The average success rate of enterprise digital transformation (DT) has been persistently low over the years. Though a comprehensive approach toward digital transformation is the secret to lasting change, recent reports indicate that 88% of IT leaders saw user behavior driving DT projects rather than business cases. As a result, organizations have reportedly wasted around $4.12 million on an average on failed DT endeavors over the past year. So, why do DT efforts fail even working alongside experienced partners?
The curious case of missing transformations
As established, digital transformation payoffs continue to underwhelm the majority of enterprises undertaking them, even with experienced transformation partners in tow. And even though there are several intrinsic factors behind these, one of the most basic reasons includes – the misalignment of goals between enterprises and the transformation partners they choose to work alongside. In many cases, they collectively fail to find the perfect blend of technology and business-focused aspects of transformation that ultimately drives larger objectives and goals.
Often transformation partners and business leaders are not on the same page when it comes to drivers, vision, priorities, technology selection, or investments. The root cause of this misalignment might be different, but IT might fail to understand the change drivers or the reason business leaders are envisioning the transformation in a certain manner. For them, their understanding of the goals, objectives, and value drivers can be aligned with the IT buyers but remain misaligned with the business side sponsors. The disconnect brews further when leaders and partners pass on a half-baked strategy to IT sans any comprehensive business goals in place and instead expect well-articulated IT decisions.
In some cases, the focus has also been on specific technologies rather than the larger business objective. This complete misalignment of goals, objectives, and value drivers across the partner and all stakeholders within the client team leads to failures.
But at the end of the day, they are still responsible for reimagining the customer value proposition. The key is understanding that transforming the value chain is all about modernizing experiences and using analytics. And here, they must leverage a core value tenet for digitally enabled transformation – the virtuous data cycle. Improved customer experiences attract more engagement and thus feeds and increases the available data which subsequently extends the scope of analytics leading to even better and more accurate data, analytics, and insights generation. All in all, digital technology is an ever-permeating common theme here.
Blending in business objectives with technology endeavors
So, what can enterprises do? The answer may include a rethinking of how transformation partnerships are cultivated starting with an internal examination.
At the outset, it is crucial to align objectives and build upon realistic expectations on the value delivered with the partners. This can be achieved with a thorough assessment of a company’s transformation readiness along key journey milestones. This readiness has several elements including business, process, technical, and people attached to it.
Business readiness must have objectives at all levels aligned to the leadership vision of the future enterprise. Process readiness entails minimal non-value-added processes in the enterprise – if the processes are ineffective or wasteful, adding technology means more resources are wasted faster. Technical readiness must have the infrastructure in place to support the journey. And finally, people readiness involves making sure the corporate culture and individual mindsets are open to new ways of working. More efforts are needed if the employees are accustomed to the company’s poor transformation track record.
Next, all projects and initiatives need to be clearly mapped to real business outcomes measured in tangible metrics. For example, implementing a new online checkout feature will improve experience, lead to a certain percent reduction in cart abandonment, increase conversion rates, and thus have a positive impact on the revenue. For smaller projects, they can be directly tied to outcomes but larger initiatives will need to be deconstructured into smaller endeavors and each then tied to tactical impacts and metrics.
Often employees perceive the disruptive demands of any organizational change as a threat. The biggest question for employees here is – what’s in it for me (WIIFM)? It is critical for every employee to see their benefits tied to the transformation. Here, senior executives and leaders can play an important role as primary change sponsors. They can provide the credibility to change, authorize funding and resources, and conduct employee-centric activities. The benefits of the change can be defined by the parts, i.e., benefits to the customer, the company, and the employees as an extension. It’s all about preparing, equipping, and supporting employees in the journey that they eventually have to undertake as the company goes through the change.
Also, the leadership must try to get insights from the ground-up, enabling them to formulate beneficial strategies with a high potential of success. Employees often have insider/ground-level knowledge about what might work and can provide the right advice or suggest improvements. But rather than bank on the old ways of gathering data, businesses must disrupt themselves to employ technology-powered data platforms. This will help to gather, organize, and analyze ground-up information to make decisions and take actions, manage change, and drive cultural shifts.
The next step is to identify transformation advocates who are convinced about the proposed plan and are keen on becoming early adopters. This group can support other employees and integrate the old and new ways of working. Then comes skill development and training of employees on all the new technologies being introduced. Without employees excelling in new systems and tools, a project cannot deliver a high ROI.
Many organizations use uniform change management strategies as a part of their digital transformation journey. These often have the same messaging and techniques deployed across the board. From a change management point of view, this could be a waste of investment. Ideally, this should be driven strategically among smaller groups to get better results. It’s time to consider the digital experience and preferences of various sub-populations within an organization. Therefore, the messaging and the environment must be customized to hit the right beginning and a realistic end point across groups.
The quest to align overarching transformation goals with partners begins with introspection and internal alignment. The democratization of a thorough understanding of technical as well as business goals becomes key to ensure stakeholder onboarding. And even though businesses need a transformation partner, it must be the right partner with an accurate assessment of goals and milestones. The transformation roadmap must be drawn with a holistic blending of business and technology goals including leveraging virtuous data cycle, scoping and harnessing internal data, and mapping each endeavor to defined outcomes. Through this, enterprises can take an step toward a digital future with confidence and assurance.
–Lester Lam, Executive Vice President and Global Leader of Consulting, HCLTech
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