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Achieving Operational Excellence in Digital Transformation

Author

Bill Woodford

Sr. Managing Director Digital Transformation

Given today’s uncertain macroeconomic environment, operational excellence in digital transformation (DT) is no longer a differentiator – it’s a critical driver of business outcomes. Faced with the tightest labor market since World War II, recession fears, rising wages, and inflation levels that haven’t been seen for decades, forward-thinking organizations are future-proofing operations with digital capabilities.

Done right, the benefits are vast: driving efficiency, boosting resiliency, lowering long-term costs, improving processes, increasing profitability, and delivering a competitive edge.

More than half of enterprises are leaning into DT initiatives in 2023 to leverage operational advantages and deliver revenue growth, according to EY’s CEO Outlook Pulse. About 40% view these efforts as a top strategy for emerging from economic challenges in a stronger position than their competitors.

But while digital transformation can deliver step-change results, an alarming 69% of initiatives fail to achieve desired outcomes. Here’s what many get wrong:

Successful transformation involves more than implementing new technology – it’s about redefining how your company operates. It’s about harnessing digital technologies to reimagine operational excellence – reinventing competencies like processes, roles, and what information should look like to achieve an optimized future-state.

From automation to AI to cloud computing to analytics, pandemic successes proved that digital transformation enables operational improvements while reducing costs. But achieving the right results can seem daunting, and too many projects stall because organizations don’t know how to start.

As economic uncertainty places IT spending under greater scrutiny, increasing the pace of digital transformation ranked as the No. 1 driver for engaging a third-party provider in Deloitte’s 2022 Global Outsourcing Survey.

Quality partners bring credibility from past wins that secure C-suite support, as well as the experience, talent access, technology expertise, and cost advantages that enterprises don’t possess in-house. Here’s how an exceptional DT partner combines operational excellence thinking and digital solutions to help your business flex with today’s fast-changing markets while achieving new levels of performance.

7 guiding principles for operational excellence in digital transformation done right

1. Successful DT is business-led, aligning technology choices and investments with business strategy, priorities, and targeted outcomes

At this point, every organization has invested millions in technology. But few are true tech-enabled businesses – fully exploiting the promise of DT by aligning technology projects with greater business goals.

While synching technology and business strategies seems obvious, it’s easy to get lost in the weeds and let them fall out of alignment. Deploying technology without a strategic plan is one of the biggest reasons transformation efforts fall apart, leading to siloed initiatives that stop innovation from scaling.

A systematic approach is vital to defining the right goals and KPIs for achieving future ambitions and creating better processes across the board.

Quality transformation partners come to the table with a proven methodology for thoroughly assessing your current state, working with business leaders to determine high-value improvement opportunities that accelerate company goals.

A clear, business-led strategy focuses DT efforts, creating top-down alignment behind the endgame and ensuring ROI for each initiative is clear, supported, and appropriate for the organization.

2. Put technology at the core of business strategy to reimagine a more effective way of work

Exceptional partners are more than technical experts. They also have the business expertise to use technology to innovate operational excellence.

These partners use assessment to reimagine operational excellence in digital transformation – leveraging tools and technology to create future-state process flows that challenge old assumptions, eliminate non-value-added tasks, and redefine team roles to focus on more strategic work.

Quality partners can also identify opportunities to maximize use of legacy technology; for instance, taking advantage of automation capabilities in your existing ERP system.

To help you understand value, your partner should estimate the savings potential of each opportunity relative to a current-state baseline. An important benefit of working with quality partners stems from their ability to assess value vs. complexity vs. cost of improvement opportunities and prioritize your implementation roadmap.

3. Position IT as a value co-creator

Creating a business-led strategy doesn’t mean IT should be relegated to a supporting role. IT-business alignment is critical to successful transformation, with IT working alongside business units to drive the best outcomes.

While business teams lead the charge with high-level requirements for improving operations, modern IT Departments are embracing their role as value co-creators – learning more about business objectives and goals so they can use their technical expertise to drive strategy.

Eliminating traditional silos between business departments and IT is key to innovating the right solutions and implementing them effectively. IT governance is essential to building a sustainable DT program as well, bringing advanced technical knowledge of how new technology will weave into existing infrastructure, testing and maintenance capabilities, data security oversight, and more.

4. Deliver incrementally, generating momentum with early wins

Convincing employees who are naturally resistant to change to embrace a new way of work is not for the faint of heart. Not surprisingly, 42% of IT leaders rank change management as their biggest DT challenge, according to IFP’s 2023 State of Digital Transformation report.

More than 30% say poor change management cost them $1 million to more than $5 million, IFP reports.

Quality partners view digital transformation as a journey – not a single step. They use the value framework to break down the greater vision into smaller, more manageable sequences.

Typically, that means starting with action items that deliver quick wins, spreading enthusiasm enterprise-wide. By frequently and consistently providing chunks of value, your partner will reinforce digital transformation as a key investment in your company’s future.

This strategy also undermines workforce resistance, providing early, concrete evidence of how DT can directly improve work lives. As organizations struggle to fill roles amidst the ongoing labor shortage, streamlining operations helps them do more with less.

Technology like automation can also take over hated chores, allowing human staff to move to elevated roles with more interesting work. A UiPath study found that 85% of executives believe automation can reduce turnover and attract new talent in today’s red-hot job market.

Restructuring large-scale initiatives into a series of smaller, faster projects also accommodates cost management in today’s economic climate – accelerating growth through innovation and achieving quicker returns with less spend.

5. Build a value realization framework to define, track, and achieve targeted outcomes, course correcting as needed

Value realization data provides powerful leverage to your DT efforts, offering important insight into key business drivers like dollars saved, productivity increased, and top-line growth enabled.

Exceptional DT partners are committed to clearly defining, predicting, and tracking the value of transformation efforts, establishing benchmark measures and improvement targets during the design phase of your journey. They utilize best-in-class analytics tools like Microsoft Power BI to deliver detailed visibility into performance and quality that enable insight-based decision-making for your enterprise.

By continuously quantifying value, your partner can ensure the pace and priority of DT adoption align with your business goals. They can also make sure the right actions are taken to realize the full promise of operational excellence in digital transformation, making necessary adjustments and identifying new opportunities to maximize your digital growth.

6. Create governance to manage progress, risks, and engage stakeholders with clear decision rights

DT program governance isn’t a nice-to-have, it’s a must-have for success. Good governance provides a framework for ensuring operational excellence in digital transformation is executed effectively, staying aligned with business goals.

It also builds a structure for decision-making and risk management, establishing clear roles and responsibilities that drive effective communication and collaboration. Impactful decisions will need to be made throughout your journey, and good governance ensures they are made as a group, the impact is weighed and understood, and risks are assessed without blocking opportunities.

Governance also establishes robust metrics and an Agile methodology for tracking and evaluating progress. For instance, exceptional partners conduct brief post-mortems after each increment to learn from their success and generate actionable ideas for improving the next phase.

By ensuring governance is an integral part of your DT strategy, not an after-thought, your partner will help keep your initiatives on track – avoiding delays and cost overruns that threaten to derail your efforts.

7. Prioritize ongoing change management with clear communication

Achieving operational excellence in digital transformation takes time, and change fatigue can quickly derail your journey. To create sustainable transformation, your organization must prioritize robust and ongoing change management.

Changes to business processes or user experiences that catch stakeholders by surprise or trigger unexpected disruptions can dampen enthusiasm for your new way of work. Clear communication and training on what will happen in the current environment, how transformation will unfold, and what your new digital landscape will look like are vital to managing resistance and maintaining executive buy-in.

Celebrating quick wins and the efforts of change agents and staff who embrace new tools and processes are also important to keeping momentum strong.

Exposure to success drives commitment, helping turn neutral bystanders or reluctant stakeholders into enthusiastic advocates. These efforts can spur innovation as well; as more people in the weeds understand the potential of transformation, they may identify unexpected benefits and applications.

Reimagine how your company operates while minimizing risk

Digital transformation stands as a key enabler of operational excellence – creating new opportunities to improve efficiency, quality, and costs. In 2023, the pace of change continues to accelerate as companies with digital-first strategies become 64% more likely to achieve their business goals.

But implementing a technology solution doesn’t automatically lead to business improvements, and today’s macroeconomic climate has only caused complexity to increase.

Partnering with an experienced DT provider holds the key to minimizing risk while unlocking the full, game-changing potential of business and technical innovation that delivers operational excellence in digital transformation done right.

Want to learn more about maximizing business performance through digital transformation? Schedule a consultation with our digital transformation experts today!

Written by

Bill Woodford
Sr. Managing Director Digital Transformation
A results-oriented and pragmatic leader with comprehensive experience driving digital business transformations across a range of industries with Fortune 500 and middle market companies. Expertise partnering with business and IT leaders to assess, define and implement high-value capabilities that drive business outcomes.

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