Digital transformation is essential for companies to remain competitive. Many companies invest in technology to modernize their operations. They want to eliminate onerous manual tasks, improve speed of service delivery, accelerate procurement cycle time and enhance employee productivity. Unfortunately, delivering measurable value is not always straightforward.
There are three impediments that affect a company’s ability to deliver measurable value. They are the lack of strategic alignment, operations alignment and results tracking.
Strategic Alignment
To deliver real value from digital transformation, companies need to develop a holistic and well defined strategy. It encompasses a review of business goals and identification of problems where technology would bring meaningful impact.
Business value comes first, not technology. When the sequence is reversed, time and capital would be spent on implementing technology that tackles insignificant issues. Subsequently, the company receives little value because of the misalignment with business objectives.
For instance, a construction company has a goal to have better project cost control. It realizes that the disparate applications and heavy reliance on Excel create duplication. Time is wasted on locating information.
To manage projects in an effective manner, the company determines that an integrated construction management software would replace the adhoc project management, resource management and Excel-based cost estimate tools. Project teams would have timely access to information they need to manage their projects proactively.
The alignment of the digital transformation initiative with the company’s strategic goal makes it clear why the initiative is important and the value it delivers.
On the contrary, when a company chooses to adopt AI (artificial intelligence) because of the fear of missing out, it would end up usurping time and money from important projects that deliver meaningful value to the business.
Operations Alignment
Every transformation impacts operations. Therefore, companies need to look at what is needed at the operations level for a successful transformation.
This involves identifying the new skills and expertise needed, functional capabilities related to process and business rule changes, as well as peripheral technology that might be required.
Following the construction company example above, the replacement of non-integrated applications with a comprehensive software suite is excellent from the technology and project manager’s perspectives. However, the company also needs to consider effects on the contractors, site supervisors, engineers, and others that work on the project.
To support adoption, investment in handheld devices might be necessary. Contractors, who are not employees of the company, would need to evaluate potential changes to how they work.
For the construction company, additional information captured in the new software suite might provide intelligence to modify its billing practice, improving project margin.
This is why operations alignment is crucial to developing a holistic transformation strategy. Without it, companies would not be able to fully support the transformation and realize the intended value.
Results tracking
When the business case for the transformation initiative is submitted for funding, return on investment is a key consideration. As a result, there is a need to track improvements and report on them.
For many companies, results tracking conversations often take place late in the project life cycle.
Over-reliance on out-of-the-box metrics and dashboards usually is the culprit. These features might be adequate for reporting for a snapshot in time. In most cases, these metrics do not reflect anticipated value included in the business case.
This is why results tracking capability needs to be incorporated as part of the project plan. Proper results tracking requires defining the results that validate the values articulated in the business case, the performance indicators to reflect success, and the data to be captured. These needs translate into data elements and computation requirements.
They should be captured upfront and not at the end when defining solution requirements.
A financial service company spent millions on its operations modernization initiative. When questions came up about improvements, it could offer anecdotal information only as it did not build any tracking capability.
Indeed, an analyst on the project team did raise the need to look at results tracking. However, the project manager felt that reporting was not a priority.
Without incorporate tracking needs as part of the project scope, it is difficult to steer away from the unwelcoming practice of exporting data to Excel for reporting purpose. This is viable for cases when data is available. The company would be hard-pressed to quantify results when there is no data.
Digital transformation is not about implementing a state-of-the-art technology or catching up with what competition chooses to invest in. It is about understanding the critical business value the company aims to achieve and assessing whether it can leverage technology. Strategy alignment, operations alignment and results tracking are three areas that need to be addressed in a coherent fashion.
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