations. Therefore, those digital transformations tended to flounder.

To be honest, I haven't seen that dynamic change much at all over the years. This is an area where I think the needle needs to be moved more. There needs to be a way to make sure that executives understand what it takes to make their project successful, what the things are that they need to do, and what their expectations are as executive sponsors and leaders within organizations as part of their transformation journeys.

Lack of Focus on Business Process

Now lack of focus on business process is something that has changed, but it's changed for the worse. Business process was sort of focused on, but it still was more focused on technology within these digital transformations. Over the years we've found that organizations have tended to focus even less on business process management, and business process improvement, than they have in years past.

To get real business process improvements and business value enhancements to the organizations, define what that business process operating model is going forward. Rather than deferring to software vendors to rely on their alleged best practices that are off the shelf, define what it is the technology is offering, and make sure to find and implement technology in a way that's going to enable those business process improvements.

Poor Risk Management

Another thing that has not changed much over the years is risk management and mitigation. Organizations still have not figured out how to mitigate risk, how to identify the risks, and just how to have an overall risk management framework that works well. The good news is I think I understand why this is.

I think it's because, not so much that organizations don't care about risk or they don't want to identify the risk, but it's because they're relying on their software vendors, who are the experts in the technological field or the technology that they're deploying. They're relying on those parties to identify the risks and those vendors don't have an incentive to adequately identify what all the risks are.

To identify and mitigate risks, we need to have a good, holistic, complete understanding of where all the risks are adequately and effectively. There also needs to be an anticipation of the risks before they become apparent, and before they become so painful that we can't fix them. That requires independent third parties outside of your software vendor and outside of your system integrator, who has a lot to lose by you feeling or recognizing too much of the risk.

You need independent third parties that will help you identify those risks so that you can fix them. Otherwise, they're going to surprise you, and they're not going to be something you can repair later. Risk mitigation is something that we need to get a better handle on and improve for digital transformations to have a much better track record than they have over the last 25 years.

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Lack of Benefits Realization

Another thing on our list here today that has changed, but it's changed for the worse is a lack of focus on benefits realization. A question you can think on is what is that measurable business value that is needed out of the digital transformation? Even if we back up and just look at go-live, how can the disrupt of operations do not happen where that materially affects your ability to service customers, or to collect money from your customers.

Even more fundamental than that is just making sure the go-live does not get screwed up. That's where a lot of organizations fail and have disruptive or disastrous in some cases go-lives that mean they can't ship product, can't close the books, can't invoice, and can't run payroll. All those things are big problems for organizations, and so many of them run into those problems when they shouldn't have to.

There's no reason for organizations to run into those sorts of problems. But here we are, 25 years later in my career, and most organizations tend to gravitate toward these models that lead them to unsuccessful digital transformations. These are just a few things to think about as we look back over the last 25 years. What are the things that haven't changed, and what should we be changing for the better.

Resources

For more information on this topic, and this whole thought around what are the best practices within digital transformation, I encourage you download our annual 2021 Digital Transformation Report. This covers everything you need to know about digital transformation best practices, software rankings, independent software reviews, and other things that are going to make your project more successful.

I hope you found this information useful. If you have any questions regarding more about how to fix digital transformations stuck in the past, please don’t hesitate to reach out to me directly. I am happy to be an informal sounding board as you move through your digital transformation journey.

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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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