How a CIO turned critical challenges into benefits that drove change and success in digital transformation

In meetings with companies undertaking digital transformation or IT modernization, I often hear executives talking about advice they’ve received from their consultants and advisors on how to plan and manage these initiatives. I consistently hear different versions of three points. “We must have a detailed road map of our transformation journey.” “We will need to replace most of our existing talent.” “We’ll need mountains of money.” Sound familiar? Consultants and systems integrators (SIs) consistently preach these practices, warning companies that their transformation won’t play out the way they hope unless they follow this advice. But compare that advice with the real-life experience of CIO Toby Buckalew.

The odds for digital transformation success at Buckalew’s former company were low. Steep challenges faced him when he joined the company as CIO tasked with managing the IT modernization and building a digital platform. That would be difficult enough for any CIO, but chaos was already bubbling at this company when he arrived to drive massive change.

Facing a steep uphill battle

The company was once international and publicly traded. After some mistakes, the stock was de-listed and the company went bankrupt. When it came out of bankruptcy, it emerged as a new company. There’s nothing like a company coming out of bankruptcy as, typically, no situation is where it needs to be because the company cannot spend money during the bankruptcy process.

Upon his arrival, Buckalew found antiquated facilities and out-of-date hardware and software. Testing a system caused the power to go out, and they had no power for a week. Obviously, this had a negative impact on customer relationships. The company had an inflexible, expensive and fragile IT environment and a mind-set not focused on production.

The company wanted to build a digital platform to allow full visibility of the business. But it was saddled with many legacy applications, homegrown 20 years ago, which didn’t communicate with each other. These apps were production systems; so, when they went down, the business stopped. And it had a cascading effect; a change in one application flowed to another system, which typically caused an error in another system. Operating assumptions were old and undocumented.

Change introduced into this environment became a very expensive issue. Coming out of bankruptcy, the company lacked money to invest in moving forward, and they consumed most of the IT budget just keeping the environment up and running.

Making matters worse, the new company after bankruptcy became a service provider. This introduced a complete business model change since the pre-bankruptcy company operated on a different model. The company began providing many back-end services to clients, but there was no visibility into client interactions. One system tracked problem tickets but didn’t allow tracking all the data. Another system tracked clients’ locations and contact information, but the information disappeared from everyone’s view if it wasn’t a current client. Buckalew adds that “no one could tell what the sales pipeline looked like.”

Staffing was another issue. “I inherited an IT staff lacking a true customer-focused mentality. This was a huge hurdle to overcome in the change in business model. The staff needed to support our corporate clients’ businesses in more than 30 states as well as our internal colleagues’ work,” says Buckalew. “Understanding the customer relationship is crucial. The people portion of the equation is so important. You must get that right the first time. If that’s not right, you won’t be very successful in the long term.”

Change management on the scale of changing an operating model requires far more than communicating to people what is going to happen. There are talent model changes, policy and process changes, mind-set changes and changes in customer and business partner relationships. It’s a profound level of change that requires swaying people’s opinions about the change.

Buckalew explains, “There are many more moving parts when you’re changing a business model. And that’s when you get a lot of pushback. It’s one thing to tell people what will change and put them through training to understand which button to click. It’s something else entirely to say, ‘We’re going to rip out everything you know and how you do everything and change it. And it has to happen.’

Guiding principles

When I spoke with Buckalew about how he avoided pitfalls and managed the snarls of driving such massive change, it became clear that he followed several guiding principles rather than adhering to the common “best practices” I mentioned at the beginning of this blog.

• Be realistic about what’s possible
• Embrace change with agility and allow the journey to unfold
• How you leverage employees will affect the outcome
• Be poised to take advantage of challenges and turn them into opportunities

Buckalew recognized that the best approach to the digital transformation journey and IT modernization is an agile, iterative approach. “You can apply agile principles to people and organizations. It’s a powerful, flexible way to manage any process, not just software development,” he says.

The company’s goal was to centralize all customer-focused applications and combine them to a single CRM interface and digital platform.

“We didn’t start out with a detailed plan. We knew we would eventually change everything, but we started by breaking down the journey into small pieces. We started by working with the worst situations first – those with the most fragile condition and most important impact to clients and highest risk,” says Buckalew.

They made an inventory of products and services and which clients and internal departments they affected. They also spoke with clients, department heads and random employees of the company as to their pain points, their feelings about the company and what areas should change first. The commonalities in this feedback enabled Buckalew to zero in on the technology challenges and the people challenges. He then mapped the pain points and challenges to the areas of biggest impact.

“From there, we started building technology road maps,” says Buckalew. “But prioritizing the changes was not a simple matter of determining what we needed to fix. The bigger question was where the business is going and what it needs to go there. Of course, IT needed to make sure things worked so it could support the business today, but we had to undertake change with the future in mind.”

He adds, “With so many different client services involved, and so many clients with different perspectives, a big challenge was that everybody had their own carrot they wanted to put in the soup.”

Don’t change people – help them change

A typical dilemma companies face in transformation is whether to fire the existing staff and build a new organization. As they did with implementing new technologies, Buckalew says the company broke down massive transformational change into small pieces for staffing in the IT and customer-service areas.

Buckalew evolved the IT organization, along with the technology, over the five years it took to build and implement the digital platform. He says they lost only four people during the transformation but didn’t need to replace them because the company gained efficiencies from the transformation.

Buckalew says, “The morale was higher when we finished the transformation. It’s shocking how much latent talent is in an organization, but most companies never investigate to see if they can leverage it. Some of our staff had a lot of personal attachment to what was going on and really wanted to see the company succeed.”

“They’ll impress you with what they’re able to do if you give them the opportunity to change instead of changing out the people,” Buckalew adds. The agile approach allowed Buckalew to evolve the staff talent instead of replacing people. As a result, they worked more productively, and they brought institutional knowledge and relationships that allowed them to accelerate the transformation.”

In the customer service area, the managed change by first spending a lot of time watching the customer-interaction processes (how they handled calls, followed up in email and handled problem tickets). They then audited those processes and then spoke with customer-service reps to get their perspectives. After that, they set expectations.

“I’m a big believer that if you set a high bar for expectations, over time, people will recognize that’s where they need to be, and it becomes second nature to reach that level of service,” says Buckalew. “If you set a low bar as to what you expect of people, that’s as far as they’ll go. A few will reach further, but most won’t. By setting a high bar of expectations, we started changing people’s attitude.”

Taking an agile, iterative approach, they put expectations in place, monitored and evaluated results, obtained feedback from clients and employees, made necessary adjustments and continued repeating that process to ensure they made the right changes. 

Turn financial challenges into opportunities

Coming out of bankruptcy, the company was financed and controlled by a hedge fund, which then sold the company to a new owner. As part of the due-diligence process for the sale, the company reiterated the challenges, then determined the capital outlays they would face just to get things working properly. A new CRM system was a part of that consideration, as the potential new owner wanted to know the future sales/revenue potential so that the owner could forecast and plan the budget.

But getting everything working properly was a challenge since they couldn’t make any large capital spends during the sales process, which lasted two years. Buckalew recalls they had to put a hold on a lot of the capital projects. For the necessary new CRM system, they decided to go straight to the cloud after the company was sold.

Buckalew used an agile process to guide the company in overcoming the stopping and starting of the hedge fund selling, the new ownership and the cash-flow challenges while the sale was going through. The agile approach enabled them to make consistent progress in sprints in different areas during that time. For instance, while they lacked the capital to go to the cloud for the new CRM system – a major component of the integrated digital platform the company was building – they were able to at least work on the definition, the documents for requirements and the change management so they could push that system implementation along faster when they had the capital.

The outcome

The company obviously needed to drive digital transformation so that it could compete better and provide better customer experiences. Putting a new digital platform and new customer-interaction process in place would allow the company to grow its market share. But it first needed to modernize IT – while facing major constraints around funding, a dysfunctional organization, low morale because of the bankruptcy issues and antiquated technologies.

Buckalew recognized the constraints meant they would need to move towards the vision in an agile way without a detailed plan. This would allow advancing in the road map iteratively until the constraints improved and gave permission to move forward further. It also allowed welding the IT modernization and business transformation aspects of the journey together instead of undertaking them separately.

The company developed a business transformation and IT modernization plan, but Buckalew says the agile approach allowed them to be opportunistic as to what part of the plan they deployed, and when. 

Digital technologies were at different levels of maturity during the company’s digital journey. The agile process allowed them to watch the technologies mature and take full advantage of the cloud. When the technologies were mature enough, cheap enough, and appropriate for the road map, they snapped them up and plugged them into the company’s architecture. The timing for deployment of new technologies also was tied to when funding became available.

The agile approach to transformation enabled building a highly effective digital platform with a new CRM component, which enabled the data-driven management that the business wanted.

Does your company need to adhere to common “best practice” principles?

My advice is to follow the principles that Buckalew used in the successful transformation he led. This use case proves that companies can succeed in digital transformation and IT modernization even in the most extreme environments – with limited capital, change in ownership, poor morale and even bankruptcy. The fact is disruptive digital technologies require a different approach than traditional transformation projects. Companies that apply the components of the digital approach together can achieve wonderful results.

In addition, as Buckalew proved, achieving digital success and IT modernization works better when the people change, rather than the company changing out the people. The company can change people by helping them lean into the new technologies and how to be more effective.

Finally, although consultants and SIs advise it’s best to separate IT modernization aspects from the business transformation aspects, Buckalew’s experience shows that companies that weld both these paths together can be opportunistic and possibly gather more support and more budget.