Most Important Digital Transformation Activities [Digital Strategy and Implementation Framework]

Written By: Eric Kimberling
Date: September 20, 2023

There are several crucial components essential for a successful digital transformation. However, many individuals are unaware of these distinct work streams. In this discussion, I aim to address these major work streams that are fundamental to a successful digital transformation.

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Many individuals are keen on digital transformation, with a significant number eager to expand their knowledge on the topic and manage a successful transformation. However, the major components of an effective transformation are often not well-understood. In this discussion, I aim to elucidate these critical work streams that are essential for a successful transformation.

Strategy and Alignment

The foremost essential aspect of any digital transformation is assessing the overall strategy and alignment. This involves two distinct dimensions of strategic alignment:

  1. Alignment with Organizational Goals: This dimension assesses how congruent the digital transformation framework, which includes its goals, objectives, parameters, and project governance, is with the broader organizational goals and objectives. It is imperative to ensure that these aspects are in harmony with the organization's overarching aims.
  2. Alignment Among Stakeholders: This dimension evaluates alignment among individuals, particularly key stakeholders within the organization. It's vital to ascertain whether these stakeholders are in agreement with the proposed direction. Even if a strategy is impeccable and ideal for an organization, it will falter if the team is not unified. A less-than-perfect strategy with strong alignment can often be more effective. Therefore, the emphasis should be on achieving synchronicity between the transformation strategy, the organization, and the key stakeholders and executives.

A pivotal initial step towards strategic alignment is the articulation of the strategy. The primary output from this step is typically a strategic articulation map. This map serves to distill the broader organizational goals and objectives into specific digital transformation goals and objectives. Such a translation often sets a vision and direction for the transformation. It also helps identify areas of alignment, potential misalignment, and the necessary adjustments to ensure congruence.

Business Process Management

The subsequent vital component of an effective digital transformation is business process management. Within the realm of business process management, there are numerous facets.

To encapsulate, it's essential to delineate our business processes. This is imperative to craft a business blueprint that outlines how technology might facilitate business process enhancements. To achieve this, it begins with an assessment of our present business processes and workflows. This evaluation aims to identify what's functioning optimally, discern pain points, and pinpoint opportunities for enhancement. The objective is to define an envisioned future state, detailing improved business processes and ascertaining how technology might aid in streamlining these processes.

It's noteworthy to mention that software vendors and system integrators occasionally advise organizations to bypass this crucial phase. They might suggest postponing business process management until the implementation phase. This is a detrimental oversight that many organizations succumb to. The rationale behind emphasizing this stage is that it acts as a visionary blueprint and provides direction on technological deployment. Without a clear understanding of the present and desired future state, organizations risk ineffective technology deployment and fail to extract optimal business value from their technology investments.

While it's not necessary to delve into intricate details early on, during the design and build phase, more granular, transactional workflow details will be essential. In the initial stages, when defining the digital strategy, evaluating potential software solutions, and prepping for the implementation, the focus should be on delineating macro end-to-end processes. These processes should provide sufficient detail without being tied to a specific technology, offering an unbiased view of the organization's prospective state. Hence, business process management should commence early in the digital strategy and software evaluation phase, continuing iteratively throughout the implementation.

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Organizational Change Management

The next work stream vital to digital transformation is organizational change management, which focuses on the human aspect of the transformation. Organizational change management encompasses various components that gain prominence at different stages of a project.

A primary output of organizational change management is assessing organizational readiness. This evaluation gauges the organization's preparedness for change and identifies areas of resistance. Resistance to change is inevitable in any organization, but the challenge lies in identifying its sources, including those deeply-rooted factors that might not be immediately evident. Organizational assessments are instrumental in pinpointing these areas of resistance. With this knowledge, it becomes possible to formulate a change strategy and plan that address these concerns.

Following the development of this strategy, attention shifts to numerous facets of organizational change. These include organizational design, pinpointing the impacts of change on the organization, crafting effective communication strategies, and devising training modules. Numerous elements of change management must seamlessly integrate for a successful outcome. Despite its pivotal role in digital transformation, organizational change management is often undervalued. It is imperative to prioritize this aspect, potentially allocating more resources than initially anticipated to ensure its efficacy and, by extension, the success of the digital transformation.

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Architecture, Data, and Integration

The following work stream, distinct from the previously discussed technological aspect, revolves around architecture, data, and integration. Rather than focusing on specific software solutions or applications, this stream concentrates on the cohesion of multiple technologies. Given that most digital transformations involve various technologies and technical touch points throughout an organization, it's imperative to delineate an overarching solution architecture. This involves understanding how to cohesively integrate multiple systems, determining data storage locations, managing master data, migrating data to new systems, and maintaining a consistent source of truth.

Even when implementing a single, enterprise-wide system or an ERP system, these considerations remain relevant. ERP systems comprise different modules and workflows that necessitate integration, underscoring the significance of architecture, integration, and data management.

A common pitfall for project teams and broader transformations is relegating this work stream to the project's latter stages, leading to overwhelming workloads that delay the project. Initiating this work stream early is essential, as decisions made in the architecture, integration, and data strategies can influence the overall implementation timeline. This stream is often a critical component in ensuring timely project completion. Addressing both the software and non-software aspects of the technology work streams is crucial for a successful transformation.

Program Management and Quality Assurance

The final work stream under discussion is program management and quality assurance. This process commences in the digital strategy phase and extends through to post-implementation. It's crucial to differentiate between project management and program management. The latter integrates all the work streams discussed previously and manages resources from various origins. This includes internal project participants, system integrators, change management teams, architects, data specialists, and more. Given the multitude of tasks and resources, program management provides a cohesive plan for efficient execution.

Beyond simply adhering to a plan, program management emphasizes the identification and anticipation of potential risks, a facet where quality assurance becomes paramount. The goal is to proactively recognize risks and formulate strategies to mitigate them throughout the implementation. Effective risk mitigation and quality assurance are integral to program management. It's worth noting that many system integrators, software vendors, and even internal project teams may not excel in these areas. Therefore, it's advantageous to engage external expertise for assistance.

In summary, understanding these critical work streams can significantly enhance the success of a digital transformation.

I would enjoy brainstorming ideas with you if you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, so please feel free to contact me at eric.kimberling@thirdstage-consulting.com. I am happy to be a sounding board as you continue your digital transformation journey.

Be sure to download the newly released 2024 Digital Transformation Report to garner additional industry insight and project best practices.

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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