A CIO's guide to digital transformation
Companies have been pursuing digital transformation at different rates for the last few years.
CIOs make sure the enterprise is participating in its own version of digital transformation because their competitors may have already beat them.
Transforming from a traditional business approach to digital requires a rethinking of how things are done with a focus on a few basic concepts along with a cultural attitude that values transparency. And transparency extends from inside the company through its business partners to its customers.
As CIOs pursue their digital transformation initiatives, they need to look at the current state, evaluate end goals, and build a master plan for buy-in from all stakeholders.
Step 1. Evaluate current state.
Here’s how CIOs need to evaluate their company’s current position and present their plans for accelerating (or starting) the journey to stay ahead of their competition.
Culture. This may be more difficult for legacy companies to change but also the most important starting point for successful digital transformation. If the company doesn’t already have a culture of openness, senior executives will need to play leading roles in building a trusting environment that supports the transparency that digital transformation brings.
Collaboration. How is the company supporting collaboration? In addition to providing tools to enable open collaboration between business units for direct communication and feedback, executive management needs to participate. This needs to be an extension of normal conversation. Non-sensitive company information that affects their roles should be shared with customers and business partners as well.
IT financials. There are multiple paths to fueling digital transformation (e.g., dedicated project spend, cutting run-the-business spend with application and service rationalization). Whichever path you take, start by viewing IT spend through a shared IT taxonomy that aligns line-item detail from a general ledger to products and services business stakeholders consume.
Cloud-enabled. It’s likely that every company has some cloud-based initiatives, but digital transformation will reach its highest potential with a cloud-first attitude toward systems deployment. Starting new initiatives on cloud-based platforms can enable fast and flexible deployment with built-in ability to provide access without restrictions based on location or computing platforms, a key to transparency.
Mobile forward. With more than half of all web traffic moving to mobile devices, companies can provide better access to customers and staff by starting with the intent of deploying to mobile devices. Is the company thinking of mobile deployment as the default strategy? CIOs need to lead the way by making mobile the first stage of application development when new projects are initiated.
Innovation. Real change requires experimentation with new ideas and methods. Is the company invested in experimentation and research? Trial and error should be shared as the company attempts to meet new challenges with new ways of doing business. Involve internal and external teams to understand problems and develop solutions.
Customer-focused. Above all, companies need to assure they are focused on their customers. Wherever possible, lines of communication need to be open between customers and multiple levels of internal operations. Changes and developments should make customers’ perspectives their top priorities as the company into account and feedback solicited to confirm goals are being met, and if not met, work together to find solutions collaboratively.
Step 2. Align to transformational goals
Ask a few pointed questions to see where your company is on its path toward digital transformation and transparency.
Are business and IT strategies linked so that business units have deep and direct understandings of IT’s efforts? Does IT have a forward-looking view of the business opportunities and challenges?
- If not, IT may be chasing initiatives that no one cares about, and business units will wonder where IT is devoting its time and budgets.
Are overall budgets and properly related to business strategies or based on outdated projects and assumptions?
- If not, spend commitments could be out of sync with the pace of the business. And what better way to ruin IT credibility than lining up support for a project or initiative that is, literally, yesterday's news.
Are executive level reviews of spending and priorities comprehensive collaborative?
- If not, working in a silo will come back and bite you once the value-based ROI conversation kicks off.
Are budgeted expenditures reviewed against current initiatives?
- If not, IT will eventually be accused of squandering its significant budgets in pursuit of outdated or otherwise irrelevant projects.
How recently have spending priorities been re-justified against digitization goals?
- If not, project priorities may have changed because of business challenges and IT can be devoting resources in the wrong direction.
Do the right people know enough about the overall goals and initiatives to verify actual transparency?
- If not, there may be transparency but for the wrong audience. That means wasted efforts and any benefits the company expects won’t materialize.
Digital transformation is not a new concept, and plenty of companies have taken up the initiative to transform themselves into more nimble and transparent organizations. CIOs are driving forces in managing the processes and need to be instrumental in monitoring their environment so that conditions are right for digital transformation to succeed.
Step 3. Build a digital transformation master plan
Digital transformation must be understood and agreed upon by senior executives, line-of-business managers, and board members, and the effort needs to have backing and support from the top levels of the company before any effort is undertaken.
Here are five actions CIOs should consider as they present a digital transformation master plan to their board and executive committees.
1. Define your transformation
While the phrase “digital transformation” seems to be on everyone’s lips, the definition is frequently left to guesswork and assumption. As the leader of any technical initiative around digital transformation, it’s up to the CIO to lead the discussion that drives a common understanding of just what the term means. This process should start with a single simple statement about the term’s meaning but should then include specifics about what the company as a whole expects to accomplish by embracing the transformation process.
This discussion and eventual statement are likely to take some time and much debate before an agreement can be reached. But a clear understanding and agreement are essential to achieving long-term success. This agreement is also essential to avoiding misunderstandings farther down the road and should be viewed as a reference document to be used to measure individual projects regarding their funding, impact, and integration. This step is critical to successful and continued progress because it’s impossible to achieve digital transformation if it is not clearly defined.
2. Define your funding model
Ultimately, digital transformation success is predicated on a growth mindset prevailing over the (naysayers) of a fixed mindset. But transformation doesn't happen without upfront investment. Be strident in how you are fueling digital transformation. If cutting run-the-business spend is your funding model make sure your master plan calls it out. Arbitrary promises to cut "waste" and "trim the fat" do not pass muster without specifics behind them. If rationalizing current services and applications is your funding model be equally specific on how and where. Too many organizations rely on arbitrary cuts to IT spend in "redundant" areas that, as it turns out, are not "redundant" at all and cause all sorts of organizational turbulence. Trying to optimize technology investments without data-driven insights into IT usage or defensible IT cost models is less of a thought-out strategy and more of a hopeful bet.
»Read more: The CIOs guide to IT cost optimization
3. Put user experience at the top
Digital transformation is all about the user—in all their many personas. But the final goal is to make the business more accessible, easier to work with, and better than the competition. It may not be immediately possible to define exactly how the changes will manifest and which technologies will touch which processes, but each business unit needs to look at its own processes and the people who interact with systems that make the business function.
It's important to collect information that can guide the changes you will put in place and the most direct ways to do that are to first ask users their opinions about where they experience pain points or would like to see changes that would make their work easier. The second way is to simply observe how people are doing their work. Whether it’s using an application or going about their regular activities, watch with an eye toward making their experience better and easier by applying your understanding of what digital processes are available that could make a difference.
4. Evaluate what’s already in place
Very few enterprises are digital-free so the idea of transforming to a digitally-oriented company is likely to be more incremental than revolutionary. That means it’s critical to assess the current state of digitization to understand what components are already part of the landscape. Part of that evaluation needs to be an assessment of each function and how it conforms to the definition and roadmap developed in the early stages of the process.
Some of the existing functions will be part of the company’s systems infrastructure and critical to ongoing operations but that doesn’t mean they comply with the future vision. Other components are likely to have been added over time either by IT or by line-of-business managers to address specific operational needs. The task at this stage is to understand how each component fits, whether they are adequately addressing both current and future needs, and how they can integrate with the grander view of digital transformation. The results of the survey and analysis need to be shared, discussed, and eventually agreed upon, along with a plan for including or removing them from the final integrated system and for replacing those that don’t measure up.
5. Set a broad schedule
Prioritization of tasks is essential to executing a plan of action, and the development of a plan of this magnitude requires consideration and support from all levels within the organization. Because of the expected positive impact on the company, top level management and board members need to be included, and if possible enlisted as champions of the overall vision so that proper funding and staffing can be allocated. The overall plan needs to be presented as an update to discussions that occurred at the initial stages of the digital transformation initiative, not as a new idea. The schedule for addressing the various phases of the transformation process should be reasonably specific but broad enough to account for changes based on factors discovered during the process, and a feedback loop that reaches to the top levels of the company needs to be established in advance.
Digital transformation of an enterprise requires substantial effort from all segments of the company. CIOs who lead the effort by informing and gaining support from top-level executives and company board members have the greatest opportunity for success.