Digital transformation without the judgement

Business Strategy & Management, Comments

John Appleby, CEO at Avantra, explains how best to handle the transformation that is required to remain competitive in the digital age

We all know that the world is changing. Unfortunately, digital transformation has become a buzzword synonymous with large consultancies and not business results, and many businesses are jaded. Research shows that 70 per cent of digital transformation initiatives fail, and there are many reasons why. Consider the following factors when deciding how to embark on digital transformation.

Business priorities

CEOs must focus ruthlessly on a small number of priorities. One customer in the rail industry went for approval of an SAP S/4HANA project, and the CFO saw the eight-figure budget and asked the CIO: ‘would you like me to approve this project, or buy one more locomotive this year?’

You might be thinking ‘buy the train’, but it is not that simple. What if this IT project improved rail network throughput by two per cent, or decreased the chances of a derailment by ten per cent? What if it provided efficiencies in cargo prioritisation that meant two fewer locomotives needed to be in service? What are your priorities? How might they be achieved by IT investments?

The future workforce

Today’s new hires are the Instagram generation. They primarily share images on social media, not diatribes about their personal life. Tomorrow’s new hires will be the Snapchat and TikTok generation, and before we know it, there will be a generation of employees who have never used a laptop.

Diagnose before you cure

Many businesses drive priorities based on a belief, or the consensus of the leadership team. This is not good enough anymore. What if you are struggling to grow because you failed to understand that your complicated customer onboarding process was throttling your ability to get customers using your product quickly?

The Lean Six Sigma method looks to improve organisational culture change by looking at eight kinds of waste: defects, overproduction, waiting, non-utilised talent, transportation, inventory, motion, and extra-processing. Whichever strategy you have in place, you need to ensure you have the right data to understand organisational challenges and opportunities before you invest in solving them.

Open your vendor choices

There was a saying in the ERP industry, ‘The Suite Always Wins’, and we believed this would always be true. A tightly integrated suite of applications would always be better than best of breed because the integration challenges that came from multiple solutions would be too painful. This is no longer the case, and integration technology has caught up so far now that you can and should consider all your options when looking to solve the problems that you diagnosed.

Indeed, there are benefits to having a smaller number of strategic vendors: buying power increases, and it is possible to gain some additional control. However, line of business owners like the CMO rightly now have a say in what solutions get chosen.

Digital transformation is a journey, not a destination

Think about how your business life changed in the last 20 years. The same will continue to be true over the next 20 years, and I will not try to be a futurist here. Understand, however, that digital transformation is a never-ending process of self-improvement, and it works like technical debt in software: you can delay modernising your business, but it will catch up with you.

Final words

There is no right way and wrong way to approach digital transformation. Some organisations might see value in large-scale transformations of ERP environments like SAP, for example, consolidating business processes across hundreds of operating businesses and end markets. There can be big wins.

For other organisations, a more scalpel-like approach, weeding inefficiencies out of the supply chain and customer experience issues might be the right approach. Some may prefer to leave legacy ERP systems in place and build delightful user experiences on top of those monoliths.

There is not a right and a wrong, there is no judgment, only what is right for your business.