What Should Inform the Digital Transformation Strategy
Digital transformation is high on the agenda of many organisations, but unfortunately, a very high number of these transformations are believed to fail.
The figure commonly cited is 70%. Part of the reason for these failures is the fact that organisations start to transform digitally without proper consideration to what they are doing and why. This can lead to inappropriate spend and uncoordinated efforts in achieving digitisation. Here I will consider why a digital transformation strategy is needed, the elements that need to be considered in informing it, and what should be included in the strategy.
The Need for a Digital Transformation Strategy
Businesses worldwide are transforming to the new digital reality. Those that adopt digital transformation strategies are able to access new business models and capabilities that enable them to gain competitive advantage. A digital transformation strategy will help the organisation to capture and make better use of the data available to it. This can inform both faster and better decision making, to take advantage of market opportunities or increase efficiency. Having a digital transformation strategy is also likely to be beneficial for the employer brand. People like working for organisations that are innovative and leading the way. Having a digital transformation strategy demonstrates that an organisation is forward-thinking.
These issues aside, it is difficult to achieve digital maturity without a digital transformation strategy. Failing to develop a proper strategy could result in digitisation happening anyway in a piecemeal and uncoordinated fashion that is not best placed to meet the broader needs of the business going forward. It is much better to coordinate this across the entire organisation so that the move is undertaken efficiently with regard to both time and money.
What Should Inform the Digital Transformation Strategy
Critically, business objectives should inform the transformation strategy. The goal of the strategy should be to develop it such that it will help move the business forward. Clear business objectives driving the strategy will ensure that it best meets the needs of the business in the short, medium and longer term. Additionally, it is no good the IT department deciding on the digital transformation strategy without consulting the many varied functions throughout the organisation. Their input is needed too, so that their requirements are understood, and so that every component of the business can be aligned within the strategic approach taken. Failing to engage departments will make the digital transformation strategy more likely to fail, since people may be likely to resist change if they are not included at the outset.
Data should to a large degree inform the digital transformation strategy since a key factor in effective digitisation is being aware and able to make informed decisions. There needs to be consideration to the data that will help drive awareness in the organisation, how this can be analysed and presented to help with informed decision making, and how this can all be achieved quickly. However, contrary to popular belief, while technology should be a part of the digital transformation strategy, the technology itself should not necessarily be a driver of it. What is meant by this, is that attention needs to be paid to the technology that will enable the digitisation of the business, and what is required, rather than getting excited about new technologies that could be used without analysing need. It is all too easy to get bowled over with amazing sounding new technologies but fit for purpose is a key consideration here. Clearly technology has a role to play in the strategy, but it is not the key element.
What Should be Included in the Digital Transformation Strategy
The digital transformation strategy should take into account factors such as who, how, what, when and where. Who is a particularly pertinent factor, and consideration for all functions across the organisation needs to be included in the digital transformation strategy.
There is a distinct human resources component to developing a digital transformation strategy. For example, the strategy should include analysis of the types of skillsets needed within the organisation to deliver it, and how these will be obtained, if not already within the organisation. In some cases, these skills could be developed from within, but in others they may need to be hired. The human resources element of the strategy must be factored in, so that capability and budget can be understood and planned for effectively. In addition, given that moving towards digital transformation will almost certainly require new ways of working for people up and down the organisation, thought should be given to the cultural change needed to drive the strategy forward. Defining the culture that will help the organisation to succeed in its digital transformation strategy is one element of this, and the other is developing a plan to roll out the change effectively.
Being aware of the risks that are faced in implementing a digital transformation strategy is also something to include within the development of the strategy. Understanding issues that could arise and mitigating against them will give the strategic imperative the highest possible chance of success. At the same time, monitoring activities needs to be part of the roll out of the digital transformation strategy. The roll out can begin with pilot tests, adapting the technology based on feedback received. Beyond this, new development and enhanced solutions can be rolled out.
It is clear that having a digital transformation strategy in place is important to achieving digital maturity, competing and being efficient. A digital transformation should not be led by the technology alone – rather it needs to take into account the needs of different functions within the organisation, the business goals, and the data that will be needed to drive the organisation forward. Effective digital transformation strategies consider people issues such as skills and capabilities needed and the culture that will be required for the organisation’s digital transformation strategy to succeed.