Unraveling Digital Transformation: 8 Factors for Success
According to the International Data Corporation, investment in digital transformation is projected to reach a whopping $6.3 trillion by next year. There are a few reasons for this. In part, businesses of all kinds – including staffing firms – are seeking ways to be more efficient. This is particularly true in a post-pandemic world facing rising material and labor costs, rapid-fire regulatory changes, and a shortage of IT talent. Technology is, of course, one way to address these challenges.
There is also a widespread ‘technology debt’ across every industry. Businesses have put tools and technologies in place over the past several decades, and those tools are in need of modernization.
Cary Grigg is Director of UHY Consulting, an affiliate of UHY LLP, which is ranked as one of the top 30 national professional services firms. In his business, Grigg sees the value that digital transformation can bring to businesses. He also sees the problems that can emerge when such transformations are poorly executed.
In a recent presentation to TechServe Alliance members, Grigg shared the eight factors that contribute to a successful digital transformation.
Digital transformation: Ensuring success
Grigg defines digital transformation in two ways.
At the highest level, it is the “leveraging of technology to fundamentally change an organization and optimize how it delivers value to customers.”
The second definition, however, hints at the impacts that digital transformation can have within an organization: “The essential, intentional and deliberate disruption of people, processes, and technologies to align with a company’s strategic vision.”
Large and small companies alike struggle with this disruption. When digital transformation fails, three problems most commonly surface:
- The business makes a large investment, but sees no improvement in return
- The implementation takes longer than anticipated, and is significantly disruptive to the operation of the business
- The change doesn’t ‘stick,’ and employees revert to old ways of working
If you are considering a project like this in your business, here are the eight factors Grigg says can make the difference between digital transformation failure and success.
1. Vision and business strategy alignment
“If you don’t start out making investments in things that directly support the vision and strategy of the company, you’re more likely to throw good money after bad in a failed attempt.”
To be successful, any digital transformation project needs a clear vision and the strategy to reach it.
With a clear vision, you’re beginning with the end in mind. A clear and compelling story about where you want the organization to be at the end of the project allows you to move people towards a common goal.
Your strategy then translates that vision into a series of clear and cohesive steps to realize the end goal. For success, each strategy decision along the way must connect to the original vision.
2. Leadership buy–in
“If there’s not somebody at the top of the house that’s supporting the initiative, you’re really trying to push a boulder uphill without any help.”
Throughout a digital transformation project, leaders should remain supportive of both the project and people, as well as engaged in the project. Effective leadership helps eliminate project roadblocks, and nurtures understanding amongst employees about the reasons for change, and the value in reaching the goal. Leaders can drive the concept of change as an opportunity, rather than a challenge.
3. Integrated change management
“These are disruptive events. Making sure that your people are heard, supported, and listened to keeps the process moving forward. It’s like a grieving process. A good integrated change management program should move employees from one end of that spectrum to the other as quickly as possible.”
Change is scary for everyone, at any level. Effective change management builds that human consideration into a digital transformation project.
There are considerable risks in not doing so. Grigg cites examples such as one well-known company, who lost $12 million in sales in one quarter, and another, who experienced a $50 million loss during an SAP implementation. The reason in both cases: inadequate testing with, and training and support for, the company’s employees.
Given these examples, it’s not surprising that – according to Gartner – employee support for change initiatives fell from 74% in 2016 to only 38% in 2022.
Grigg says that integrated change management is a function of three considerations: the what, the why, and the how.
- What: Prepares employees to adopt the transformation, and to adapt to new ways of working
- Why: Instills the vision of how the future will look and feel after the transformation, and invites people to be part of the process
- How: builds excitement instead of denial, and fosters creativity over resistance. Leadership inspires high energy for the reimagined future
There are risks associated with doing this poorly, but there are also rewards for doing it well. Projects with good change management, Grigg says, are six times more likely to achieve their objectives.
4. Structured project management
“A structured project management approach is key, especially when it comes to corralling changes and preventing scope creep. It keeps all the stakeholders aligned and helps them understand exactly where they are in the vision.”
As with any large and complex project, effective project management is critical for a successful digital transformation. Central coordination, clear communication, and tight controls allow you to support people in getting their parts done, and to hold them accountable for doing so.
A solid project management structure:
- Details the implementation schedule
- Assigns roles and responsibilities to stakeholders
- Aligns resources with capacity and capability
- Manages complexities and interdependencies within the project
- Determines risks, and the mitigation strategies to deal with them
- Keeps project stakeholders fully informed with timely and accurate reporting
5. Documenting the current state
“Get down to the nitty gritty and talk to the people that are actually performing the functions. That’s the best way to make sure that that picture is accurate, that it reflects all the different challenges and manual workarounds.”
Information is power. Grigg advises any company considering a digital transformation project to ‘stop guessing and start knowing.’
Before initiating any project, the current state of affairs must be thoroughly understood. You can do this by asking questions of the people who work with the systems and processes every day, such as:
- Can you describe the current processes in detail?
- Are all the existing systems and structures essential?
- What are some pain points or inefficiencies that you’re aware of?
- What are the bottlenecks, gaps, and weaknesses you experience in the current structure?
These kinds of questions not only help to build a complete understanding of your starting point, but they also serve to engage employees in the change process.
6. Developing the future state
“Dare to dream. What would it be if you could make it anything you wanted it to be? How close can you get to that? You have constraints on the project, of course, but challenge some of the assumptions as well.”
Grigg likens a successful digital transformation to baking a cake. All the ‘ingredients’ must be present, they must be combined in the right way, and in the right order.
Like a cake recipe, a successful project plan anticipates the requirements at every stage and sets out a clear and realistic plan for reaching the end goal.
7. Identifying technology solutions
“It’s easy to ‘cash in the coupon of the month’ for the software that’s on sale. Doing so, though, can lead you down a bad path pretty quickly.”
Instead of setting out to shop for software, Grigg says, you first need to understand what your requirements are. It is those requirements – not software cost or availability – that should primarily drive your choice. One decision to make is whether to build on the legacy systems already in place, or to migrate to an entirely new solution. Either way, in today’s market, there are a range of options available to you, including:
- Artificial Intelligence (AI)
- Machine Learning (ML)
- Robotic Process Automation (RPA)
- Internet of Things (IoT)
Some or all of those may be appropriate for your circumstances, but understanding which ones, and how, is critical. According to Grigg, organizations waste $122 million for every $1 billion invested in digital transformation – primarily due to poor implementations. The right plan, accompanied by the right technology selections, can help you avoid these significant losses.
8. Finding the right transformation partner
“One of the things that we do is help customers identify and connect with the right transformation partner, typically a value-added reseller. UHY Consulting is independent; for us, it doesn’t matter what technology a company selects, as long as it’s the right one for their requirements.”
Grigg is clear about the importance of selecting the right partners for digital transformation. An independent consultant like UHY, along with a value-added software reseller with a wealth of end-to-end experience, help to ensure your project’s success.
Are you considering a digital transformation for your staffing firm? The ideas discussed above were part of a webinar hosted by Cary Grigg and presented to TechServe members. If you missed the live presentation, we encourage you to view the recording, which you can find here.