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7 Steps to Successful Digital Transformation

Author

Bill Woodford

https://www.linkedin.com/in/bill-woodford/
bill.woodford@auxis.com

Sr. Managing Director Digital Transformation, Auxis

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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 <