In today’s tech-driven world, there is no business if there is no digital strategy. With 95% of processes dependent on technology, it’s more important now than ever before to make sure your digital architecture is being optimized. It could just be the factor that sets you apart in your industry and drives your competitive edge.
Many business leaders realize the importance of having a strong digital strategy, but how can you truly optimize it? At a high level, it comes down to clearly painting the picture of where your business wants to be in about 10 to 11 years, and what types of technologies you can incorporate in order to help you get there. But let’s dive into the seven elements that will really help catapult your digital strategy and ultimately optimize your operations.
Above all else, it’s imperative for the visionaries of your company to pick up the paintbrush and clearly illustrate where the company is going. Define your big-picture goals, and figure out how those goals translate into digital goals and objectives.
At the end of the day, unless you know what your business will become down the line, all you’ll be doing is replacing your obsolete technology with another technology. You’ll remain stagnant with a newer and prettier user interface for your employees rather than utilizing technology as a tool to drive your business forward. Without the vision of a business’s future state, you’re not necessarily undergoing a full digital transformation and your ROI and benefits realization will never be as strong as it could be.
The most important element here is that there is alignment not only with those running the company but alignment across your business objectives and the digital initiatives you outline in your 10-year plan. One way to do this is by outlining a clear target operating model and use that to determine how technology will fit in. Dial-in on your operations by figuring out what your first-level processes entail. From there, you figure out the process taxonomy to identify pain points, areas of high costs, processes that have a high customer or high colleague volume, etc.
Once you have a good grip on the ins and outs of your processes and where there is room for growth, take a look at your business goals by process and ask yourself these questions -
One thing to note - when evaluating where in business you want to grow, veer away from ‘I want to be better at social media’ or ‘we want our eCommerce to grow.’ These are elements that could work, but oftentimes lead to a crumbled strategy. When building a strategy, focus on the core drivers that hold your business up, not the fluff.
It’s important to understand how your data is working and how it is being entered. If someone in the company is entering bad data, that data will trickle down into the business decision-making process in more ways than one might anticipate. No ERP system will fix that, it will just put the bad data on a prettier screen.
Take the time to cleanse your data periodically and make sure all your data is accurate. While you do this, you should also consider your data and security efforts. Classify your data as you scrub it to help you with your future cybersecurity efforts. After all, a digital strategy in today’s world is not strong unless it also has a protective element associated with it as well.
Define, very clearly, the key aspects of your organization. Focus on the unique skills within your organization, your organizational design, your roles and responsibilities, and the potential change impacts that your company and team will experience if you go through a digital transformation. Understand where you are today and the gap that exists between your current state of business and your desired future state of business.
All companies are currently utilizing technology, just in various capacities. The current architecture and systems you are utilizing will place you at a different starting point than others. With that said, analyze your current systems and business architecture to understand where the points of change will be.
Assess the current applications your business is using. Are you on the cloud? Where is all your data stored? What does your physical infrastructure look like? You could even go as far as analyzing the skills of your current employees both in general business and in IT. Would they be able to handle managing a given ERP system like SAP, or would they need something that’s somewhat more hands-off?
I also bring back the point of understanding your data, because it is vital to your digital strategy. Unless you know where your data starts, where it flows, and where it ends, you will not be able to fully define your processes. If you don’t understand where, how, and why your data flow where it does, you won’t be able to successfully implement a new software and will set yourself up for inevitable ERP failure.
Identify the most important metrics that keep your business performing at the rate you need. Assess your current results as benchmarks, and use your processes to base your benchmarks on.
A key tactic that many companies are beginning to implement as both a means of budgeting and metrics is Driver Based Rolling Forecasting, also known as beyond budgeting. Rather than basing this year’s budget on last year’s budget, beyond budgeting says that you have one budget to run your operations and one budget to help with transformation and change. Rather, you get a cash allocation out of a capital pool for any projects your team undertakes. The key is that the budget is tied to performance. Each element of the business has a specific target, and that cost will roll up into the greater key metric.
Whether you implement beyond budgeting or not, make sure your KPIs and employee objectives are tied to the overarching key business goals. All KPIs should support the progression of your company towards your future state, including the metrics used to evaluate, implement, and manage new software and technology.
You can take your digital strategy in various directions. You could take on a full-on ERP system, you could take a best-of-breed approach and dial in on specific solutions for specific departments of your business. You could also choose to move everything to the cloud, which is becoming more and more popular as time goes on.
Understand your company culture and what will work for you. For example, if you want to promote flexibility and host a company that enables remote work, the cloud might be a good route to pursue. If you are dealing with classified or sensitive data on a daily basis, keeping an on-premise solution may be a good route. Each business is unique and will have differing needs depending on its industry, size, goals, and objectives.
If you would like to bounce ideas around regarding your company’s digital strategy, please don’t hesitate to reach out to me directly. I am always happy to be an informal sounding board for your digital transformation.