- Digital transformation is necessary
- You must avoid the risks associated with digital transformation
There is no way to avoid digital transformation but there are ways to mitigate the risks.
Secure and scalable digital platforms and systems are mission-critical for every type of business, B2B and B2C. An easier way to think about digital transformation is that companies are looking for ways to more effectively meet customer and business needs.
Outdated systems and software don’t help companies meet those needs anymore. Customers and internal business users (the majority of your employees) have, thanks to the Web 2.0 revolution since the early 2000s, grown used to intuitive, cloud-based software that is user-friendly. To put it simply. Of course, at the enterprise level it’s more complicated than that.
What is a digital transformation?
Digital transformation starts when companies realize and accept that systems and platforms they’re using aren’t up to the job anymore. Customers and employees need something more modern, efficient, fast, and secure. Either because of changing trends, market forces, and regulatory pressure, companies need new systems developed, or to overhaul legacy systems, or re-platform them.
At the same time, how people — customers or staff — use these systems often needs to undergo a transformation. New digital culture needs to be instilled. New training is needed. New processes need to be put in place.
CFOs would agree that there is no point in having a new system if no one can use it, and therefore the company doesn’t benefit from improved efficiencies. Any new system should be more user-friendly than what it replaces; but processes still need to evolve at the same time.
Beyond improved efficiencies, there are many upsides to digital transformation. Cost savings, increased competitiveness, new innovation, even collaboration, new products and services, and a whole load more. There is always a trigger and a need, something that means a digital transformation project should go ahead, especially if small-scale tech improvements have already been implemented throughout an organization.
However, there are risks too.
What are the digital transformation risks?
Often, the size of a company determines the size of the risk. In smaller companies, it’s easier to implement a transformation project across a team. Small-scale tech upgrades usually start with staff using apps. Either those apps are adopted across a team, or the company makes broader changes because of what customers need, what competitors are doing, or a mix of everything.
Change in a smaller organization takes less time, costs are lower, as are the risks. But that isn’t the case in a larger company where there are multiple systems and platforms. Some modern, some legacy, and often a myriad of interconnectivity required to make everything work.
Whether a company is re-platforming, overhauling, moving to the cloud, or having a brand new system built, the risks are similar. Cost and time, and the precious use of internal resources. A project that doesn’t work out, or goes seriously over budget, can prevent similar projects winning future C-suite sign-off, and a budget. In some cases, failed digital transformation projects have had a serious impact on profitability and long-term forecasts when gains don’t materialize straight when expected, or projects are delayed.
How to reduce digital transformation risks?
At Anadea we are working with small businesses and enterprise organizations, and in our experience, there are a number of things that can be done to de-risk digital transformation projects.
1. Collect challenges from across the organization
Digital transformation ought to be what it says: a transformative experience.
Team members across an organization will have different challenges, depending on their role and systems they use. Some will have workarounds, or will know of some but they aren’t possible due to digital security measures. Find out what everyone needs, including and especially your customers and external stakeholders, if a project is to have a wider impact. Actually, keeping focus on transparency and engagement, so that everyone involved can understand and contribute to the digitalization efforts, are some of the factors that make a digital transformation more likely to succeed.
Once a leadership team driving this knows what is needed, a company can set about creating the goals for a digital transformation project.
2. Understand how to benchmark improvements
Budgets and proposed impacts (ROI), often known as a business case, are essential to get C-suite buy-in and approval. Have a clear understanding of the impacts you want and need. In other words, what does success look like? Is it improving your company performance or enhancing customer loyalty? If you know this, and you’ve got clear benchmarks, then you can roadmap the journey to achieving operational goals.
3. Pick the right platform, or tech stack
Where you start can have an impact on the end-result, or at least the journey you take. It depends whether your systems are already cloud-based, on premises, or a mix of the two (hybrid). What platform does your tech stack already run on?
Either work with your in-house CIO and IT team, or bring on-board an external IT strategy consultant, to map out the current platforms limitations. Use this and the challenges across an organization to understand what you need from a new platform or tech stack, and therefore how to implement the project goals.
Maybe you need everything in the cloud, although that isn’t essential for every company. It matters more to have the right platform and solution for specific challenges you have.
4. Prove a positive ROI before going ahead
Start small. Digital transformation projects can be big, take months, need a series of teams and others to coordinate and lead. So before you dive into something that can get difficult to manage, start with a small project with an easy-to-demonstrate ROI. Prove an impactful victory, then move onto a larger goal.
5. Build for long-term quality and scalability
Quality, security and scalability is more important than getting something done quickly. Especially when technical projects are in development. Short-term fixes and rushed work can result in ‘technical debt’, and this isn’t what you want. In all likelihood, legacy systems are overloaded with decades of technical debt. Don’t risk a new systems starting off with the same problems.
6. Make sure training is a part of every project
When it comes to launching internal transformation projects, start small. Start with a trial team. Provide comprehensive training. Work out the bugs and kinks with beta users. Once you are happy with the results of that, put a plan in place for a successful mass adoption rollout alongside the systems launch.
Digital transformation projects run smoother when staff are trained, and budget holders can see the impact, and therefore operational objectives have been clearly met. It starts with framing these the right way at the start.
Nowadays, companies need to adapt to the realities of the digital economy, introduce innovative processes and develop intelligent IT solutions to stay ahead of the curve. However, the hard truth is that many digital transformation projects fail to deliver their expected outcomes and this can deter some businesses from investing in innovations.
Don’t let the low success rate of digital transformations fear you. Understanding the risks and choosing the right strategies at the outset of your digital change initiative, helps stack the odds in favor of success.