A strategic business change is extremely disruptive, not only to employees but also to partners and customers. It\u2019s even more challenging when the starting point is an underinvested IT environment mostly just surviving in maintenance mode compared to the future-state goal to be a company providing technology-enabled innovative services. That kind of situation has me thinking about what happened at H. D. Smith.\u00a0\nBased in Springfield, Ill., the company had been a pharmaceutical distributor since its founding in 1954; but a few years ago, the Smith family decided to branch out beyond their traditional business. They wanted to supply not only healthcare products but also technology-enabled services and business solutions integrated around the products. It fit with their strategic intent of controlling healthcare costs, safety and quality while maximizing patient outcomes. They could see the that the digital world was beginning to transform business and present new opportunities \u2013 or threats to businesses not moving to digital technologies.\u00a0\nThey brought in a new CIO nearly five years ago to lead the transformation of the IT environment. David Guzm\u00e1n\u2019s background includes a highly successful tech-enabled business transformation at Owens & Minor, another healthcare products supplier, several years ago. Even so, that didn\u2019t enable him to whiz past the challenges at H. D. Smith. As he shared the H. D. Smith transformation story with me, it was clear that the company had underinvested in its IT environment and there was no way that environment could move the firm into a digital business. But it was also clear that the leaders were willing to invest to have a shot at the vision of where they wanted to take their business.\u00a0\nIn the environment Guzm\u00e1n took over when he joined H. D. Smith, the data center was inside the distribution center. It had one generator, so there was no redundancy. As he described to me, \u201cIf we lost power, we had to choose between the data center and the huge refrigeration unit for medical products that needed to be kept cool.\u201d\u00a0\nOther examples of the environment at that time: The IT department didn\u2019t conduct intrusion detection or manage other basic security processes. Most processes were very immature. They tested code in production. And there was no change-management methodology. Guzm\u00e1n recalls that \u201cchange management was basically an email from one developer to another that said, \u2018Don\u2019t touch this object while I\u2019m working on it.\u2019\u201d He observed that the cultural atmosphere of the IT team was sort of a justifiable pride in being able to run a major company despite not spending money and not having formal processes.\nStepping into the midst of this environment and tasked with transforming it to enable innovation, Guzm\u00e1n was immediately also saddled with responsibility for getting an SAP implementation under control, occupying much of his attention during his first three years (two years to implement and a year of post-implementation \u201chyper-care\u201d).\nToday, H. D. Smith develops innovative programs and services. Approximately 15 percent of its business is from new digital and speciality distribution services. Part of this is via the acquisition of Triplefin. At the same time, the IT group supports the growth of the core pharmaceutical products distribution business, realizing the Smith family\u2019s vision of growing their core business and creating a complementary digital business. Impressive results, indeed, for a five-year journey! : And the transformation continues, with Arete Pharmacy Network, a joint venture with American Associated Pharmacies, the most recent addition to the emerging digital portfolio.\u00a0\u00a0How did the CIO help the company propel this vision?\nFirst, he recognized that moving a company into a digital business is much more than changing the technology. My advice to companies undertaking business transformation is to never underestimate the business side of the change; it\u2019s not just IT. Change on the business side must be embedded and part of the DNA of the transformation. A CIO can help lead the change but must drive the change into the very fabric of the business and business model.\nThis requires a united leadership team effort. Dale and Chris Smith are the drivers of change. The CIO has been a key part of driving change as has the head of HR, Karen Callaway, and the president of the specialty solutions business, Bob Appleby. Together, these five form the executive committee that drives the transformation of H. D. Smith. Over time, this also included the CFO and industry veteran, Joe Conda.\u00a0\nGuzm\u00e1n shared with me that he emphasized the change of the entire business and that changing to a digital business required thinking differently through all processes. There are so many complex uncertainties in that level of change.\n\u201cDigital transforms the business, so understanding the business is key,\u201d he says. The executive team made sure that the SAP implementation and teams performing the other IT changes also involved talent from the business perspective of every department (finance, operations, logistics, sales, etc.).\nAnother step they took in thinking differently about processes in a digital world was to rethink how the Project Management Office (PMO) should operate. Because of the level of change, they shifted the PMO to report directly into the office of the CEO, Chris Smith. \u201cThis gave the PMO the power to communicate to the organization the imperative for the business to change,\u201d he recalls.\u00a0\nPart of his role as CIO was to transform the business to be a better consumer of digital capabilities. Before the company began its digital transformation journey, Guzm\u00e1n says it was like a Venn diagram with two circles. \u201cOne was IT and one was the rest of the business, and those two circles did not intersect at all before our digital journey.\u201d \u00a0\nThe digital transformation comprised the whole company, and it was necessary to elevate everyone\u2019s level of sophistication. \u201cWe needed to build those skills in each department,\u201d he explains. \u201cFor instance, we trained people on how to test software, how to do requirements, how to articulate digital needs, how to be the first line of defense in supporting the solutions that we deliver, how to make projects run smoothly and how to understand the systems development life cycle.\u201d\u00a0\nDigital transformation isn\u2019t just about IT; check that mindset at the door. It\u2019s a CIO\u2019s first step in dealing with the uncertainties and challenges that will arise.