What I Learned About Digital Transformation in 2021

Written By: Eric Kimberling
Date: January 1, 2022

Just when I think that maybe I've learned everything there is to know about digital transformation, the New Year comes upon us and I realize that I have not, in fact, still have key learnings to harvest.

What are those things that I learned in 2021?

Let’s take a deep dive into my 2021 business transformations…

In the last year, I've had the good fortune of interacting with hundreds of different organizations that are going through digital transformations. In that time, dealing with all these diverse companies who experience massive amounts of change, I found that I still have not figured out everything there is to know about digital transformation.

I don't know that I ever will, which is what makes consulting challenging but very fun.

Forced Digital Transformations

One of the things that became crystal clear to me in 2021, even more so than in 2020, is just how much digital transformation is being forced on organizations throughout the world. I'd say most organizations are being forced, either because the economy in the world is changing, new government regulations, or maybe even consumer behavior is evolving.

Probably most importantly, software vendors are shifting. In many cases, software vendors are forcing a sunset of their legacy products, which is driving a lot of organizations into their transformations.

When adding up all those different things that could cause an organization to be forced into a transformation, it is easy for the majority to be in that situation. That's one of the biggest takeaways that I have from this year. For the time being, however, digital transformation is a necessity for a lot of organizations.

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Lack of Changes

While I just got done saying that a lot of organizations are being forced into change, there's a subset of businesses that have not changed. For example, organizational change management or lack thereof has caused organizations to not push forward in their digital transformation. This will hinder any progress and potential growth. It will take a whole team on the same page to achieve any technology transformation.

Project management and business process improvement are also examples of operational areas that are slow to progress. Without key operational optimization, businesses have been stressed in our current climate. Without the ability to understand these areas of opportunity, there will be little to no growth or adaptation.

In short, the reasons that digital transformations fail largely have changed, not just in 2021, but into the years and decades leading up to 2021. I do not see much of that changing leading into 2022 either. At some point, you figure that must change, but it still hasn't.

I'm still surprised each year that goes by that we as an industry haven't yet figured out how to make digital transformations more successful. I think until we figure that out, that's going to be a drag on the digital transformation space.

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The Importance of Flexibility

With the amount of change happening in society, the economy, consumers, with suppliers, supply chains, and with government regulations, flexibility is more important than ever. Working with so many organizations globally that are struggling to adapt to changing demands, it's fascinating to me how quickly organizations are changing and how flexibility and agility is so important.

Now, I hear industry analysts and software vendors talking about agility all the time. I think most reading this may have heard that term commonly used as well. In truth, understanding the magnitude of what's driving that need for agility is one of the biggest lessons I have today.

It really helps me empathize with our clients and digital transformation teams because they're trying to juggle and balance the evolving business landscape while attempting to implement a new technology, which can be very difficult.

Supply Chain is Still Critical

One of my predictions for 2021 was that supply chain management would be a very important factor and key driver for change. Turns out that was true. We're feeling the impacts of supply chain issues throughout the world as we speak. After the “Great Toilet Paper Shortage of 2020”, this isn't exactly a surprise. I guess what's a revelation to me the magnitude in is how correct that prediction was.

It's honestly even more extreme than I would've thought it would ever be as far as how difficult supply chain management is and how challenging it is for organizations to manage and optimize their supply chains, or even just keep their supply chains functioning.

These barriers speak to how interconnected supply chains are and how much it takes to make an effective supply chain. Just as importantly, how difficult it can be to transform supply chains to adapt to 2022.

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HR is More Important than Predicted

Another prediction I had for 2021, which was sort of true, but not completely true, is that I assumed that human capital management would become a very important consideration for organizations going through change and transformation in 2021.

I didn’t realize the impact labor shortages would have on the global economy, and how difficult it would be for organizations to retain employees. I honestly was approaching it more from the perspective of how you help people ensure they feel safe at work within the global health pandemic. I think that's still top of mind for a lot of organizations and employees, but what's even more important is providing an environment that people want to work and grow at.

Effective retention strategies have always been a concern for organizations, but it's especially relevant now with the labor shortages that many industries and geographies are facing. It's something that I can think will continue into 2022. That's one of the biggest lessons I have from 2021 is just how important HR, human capital management, and employee experience is for the present and the future.

Tech Change Will Always Accelerate

With each year that goes by I always think that technology is changing as fast as it could possibly change. With the advances in machine learning, industry 4.0s, smart factories, and the internet of things, business technology is rapidly evolving. There's an explosion of amazing technology out there that everyone wants to get their hands on.

Though new tools are very exciting, it's also a stark reminder that technology is always going to be accelerating faster than organizations and people can. At what point does that divide become too big? I don't know the answer to that, but what it does also showcase is that it’s not necessary to implement all emerging technologies within business strategies immediately.

Vendors may suggest shiny, new features, but it's important to stay grounded and really identify the technology that can best support your business in the 2020s and beyond.

Regional Differences in Tech Competencies

One of the biggest lessons from 2021 was when I took a trip to Germany to speak at a conference late in the year. At the ERP Congress, I learned a lot about different software vendors that were specializing in the German market.

At Third Stage, we have international locations at our offices in London that services our European market, and we have an office in Brisbane that services our Asia Pacific office. In fact, we're in the process of opening an office in Africa as well.

We're very familiar with the global landscape, but even looking within Europe, it was fascinating to see how different the German ERP market is relative to the rest of Europe and the rest of the world. It was a good reminder, not just for people in Germany or Europe, but just wherever you are in the world.

It's important to recognize that a leading global solution may or may not be a good fit for your geography, not just in terms of the presence that that software vendor has, but also in terms of the technical and functional competencies within your market.

Even if the software vendor has a footprint or an office in your country or location, you also want to be sure you have an ecosystem that can support that technology. That was one of the biggest lessons I had as well, is that there's a lot of unevenness and a lot of disparity throughout the world on the levels of technical competencies.

How Much I Don’t Know

To close, a takeaway and lesson for me in 2021 is just how much I don't know, and how I'm nowhere near knowing everything there is to know about digital transformation.

That's, again, what makes this job so interesting, but it also makes it very difficult for those of us in the digital transformation space. With all that said, it’s that much more important for us to stay on top of current trends, to always look outside our own knowledge base.

The most significant takeaway is to source external resources and information to figure out the best ways to make the digital transformation successful.

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Resources

Speaking of external resources, I want to invite you to download our 2021 Digital Transformation Report which covers top 10 rankings of different types of technologies, as well as general best practices for how to make digital transformations successful. As part of your digital strategy and planning, it’s a must-read.

I also want to direct you to our social media channels as well. You can check out my YouTube page here and also the Third Stage YouTube here. We'll be happy to share with you what we're learning in 2022.

I hope you found this information useful and If you have any questions or may even want to talk about what you learned about digital transformations in 2021, 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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