Organizational Requirements for Digital Transformation Success

Written By: Eric Kimberling
Date: December 17, 2021

Whether you succeed or fail in your digital transformation, is entirely up to you. Success does not depend on independent consultants, system integrators, or software vendors. Get your act together and ensure that you are prepared for a digital transformation.

One thing we've observed in the digital transformation space is, many organizations feel as though success or failure in their transformation is dependent on other parties. The reality is that success vs. failure has more to do with the organization and overall strategic goals than any third party.

So… how can you create this internal accountability?

Define an Aligned Strategy

The first key to success is on the business to define and align the digital strategy. Now, chances there is probably a clearly defined overall business strategy, but the fundamental difference is to translate that business or corporate strategy into goals and objectives and specific tactics for the digital transformation.

A lot of times organizations define their digital strategy, however without necessarily doing it in the context of the overall business strategy. Think about it, that's a recipe for failure right there because there is a disconnect before the start of the project. There is a digital transformation strategy in place that may not be aligned with where the company is headed in the future.

It's so important to have a very clear vision for what this project means and how it will enable a broader business strategy. These details are going to give a lot of guidance and clear direction on the project, and it's also going to make decisions much easier and faster when you align the strategy.

Alignment is always the main key to digital transformation success.

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Assess Current Operations

Much of the feedback we receive from our client community is current operations do not matter as new technology is in the pipeline. The current technology is old and businesses want to fix it, and that's why there is a need for a new digital transformation. However, it’s important to understand the current state in order to strategize how we will move forward.

Not only from an operational understanding but also from an organizational perspective so that the people can communicate how they operate today. This will help determine future state operations.

Defining how things operate today and strengths and weaknesses, helps analyze and pinpoint where a digital strategy can help via improvements to the current operational model. This exercise helps to identify what you may want to preserve, as well as the things to improve as part of your digital strategy.

Clearly Define your Future State

Once the current operations are defined, assessed, and you understand where the strengths and weaknesses are, now is the time to start to define what the future state is.

You can begin by asking these key questions:

  • What are we going to look like?
  • What do we want to be when we grow up?
  • What's our common operating model going to be?
  • How much are we going to standardize?
  • How are people's job roles going to change?
  • How are we going to be organized?
  • How can we use technology to automate and improve our operations?

All of those are questions can be answered as part of this future state definition and assessment. There needs to be a clear definition of project objectives from an operational and organizational perspective to evaluate system software vendors.

Reflecting on these strategic questions guides the organization on the types of software vendors to consider and what technology might be the best fit for the organization.

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Select Tech Based on Your Needs

There is a ton of enterprise technology available in the marketplace. Examples like a ERP systems, HCM, CRM, supply chain management, robotics, artificial intelligence, and the internet of things, are all excellent choices for your organization.

For now, none of that stuff matters.. What really matters is identifying the technology that will best enable that future state and digital strategy. Once this is complete, it’s time to focus on a clear framework and stay focused on the solutions that are going to best enable your strategic goals.

It's important to not only evaluate potential systems but also identify unnecessary mindshare.. A lot of times, vendors will try to sell you on cool bells and whistles that your organization may simply not be ready for yet, and it may be overkill relative to what your needs are.

Assessing the right solutions and focusing efforts on the right solutions is extremely important, but you should focus on those technologies that are going to help enable future state strategies and ignore tools that aren't going to further enable business strategies.

Augmenting Vendor Methodologies

If you're not an expert in digital transformation and most organizations aren't, it can be easy to think that the software vendor and system integrator are going to give you the methodology to help deploy technology the way you need to.

Software vendors and system integrators might give a methodology that you can use as a starting point, but it's something that needs to be molded to specific situations.

It's important to be able to challenge those methodologies, poke holes in them and find ways to modify them to fit your needs. In addition to adapting methodologies, you also want to look at ways to augment the methodologies.

For example, technology vendors and system integrators typically have methodologies for deploying technology, but they don't have methodologies for process improvement, organizational change, redesigning an organization, or architecture and integration.

It's very important to expand methodologies in the overall proposed project plans to integrate specific business needs.

At the end of the day, the methodology needs to encompass everything, and the overall plan needs to incorporate all the different workstreams as well. This is something that only businesses can provide, software vendors or system integrators are not going to be able to provide this internal insight.

Define a Change & Strategy Plan

One of the biggest keys to success for any digital transformation is change management strategies. Most organizations overlook this effort, or they think that training and communications is going to be all they need to do. There needs to be a very comprehensive change strategy and plan that includes not just training and communications, but also organizational design, organizational readiness, organizational assessment, roles and responsibilities, and change impact.

Most software vendors and system integrators don't do change management well, and some just simply don't do it at all. It's important to really enhance capabilities and provide the resources, whether or internal-external or both, that specialize in change management.

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Define Architecture & Integration

Architecture and integration plans are often overlooked but will be critical to success. Chances are organizations are not going to have just one system or technology that is going to be deploying. At the very least, core systems will need to integrate with technologies that already exist. Regardless, you want to make sure that you have a solid plan to tie this all together.

It is important to look at it from a technology perspective because the integration and the internal IT skills that you need to develop is to ensure success long term. Again, this is something that your software vendor and system integrator will not be able to provide.

Build Internal Competencies

One of the biggest problems with digital transformations is that organizations become so dependent on third parties to be successful. They depend too much on their software vendors and system integrators to make their projects successful. The problem is when those third parties go away, they're left in a bind. The key here is to understand how to build the internal competencies to become self-sufficient.

Now, there are two benefits to this. First, the implementation is going to be faster and cheaper if those internal competencies are in place. Second, being able to get rid of the consultants faster is key to being able to manage this on your own sooner. It's not going to happen overnight so make sure that as part of your overall digital transformation, you get your act together by having a clear plan for how to build those internal competencies internally.

Resources

For more best practices on how to make your transformation successful, I encourage you to download some of our 2021 Digital Transformation Report which includes best practices on how to be successful in your transformation, as well as independent rankings and ratings of different software technologies in the marketplace.

I hope you found this information useful, if you have any questions regarding more organizational requirements for a digital transformation, 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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