Last week, I met with a large, Fortune 500 client to discuss their ongoing digital transformation efforts. It was a particularly enjoyable discussion from my perspective.
The way the client executive and project team is approaching their initiative is particularly refreshing. They are focused on the right things, are thinking bigger-picture and longer-term than many of our clients, and understand the complexities they are about to undertake.
At the same time, the discussion was a reminder of how much the enterprise technology space has changed in the last 20 years that I’ve had the opportunity to be a part of it. Long gone are the days of simply viewing technology as a back-office function meant to make companies more efficient. The opportunities for enterprise systems and technologies are broader than they’ve ever been.
As more of our clients shift their thinking beyond ERP systems to focus on the bigger picture of digital transformation, we find that there are a number of essentials that executives and project teams tend to forget:
1. Digital Transformation Leverages More Than Just ERP Systems. One of the key takeaways from hundreds of client discussions over the years is that ERP systems are just one of the technological components required to drive change. In addition, standalone systems such as eCommerce, warehouse management, business intelligence and others can affect more enterprise change and improvement than any one ERP system typically can. And, best-of-breed solutions are no longer at a disadvantage compared to single systems. It’s now easier for organizations to view technology outside the lens of ERP software.
2. An Effective Enterprise Strategy is the First Step Towards Digital Transformation Alignment. Even more so than is the case with ERP implementations, digital transformations require a strong alignment with your organization’s overarching business and enterprise strategies. In other words, these strategies and objectives should clearly define how enterprise technology (or technologies) will help you achieve those objectives. For example, if your goal is to increase efficiency and profitability with each of your customer interactions, then your digital transformation should aim to achieve that same goal.
3. Business Process Reengineering Should Drive Your Digital Transformation Initiative. Most digital transformations entail significant changes to ways of thinking, operational models and business processes. Therefore, business process reengineering should be the foundation of your digital transformation initiative. Rather than backing yourself into a corner with a single suite of products that may or may not fit your needs, it is important to first redefine how your business processes will need to look in the future to address point #2 above. Then – and only then – will you want to find enterprise technologies to fit your needs.
4. Organizational Change Management is the Missing Link to Successful Digital Transformation. Along with business process and operational changes comes the need for effective organizational change management. You may think that employees will openly embrace the strategic changes you are making – and they likely will – but that eagerness isn’t enough to overcome the difficulty of change. Your initiative will require a well-defined strategy for organizational change, training and communications to ensure that your new technologies and business processes are effectively adopted by your employees. Otherwise, you are simply investing in shelfware that won’t have much of an impact on your business.
5. Implement Benefits Realization to Measure the Results and Continuously Improve Your Digital Transformation Efforts. Digital transformations are typically intended to move the needle on key strategic objectives. For example, increasing order size per customer, increasing or defending market share, increasing profitability per order and other metrics are typical drivers. In order to achieve them, however, you will need to define your target levels of performance, measure them and continuously improve your digital transformation efforts over time.
With these five essentials in your hip pocket, you are likely to make your digital transformation efforts successful. Without them, you are likely to be among the majority that fail in their efforts.