If you’re not planning or executing a digital transformation strategy, you better be at least thinking about it so you’re ready when the bosses ask what your game plan is.
But how do you peer over the long-term horizon when the IT world seems to be constantly shifting? Start by ensuring you have a realistic assessment of your IT assets and how you’ll leverage or dispose of them in the coming years.
First off, you must be willing to think outside of traditional boxes. “By 2018, 70% of siloed digital transformation (DX) initiatives will ultimately fail because of insufficient collaboration, integration, sourcing, or project management,” predicts IDC.
Insight is key
David Dubois of the INSEAD Business School writes that C-suite executives and entrepreneurs must be able “to identify possibilities and drive change concurrently in three areas where digital technologies can make significant differences and change the face of organizations:
- Intelligence– Seeing digital data as a source of insight and using this data in knowledge-creation processes to create competitive advantages.
- Integration– Leveraging digital channels to transform organizational processes and create agility.
- Impact – Rethinking how digital dynamics can improve a company’s value proposition.”
It’s also a good idea to study up on past IT failures that may still echo and cause skepticism.
“In the past, IT failures often meant high-priced flops, with large-scale software implementations going on way too long and way over budget,” Mary K. Pratt writes at CIO.com in a feature highlighting failures and lessons learned.
Make sure it really is transformational
And don’t be too glib in applying the term “digital transformation.” For many organizations, writes CIO.com’s Clint Boulton, “digital transformation is really digital optimization in disguise, as new digital initiatives merely augment existing services. In the end, many who struggle to define digital transformation resort to the old adage: ‘They know it when they see it.’”
After ticking through some of the characteristics of true transformation, Boulton concludes: “Ask yourself whether what you’re doing is disruptive to your business and to your industry. If you can say yes with a straight face, you may well be conducting a bona fide digital transformation.”
In a Harvard Business Review article, Barry Libert, Megan Beck, and Yoram (Jerry) Wind provide insight into the five-step PIVOT process they use to help clients navigate digital transformation (heavily condensed here):
- Pinpoint your starting place
- Make a complete inventory of all your organization’s assets
- Visualize a new future as a digital network where your firm partners and co-creates with one of your external networks
- Operate a pilot of your network business by shifting small amounts of capital (including time, talent, and money) to the new initiative
- Begin to track the progress of your network initiative
Skirting digital hype
Of course, whenever a term takes hold as an industry buzzword, every vendor is going to lay claim to it, just to ensure it doesn’t lose mindshare to competitors. So the vendor’s digital transformation strategy may not always map to your transformation needs. For example, when your ERP vendor advocates swapping out all the systems you invested in over the last decade for new “digital-ready” systems, you have to ask at what price and for what benefit?
Gartner advocates a “post-modern ERP” model that optimizes core investments and focuses new investments where they can have the most impact and drive competitive advantage. That’s going to take some effort, though.
“Integration has emerged as a critical component of postmodern ERP strategies, but solid integration strategies remain elusive for many organizations,” cautions Gartner’s Denise Ganly. “You can’t have both flexibility/agility and less complexity. There will be more integration challenges with postmodern ERP in hybrid environments than with on-premises, monolithic approaches.”
And then there’s the matter of funding your transformation initiatives. Unless you’re lucky enough to be handed newfound money, you’ll need to squeeze every last available dollar out of existing IT assets. One place to start: ditch traditional vendor support models and create a new model based on third-party support services.