What to know for your digital transformation journey

Rodolphe Goudin

August 27, 2024

Undergoing a digital transformation by yourself can be a scary task

There are probably as many definitions of digital transformation as there are people discussing it. Indeed, whatever your role in the transition, it may sometimes feel like it’s a never-ending process with no fixed destination.

While transformations are unique, the reasons why organizations typically make the transition can be narrowed down to one of three reasons: processes and productivity optimization, differentiating from competitors in new or existing markets, and delivering a more attractive end user or employee experience.

Let’s look at the priorities and processes that are critical foundations to a successful digital transformation.

Digital transformation definitions

First, it’s worth defining some industry terms.

Digitization is the conversion of analog or physical information to digital, such as converting instruction manuals from paper to digital, or moving from newspapers to digital channels.

Digitalization is using digital technologies to enable or improve business models and processes, such as providing on-site mechanics with line-of-sight digital instructions, or adding paywalls, videos and podcasts to online news sources.

Digital Transformation is the coordinated digitalization change effort at scale, diffused through all aspects of the operating model and business.

Mapping the digital transformation journey

Next, it is of utmost importance to consider the big picture aspects of your organization’s transition.

1. Assess need

This step involves identifying current and future business needs, the competitive landscape, existing technologies and skills, as well as the urgency to transform.

Map the value of your business processes, applications and tools and weigh them against the amount of investment needed to digitize them.

2. Plan for the long term

Carefully plan the evolution, starting with the digitization of a single business process or application, while securing a long-term budget and including intermediate steps.

Also consider business continuity to ensure that current applications and processes will continue to function while transitioning to new ones.

3. Finance the journey

Yes, digital transformation can be expensive, but the aim is to generate return on investment (ROI) through cost savings and revenue increases.

Include both elements in your plan to demonstrate RoI over time, with follow-up key-performance indicators (KPIs) to allow for progress monitoring and adjustment when required.

4. Risk management

There are risks with going digital, such as crashes or security breaches, which might impact service availability.

Compliance with national and international regulations also requires time and money.

Careful risk monitoring and detection as well as mitigation strategies are critical components to any successful digital transformation journey.

5. Prioritization

To ensure long term success, find out which areas of digital transformation will have the biggest impact on your organization’s business.

As with any transformation, it is important to communicate on positive outcomes, like quick wins and larger improvements in efficiency and/or agility.

What to pack for your digital transformation journey

Next, it’s valuable to create an inventory of your organization’s component pieces. This will include a thorough understanding of:

Users: Who benefits, across staff, suppliers, partners and customers

Experience: How users interact with your products and services, especially digital natives

Channels: Impact on go-to-market strategies. Identify digital enhancements to existing channels as well as new delivery channels leveraging APIs, social media, IoT and messaging services.

Products and services: How users interact with customer products and services, and how digital transformation might impact them

Technology: How your chosen technology connects to user needs and requirements, as well as how you will monitor its impact on business objectives. Technology stacks for digital transformation usually include connected objects (IoT), Artificial Intelligence (AI), cloud services (XaaS) and analytics.

Processes: How business is done in customer organizations and which processes could benefit the most from digitalization. This is important as it drives technology choices. Knowing which aspects of a given business process can be improved can also make measuring change and RoI easier.

People: How your most important asset  your staff  will perform. Success heavily depends on employees acquiring new skills and adopting new technology. Onboard them using proper change management, including communications and training best practices.

The right vehicle for your journey

Any digital transformation runs the risk of conflicting demands, poor resource allocation, bad leadership appointments and incorrect KPIs – all of which would set up the digital transformation for failure.

I like the Harvard Business Review (HBR) framework for its flexibility, which establishes four pillars in a digital transformation strategy, each with a C-level sponsorship identified.

IT uplift

The upgrade of IT infrastructure gives access to new tools, collection and exploitation of data, lower IT costs, and improvement of overall performance and employee satisfaction. This is often the very first step of a digital transformation journey, and it usually falls under the CIO or CTO to manage this pillar.

Digitizing operations

Once existing business processes have been identified and documented, it is time to assess if and how digitalization can help optimize them.

This pillar is where digitization and digitalization occur. It also provides a competitive edge to the organization as, without it, the risk of being left behind by more efficient operators is high.

The necessity to understand business requirements and operations make the CFO or COO the ideal sponsor for this pillar.

Digital marketing

This pillar deals with new acquisition channels such as the digital acquisition funnel, AI, and most  insights into user behaviors using products and services like data science. This pillar is also in charge of omnichannel interaction with users.

The CMO is the logical sponsor for the digital marketing pillar.

New ventures

As digital transformation may open new opportunities for growth, it is important to consider its impact on an organization and its business model.

The need for investment and agility to experiment and validate new business opportunities make the CEO or CSO the right sponsor for this pillar. Note that this pillar requires more digital maturity than the IT uplift or digitizing operations pillars.

Proper tools and guides

For a successful digital transformation, support from the project management office (PMO) comes in handy. But addressing the people aspect of digital transformation may require advanced change management practices.

Change management frameworks oversee the human side of a digital transformation project, and focus on assessing the status and ensuring proper adoption of new paradigms by all users impacted by the change.

Identifying and activating proper C-level sponsorship as well as enabling mid-management to play their role as guides in the digital transformation journey is paramount.