9 Questions To Ask Before Starting A Digital Transformation
Digital Transformation has become the hottest chapter in the management playbook. Maybe rightfully so because digital is the driver for improving operational efficiencies and engaging in new ways with customers and 7 out of 10 companies in APAC hasn’t started the journey yet.
The only problem with the term Digital Transformation is that it describes everything and nothing at once. The media and big consulting houses use it interchangeably in referring to everything from government projects to marketing strategies. As much as both cases fit into a digital transformation framework, a one-size-fits-all labeling creates confusion.
Instead of trying (and failing) to define what digital transformation is to everyone, this blog post will provide a set of action oriented questions that can help CEOs, CIO’s and CMO’s get started on digital transformation.
Transformation vs. Modernization
At Ydigital we always ask clients if their goal is to transform their entire company which involves digital business model innovation and cross functional skills or if they wish to modernize certain parts by injecting digital components.
A complete transformation profoundly changes the way the company operates and how it engages with customers. This is a multi year plan that affects all parts of the value chain.
A modernization on the other hand will improve teams, functions, services, or products by injecting digital components such as new technology platforms or process optimization.
Large transformations require buy in from CEO and board members while modernization can be carried out at CMO, CIO and CTO level.
An example of modernization is a company that wishes to integrate marketing and sales departments for better efficiencies and a more seamless customer experience across marketing touch points.
Strategy before tactics
Regardless of transformation type, it’s important to ask yourself nine critical questions before you start. These questions will help you design your strategy and action plan.
1) What do you want to achieve?
This is a C-level question. At Ydigital we see typically see two client goals; 1) increase in revenue by offering improving customer experience, journey or engagement or 2) decrease in cost by operational efficiency. Both goals contribute to bottom line performance but they affect the value chain differently.
2) Why do we need transformation?
Is it to stay ahead of competitors as an aggressive market move or is it a defensive response to address down-stream market effects? Are we adjusting to consumer behavior or are we trying to create it? Knowing why you need to transform and what your goal is will help you answer the rest of the questions below.
3) What are the components of my transformation?
While most of the popular frameworks overlap on a few areas they all offer individual value too. If we cut out the most basic ones and the most technical ones, most frameworks share three core components: People, Process and Systems. All transformations have these aspects but the weight and investment needed into each differs greatly.
4) How will it impact my organization?
Transformation equals change and any CEO knows that driving change successfully is one of the most difficult skills to master. While processes are relatively easy to design and systems can be integrated/tailored/developed with the right technical skills – there is not a bullet proof strategy for nailing the human component. At Ydigital our experience is that successful change management starts with strong leadership and a clear vision for what the company wish to achieve, followed with clear reasoning why it will benefit the company and the customers. Backed up with strong processes and consistent training and fine-tuning you stand a good chance to succeed but leave just one of these components out your chance of succeeding drops.
5) What is the expected value?
Lets be honest with each other; transformations happen over time and require management hours plus cash investment into new systems and potential external strategy and implementation parties. Immediate ROI (3-6 months) are possible for some modernization projects, but most projects take between 12 and 18 months to yield and meanwhile it’s important to stay committed to the long term goal.
At Ydigital’s we work closely with our clients to divide opportunities into quick wins, medium and long term wins. This approach helps us manage stakeholder expectations on timeline and results.
6) What are the current gaps and how do we plan to bridge them?
Question 1 asked what you want to achieve, the purpose or vision. Most companies have a gap in their vision and current baseline; otherwise there wouldn’t be a need to change. The gap can exist throughout all parts of the value chain and mapping out the baseline helps you design the necessary actions needed to bridge the gap. No matter what the gap is, the solution is to be honest about it and create a plan to fix it accordingly.
7) Do we have a business plan?
Transformation on any level needs budget for strategizing, planning, implanting, buying software and educating employees. Be clear and realistic about vision and budgets. If you only have a few thousand dollars a month, you most likely won’t succeed with a total transformation, but tactical transformations don’t require millions of dollars on the other hand. Ydigital advises clients to create a business plan with expected cost, ROI and payback time before initiating any actions.
8) Can we do it alone or do we need partners?
This depends on your current organization skills and their availability versus your vision, timeline and budget. As transformation often means introducing new ways of working, many companies prefer to hire external partners to guide the process.
9) How do we select the right partner?
If using a partner is the right thing for your company, your compare potential partners across these questions:
– relevant experience
– ustomer references
– team they plan to assign
– process, timeline and budgets
– the level of initial needs discovery