The Definitive Digital Transformation Guide
What Is Digital Transformation?
Digital transformation is the process of modernizing internal systems, processes, operations, interfaces, products, or services to empower the entire enterprise to become more responsive to customer wants, needs, and desires. A digital transformation is the pursuit of connected work across portfolios, programs, and teams for on-strategy delivery at speed.
By advancing digitization, modernizing technology and processes, and supporting the ability to adapt, companies can thrive while providing a better customer experience.
Gartner defines digital transformation as “modest initiatives such as putting services online or legacy modernization…anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.”
The modernization movement has been gaining steam for years, as market pressures, growth opportunities, increased competition, and evolving regulatory standards have forced companies to adopt new capabilities. COVID-19 has only added fuel to the fire.
Before COVID-19, IDG found that as much as 40 percent of all technology spending was earmarked for digital transformation initiatives; however, PwC reported that while 52 percent of companies plan to cut or defer investments because of COVID-19, only nine percent will make those cuts in digital transformation.
Companies can’t afford to defer digital transformation, because transformation is how companies survive change.
With new drivers continually emerging, the push towards transformation is undeniable and, some would argue, unavoidable. But, as many discover, digital transformation is not an isolated effort; it’s ongoing, continually optimizing based on customer and market direction. It involves the following sub-pursuits:
Adapting to the changing world of work
Organizations need greater agility to compete and innovate in a constantly changing world. While the external world is evolving, the internal workplace is too. Teams need the autonomy to work using their preferred methods, whether it be hybrid work methods, waterfall, iterative work management, collaborative work, or Lean-Agile delivery. But many enterprises are still rigid in their expectations.
By adopting more agile and adaptive portfolio and work management solutions, businesses can support the various work methodologies teams utilize to deliver on strategy while centralizing efforts and unifying teams around shared goals.
It’s not only how teams work, but where, and with how much governance.
Work is now multidimensional. Teams are globally distributed. Since COVID-19, the workplace has evolved to include a blend of remote and onsite employees. Leaders need to establish guardrails but give teams a choice in how they work and the autonomy to execute it the way they feel is best.
Realizing Agile at scale
At its simplest terms, Agile is about how smaller, multidisciplinary, self-governing teams solve complex issues by breaking them into bite-sized chunks, getting continual feedback, and focusing on incremental improvement. The goal isn’t to check a box but to be responsive to changing priorities and improve outcomes, whether customer satisfaction, revenue growth, market share, or some other corporate objective.
Leadership sets the tone, communicating corporate initiatives, OKRs and funding, but there must be agility in business processes as much as work agility. Operating models and mindsets must change for real transformation to occur.
The key to realizing Agile at scale is to make business processes more resilient and remove layers of bureaucracy so teams can work more efficiently, with the long-term corporate vision and strategic priorities as a guidepost.
When it comes to digital transformation, an Agile approach is ideal for organizations modernizing how they manage work.
Harvard Business Review says, “Many executives have trouble imagining that small Agile teams can attack large-scale, long-term projects. But in principle there is no limit to the number of Agile teams you can create or how large the initiative can be.”
In any organization – but especially those with an Agile structure – connecting the work to corporate strategy is critical to ensuring value delivery. When priorities shift, as they often do, teams are ready to pivot. Software can help align teams around strategic objectives and enable them to transform at their own pace, while delivering the right work.
Creating a culture of innovation
Part of digital transformation requires changing your culture to build a more innovative, diverse, and inclusive organization. Great ideas can come from anywhere, and employees at every level and position should have equal opportunity to contribute to the ongoing effort.
In a McKinsey survey on how COVID-19 has accelerated digital transformation, the author says of the adoption of technology capabilities as key factors of success during a crisis, “A related imperative for success is having a culture that encourages experimentation and acting early.”
A digital transformation strategy is incomplete without inviting employees to innovate on opportunities to digitize and ways to solve digital transformation challenges. Internal champions from across the business, those who are closest to the work, can share their expertise to identify problems that could be barriers to change.
Customer-facing employees, for instance, are likely more aware than an executive of a digital capability that would bring real value to the customer and could give the business a competitive advantage. Someone in IT may see a technological roadblock that could be avoided by migrating a legacy application to the cloud.
Ideas need a place to land, or they just remain breakroom banter.
Innovation software with an engaging crowdsourcing capability enables a dispersed workforce to share and collaborate on ideas. With a centralized place to contribute, view, comment, vote on, and track ideas, you establish a level playing field that encourages and celebrates participation, driving a culture of continuous innovation.
Then, companies can evaluate those ideas with portfolio management software, vet the ones that offer the most value to the business, and prioritize them against other work and initiatives – covering the journey from idea to impact.
Making the product shift
All the processes and tools in the world are meaningless if they aren’t accompanied by a shift in thinking and business operations. Performance is not a true measure of success. Instead, from top to bottom, the enterprise must rethink how they can best deliver value, often requiring shifting from project management to program management.
Deloitte says, “The product shift can allow organizations to deliver value rapidly and consistently, directly targeting customer needs. They can innovate at market speed, across the entire enterprise, and deliver sustainable results at scale.”
Making the product shift requires organizations to focus on the customer experience vs. individual projects.
What this means is focusing on the customer experience, whether through a product or a service, versus individual projects that compete for the same resources. In an Agile organization tackling digital transformation, teams work together to push the company towards its transformation goals.
The product shift places greater significance on innovation and improvement, supporting self-sufficient teams who work together on digital transformation initiatives that bring value and, therefore, deserve funding. Software will support efforts to deliver products and solutions more efficiently to improve business outcomes and support strategic objectives.
Pillars of Digital Transformation
Organizations can engage in digital transformation across multiple business aspects. While you can focus on transformations within each of these separately, you may also develop a transformation strategy for two or more of these simultaneously. Just remember to take a phased approach, learning and applying those learnings as you go.
Transformation is all about incremental improvements that allow for a feedback loop before moving on.
Digital transformation is as much about breaking down silos and establishing persistent, cross-functional teams with internal champions as it is modernizing a product. By using software that connects people, data, and work across the enterprise, global work centered around strategic objectives is efficient, even with a hybrid workforce. You will be better able to elevate organizational agility to operate at speed and ensure the most impactful work is delivered even when change and unknowns impact strategy.
How people work has also changed, with many work methodologies bringing their own benefits. Agile organizations take an adaptive, iterative, flexible, hybrid approach to work, strategies and initiatives, and business operations. They recognize that one-size does not fit all.
By embracing different types of work and providing a platform that brings together work delivery, dynamic planning, and portfolio management solutions to keep everyone aligned across the enterprise, they can achieve faster time-to-market and increased revenue, innovation, and customer satisfaction.
Leadership can serve as a guiding force, but the entire organization must transform its mindset to embrace change, servant leadership, and autonomous decisions about the work. A decentralized culture with guardrails ensures that every individual and team is working towards delivering value, however small, so strategic objectives are met.
Forrester reports that 93% of companies surveyed agree that innovative technologies are necessary to reach their digital transformation goals. These technologies may include artificial intelligence, machine learning, or simply automating processes. But technology is only effective if it delivers on its intended value, such as providing real-time data to enable pivots, visibility, and collaboration across a distributed workforce. It must establish standardized processes that allow for continual feedback and improvement throughout your transformation journey.
What Are the 4 Key Challenges of Digital Transformation?
Of course, every initiative has its challenges, and digital transformation is no exception. In fact, a digital transformation can be one of the most significant challenges a company faces. The most successful organizations will view these challenges as opportunities, however, using their Agile principles to break down each challenge into manageable pieces. Some of the most common hurdles are:
Resistance to change
Forbes says, “The real secret to digital success for your organization is not starting with the technology but starting with humans.” There is comfort in the status quo, and without leadership buy-in, digital transformation is either slowed to a crawl or doesn’t happen at all. Similarly, Agile transformation is impossible if leadership continues with the command-and-control vs. flexibility and adaptability to change. They can no longer stick with annual planning and funding vs. a continuous model.
How to address the challenge
Change brings opportunity. There must be a cultural shift, using technology to facilitate change. Software can provide necessary visibility and make quarterly planning and incremental budgeting easier through automation.
Once stakeholders see the benefits, technology adoption accelerates.
It’s also easy to let current tools and tech stack to “get you by” – in some cases, it may be more beneficial to cut ties with “Frankenstein” or homegrown technology, and start over to get to fresh data via purpose-built tools and integrations that give you a new point of view for decision making.
Lack of visibility
As the enterprise grows, complexity increases and silos form. Teams work independently with little collaboration or sharing of data and visibility into what matters disappears. With gaps between strategy and delivery, and no common goal or purpose, digital transformation is virtually impossible.
How to address the challenge
Seeing everything that impacts strategy to delivery in one place and being equipped with real-time insights breaks down silos and enables dynamic planning and decision making. The right software consolidates data, exposes gaps, dependencies, and risks, providing necessary visibility into how value is being delivered, and empowers the organization to quickly adapt.
While legacy systems may “work” and be comfortable for users, much of them lead to technical debt and forces the technology to do something it wasn’t designed to do. Companies get stuck, and digital transformation stops before it begins.
How to address the challenge
Not all legacy systems have to go when it comes to digital transformation, but you must know what needs transforming and what can remain as is. Software can help. The technology provider can be your partner to offer best practices, experience, and guidance to support new and evolving processes. In addition, many organizations leverage integrations, connecting newer software to existing tools to fuel decision-making and adaptability while delivering the visibility they need.
The human factor
There are so many human-based factors that seem insurmountable, such as the changing world of work 2.0, a generational and globally dispersed workforce, and diversity and inclusion. Cross-functional skills are needed, yet finding the right people is even more of a challenge post-pandemic.
How to address the challenge
Once again, software can help by connecting individuals and teams to the business so they can take more pride and ownership in their work. The right technology partner will provide software to automate processes and bring visibility that makes cross-collaboration, work delivery, ease of use in work management tools, and connected work less stressful and more efficient. Software can also enhance the ability to bring a diversity of thought to processes, work, and deliverables that can positively bring more value to the business.
How to Create a Digital Transformation Framework
There is no singular digital transformation framework every company utilizes. It should be customized to your business, resources, and capabilities. You can use a formal framework like the ones listed below or create your own roadmap using the best practices below.
Best practices for accelerating strategy execution
A digital transformation strategy will provide a flexible roadmap to keep everyone rowing in the same direction and ensure the highest-value work is definable and prioritized based on what matters most to the organization at any given time. Create your digital transformation roadmap using these best practices from the global benchmark study and report, “The State of Strategy Execution: Embracing Uncertainty to Adapt at Speed”:
- Replan continuously
- Use Lean and Agile practices broadly
- Provide timely, accurate data from strategy to execution
- Invest in technology to understand the impact of changes and take action
Digital transformation frameworks
There are dozens of formal business models and approaches, but you can still modify them to fit your organization. Some offer roadmaps, while others break down the digital transformation into stages and steps. For instance, McKinsey lists 10 “guiding principles” of a digital transformation that fall under the following three stages: defining value, launch and acceleration, and scaling up.
But there are many other approaches to consider, such as:
- Boston Consulting Group’s Six Factors of a Successful Digital Transformation
- Cognizant’s How to Win with Digital Playbook
- Gartner’s IT Roadmap for Digital Business Transformation
- MIT Sloan’s Path to Digital Transformation
- PwC’s Digital Transformation Framework
Whichever framework you choose, it’s recommended to stick with one, instead of bouncing from one to another or trying to combine elements. You can use your chosen framework as a model, with an understanding that it’s okay to make it your own. Get your organization, team, stakeholders, and executives’ buy-in, including them so they feel more empowered, accountable, and confident in the frameworks.
Examples of Digital Transformation
Each organization will approach digital transformation differently, and the journey and results will also vary. But the following case studies will give you a sense of how companies across industries are adapting to change by leveraging Agile principles and supporting technology to facilitate transformation.
NatWest, a leading UK-based banking and financial services company, was used to change but wanted to further their Agile transformation to manage and deliver their work more efficiently in a disruptive environment. With centralized portfolio and work management tools in place, scaling Agile across the organization was more manageable, using the “train-the-trainer” model for greater adoption. Today, teams have one place to visualize and manage work across teams, from finance to marketing.
BCBS of North Carolina
Blue Cross Blue Shield of North Carolina recognized it had to transform its approach to resources, work, and processes to reach its goal of becoming a health system model. Since shifting towards continuous delivery via continuous planning, they increased their release velocity by 10% in a short period. Today, Blue Cross NC is experiencing improvements not only in release velocity but features delivered, outcomes achieved, and cost avoidance.
Digital Transformation Is a Journey, Not a Destination
Organizations must approach digital transformation as an ongoing endeavor that continuously strives to position the company as resilient, responsive, and competitive despite change. This mindset assures the people, processes, technology, and culture are always aligned with strategic objectives. Operating and business models can adapt, and technology empowers teams to execute that strategy efficiently.
The impact and benefits of digital transformation are well documented, and creating a digital transformation strategy is the first step. You can overcome digital and Agile transformation challenges and get to the other side: where ROI is measurable and continual transformation becomes part of enterprise culture. Learn more about managing transformations with these helpful resources.
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