Many organizations are not ready to answer some basic, fundamental questions that they need to address before starting their transformation. What exactly are those questions? And, more importantly, what are the answers?
When starting a digital transformation, there's often a lot of momentum and excitement, but it's important to answer some basic, fundamental questions before jumping into the transformation to provide a strong foundation for success.
Today, we will cover the ten most important questions that organizations should ask themselves before embarking on a digital transformation. These questions need to be answered before beginning the project. If any of these questions don't have a clear answer, it is necessary to pause and find a solution before starting the transformation.
The first question on the list is "Why are we changing?" This is a fundamental question that needs a more comprehensive answer than just upgrading technology or being forced to move to a new system. Organizations need to have a clear and comprehensive reason for going through a digital transformation that encompasses their longer-term goals and vision. Answering this question will provide a strong foundation for the transformation and ensure that everyone is aligned with the goals of the project.
One of the best ways to unpack the "why" of doing this project is to define the business value that is expected from the transformation. These should be measurable metrics that affect the performance, metrics, and results of the organization. It is important to define the purpose of the project beyond something as simple as "we just have to do this project." It is important to define the business benefits, impact on the customer and employee experience, effect on inventory levels, and how it will improve the supply chain. These are just a few examples of the sorts of questions that can be asked to define the expected business value.
The next question to consider is "Who is leading the transformation?" This question refers to the leadership team responsible for leading the project, setting the vision, and guiding the organization through the change. It's crucial to have the right people in charge of the transformation, with the necessary skills, experience, and commitment to see the project through to completion. This includes identifying a project sponsor, a project manager, and a core team of stakeholders who will oversee and execute the transformation. These leaders should be empowered to make decisions and have the authority to allocate resources and manage the project's timeline and budget effectively. By having the right leadership in place, you can ensure that the project stays on track and delivers the expected business value.
The next important question to ask is about the future state target operating model, which defines the business processes, structure, and integration of data and workflows across the organization. Defining this model is crucial because it enables the organization to envision what it wants to become and how technology and process improvements will support that future state. It's a mistake to defer this question until technology deployment begins, as it can lead to aimless and misaligned efforts. The future state target operating model should drive the technology, not the other way around. Defining this blueprint is critical for success in the digital transformation process.
The next question to ask is about organizational design. It involves identifying how people's roles and responsibilities will change, how reporting relationships will be impacted, and whether or not there will be a restructuring of the organization. Defining the organizational design should be done in parallel with the future state target operating model as it is crucial to consider how the changes will impact the people within the organization. It is not enough to define the business processes without considering how it affects the people. It is important to identify what the future state organization will look like before deploying technologies.
The process of defining the future organizational state is iterative. It should start early in the transformation, and as you get into the details of the technologies, you'll understand the changes and impacts at a more granular level. However, it's important not to wait until that level of detail is reached; starting as early as possible in the transformation is ideal.
One of the crucial questions that need to be answered early in your digital strategy is selecting the right technology. You should not make the mistake of selecting technology first and then trying to fit the future state within that technology. Instead, you should define the future state operating model and then choose the technology that best helps you achieve that vision. Selecting the right technology is crucial and should not be overlooked, as it can determine the success or failure of your transformation.
To ensure the success of a transformation project, it's important to define the project roles early on, both internally and externally. This includes roles such as program manager, change management team, business process owners, and executive steering committee. Without clear answers to these questions, the project governance may not be in place to manage the project effectively, resulting in cost overruns and potentially derailing the project. It's crucial to involve the right people internally to ensure the success of the project.
The question at hand is about the importance of defining project roles and responsibilities early in the planning process. It is crucial to have a clear understanding of who will fill the project roles, both internally and externally. This includes the program manager, change management team, business process owners, and executive steering committee, among others. Without proper project governance and involvement of key stakeholders, the project is likely to face issues and may not achieve the desired outcomes. Therefore, it is essential to approach the internal team as a general contractor and ensure that all roles are adequately filled to support the project's success.
The next question to ask is, "What is our digital strategy, and what is our plan?" It's important to note that the software vendor, system integrator, or implementation partner isn't the one responsible for defining the strategy and plan. It's up to the organization to define them and then bring in the external resources to help execute the plan.
Yes, involving outside resources like software vendors and system integrators can be helpful, but it's important to remember that they have a limited perspective that focuses primarily on technology. Therefore, organizations must take ownership of their digital strategy and plan, considering all aspects of the business, including non-technological elements such as change management, process improvements, architecture, data migration, and more. This holistic approach ensures that the project is aligned with the organization's goals and values and not solely focused on technology.
The importance of having a clear project strategy and plan is highlighted, and it is recommended not to solely rely on a software vendor's plan as it may not fit your culture and goals. It is necessary to adjust and supplement that plan to suit your specific needs and requirements. It is emphasized that the overall program plan should be defined early in the project.
Additionally, you may also need to bring in external expertise in areas such as data governance, data architecture, cybersecurity, and other related fields. These experts can help ensure that your digital transformation is successful not just from a technology perspective, but also from a holistic business perspective that includes non-technological factors. It's important to remember that a successful digital transformation is not just about implementing new technology, but about transforming your entire organization to be able to leverage that technology to achieve your strategic goals.
One way to approach this is to have a dedicated integration architect or integration team that's responsible for making sure those systems are integrated properly. And then, in terms of data migration, oftentimes, the software vendor or system integrator is going to be providing some level of data migration. But ultimately, it's up to you to define what that data migration looks like and make sure that the data that's being migrated from your existing systems to your new systems is clean and accurate. And then, of course, there are other areas like testing, training, and ongoing support that you need to make sure you have resources dedicated to. So, the key takeaway here is that while your system integrator or software vendor is a critical part of the project team, you need to make sure you have other resources in place to support the areas that they don't cover or don't cover well.
To summarize, it's important to recognize that a system integrator is not the complete solution for a successful transformation. You need to bring in outside support to fill the gaps that your system integrator may not be equipped to handle, such as organizational change management, business process improvement, system architecture, and data migration. While the system integrator may provide the technology to enable process improvements, it's up to you to roll out those changes to the organization. Similarly, you are responsible for cleansing, mapping, and migrating data from legacy systems to the new systems, with the help of the toolset and framework provided by the software vendors and system integrators. You should define an overall plan and strategy that aligns with your organization's goals and objectives and augments the system integrator with all the necessary activities to support the overall transformation.
The importance of alignment in a transformation project cannot be overstated. Before starting the transformation, it is important to ask whether the team is aligned internally, around what they expect to get out of the project, the transformation plan and strategy, project governance and decision-making, and what they want to be when they grow up. If alignment is lacking, it's crucial to slow down and take a step back to answer those questions and try to get aligned before proceeding with the transformation.
To ensure successful transformation, it is essential to have internal alignment within the team and organization before starting the project. This alignment involves being clear on the project goals and strategy, project governance, decision-making processes, and desired outcomes. Misalignment can lead to significant delays and increased project costs. Organizations need to take the time to get aligned, articulate a clear vision, and ensure stakeholders are moving in the same direction. Overcoming misalignment is critical, and facilitators can help organizations achieve internal alignment. While it is possible to get off track during the transformation, starting with alignment is crucial to success.
Before starting a transformation project, it's important to ask the question: How will we hold ourselves accountable for the project's success? You need an executive sponsor who is the ultimate decision maker on the project, but no one person can be the single point of accountability. You need to define who will be responsible for certain business benefits, keeping the project on track and on budget, ensuring the right resources are allocated and prioritized, and post-transformation accountability for delivering expected business value and avoiding disruptions to business operations. It's crucial to ensure accountability throughout the transformation to achieve successful outcomes.
In conclusion, before embarking on a digital transformation journey, it's crucial to ask yourself a series of important questions. These questions revolve around the business strategy, the internal resources, the system integrator, the alignment, and accountability. By addressing these questions, you can better define the scope of your transformation, understand your internal capabilities, bring in outside support where needed, ensure alignment among stakeholders, and hold everyone accountable for delivering the expected business benefits. It's important to take the time to answer these questions thoroughly and accurately, and if necessary, pause the transformation until you have clear and satisfactory answers. Remember, the success of your digital transformation ultimately depends on your ability to make informed decisions and execute effectively.
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
