6 Elements to Define and Scope a Digital Transformation
By Carla Bendeich and Chad Corneil
Over the last several years, we’ve worked with clients that have either just started their digital transformation or have been on the journey for more than 18 months. These clients are trying to understand why efforts are coming up short — or worse — relaunching programs after several failed attempts.
In order to help leaders scope a global transformation and achieve stronger results with little risk, we’ve developed questions surrounding six key elements:
1. Digital Strategy and Success Measures
Have you identified clear objectives? Is your leadership team aligned on their priority? What cultural impact do you expect?
The executives we’ve worked with usually have a vision in their head or have identified some key objectives. Unfortunately, leadership teams are often misaligned, each with their own idea of the highest priority objective. In some cases, there may be a misunderstanding about what the vision means to them and their business.
Culture is critical to effectively driving a digital transformation and leaders can improve the chances of achieving program goals by creating a common understanding about the outcomes. Assessing early on how the culture may respond to the transformation is vital and the drivers for change need to align with the overall organization’s strategy so that each person impacted by the change can support the big picture.
Companies can enable change through the right amount of governance with increased communications, program management, team alignment, and careful change management to mitigate the risk of business disruptions.
2. Customer and Product
Is your transformation effort laser-focused on providing a seamless customer experience? Which customers? Which personas? What products and/or services do you envision for the future?
These questions help leaders gain clarity on the functional areas tied to the customer experience. This determines what impact we are trying to drive with the customer before we determine who will be involved to support the changes.
Creating customer journey maps is a great technique to show the key touchpoints by persona and helps us understand which customers are directly (or indirectly) impacted by the change. Journey maps also help provide a clear vision of the recommendations that can improve the customer experience with a go-to-market service framework.
3. Operating Model
Which business units, geographies, and capabilities are impacted? What are your differentiated capabilities? Are decision rights clear across the leadership team for all areas impacted? What critical investments in organizational structure, talent, and operations have you identified?
The operating model is one element of digital transformation that’s often overlooked, despite being one of the most important. It’s critical to know the number of stakeholders impacted, their functional role, and where they sit and report geographically. However, it’s just as essential to know how they operate and where decisions are made.
We have more than 20 industry business capability models to accelerate conversations surrounding operating models, including those for financial services, retail, healthcare, life sciences, and more. The capability models — along with the operating models — create a clear picture of roles, responsibilities, and the ways of working to build a future state roadmap. They also can effectively outline where additional investments need to be made to build capacity and capabilities within the organization.
4. Data Insights and Innovation
What is the scope of the data foundations required to support customer insights, product/service intelligence, and operational decision making? What are the key applications considered for data integration across the core capabilities impacted by the transformation?
Organizations today are hyper-focused on how they drive revenue opportunities using data and are infusing data into strategic plays. While controlling how data is managed with a data-first approach can be a strategic differentiator, it’s necessary to understand the data foundations, how the organization governs information management, and how the culture embraces data to ensure they are unlocking the value of data insights and the innovations data can enable.
Several of our clients have developed self-service tools and reporting capabilities. We’ve found that making data available is just the start and the best outcomes happen when there is organizational agility to respond to market needs based on what the data and analytics show.
Answering these questions can help produce solutions that greatly influence the operating model. Therefore, taking time to fully understand the implications of how the business leverages and governs data is an important step to fully understand the impact to the business.
5. Technology Platform
What is your current platform strategy and how does it leverage cloud technologies and ensure security and compliance are at the forefront? What are the applications in consideration and how is the move prioritized?
As you can imagine, technology is always part of a digital transformation program. However, the platform and applications are just the tip of the iceberg, which is why it’s important to ask about the technology strategy, tech operating model, and the impact changes will have on the customer.
One client in the entertainment industry had a multi-year sponsorship with the owner of a downtown Los Angeles sports and entertainment complex. It saw an opportunity to transform this sponsorship into a partnership by driving business value through the appropriate use of their technologies — both software and hardware — to improve the owner’s business operations. The resulting effort laid out a multi-year roadmap focused on setting a solid IT foundation along with a customer journey map for our client’s partner to build industry-leading guest experiences at its concerts and sporting events.
Like data, technology has a significant impact on the operating model. It’s important to understand the potential consequences of the technology platform as it may automate or disrupt existing business functions and operations.
6. Finance and Funding
Do you have line of sight into the Return On Investment (ROI) and business case? Have you budgeted appropriately for the time, effort, and resources it will take to transform? How will you finance the transformation? Are you making appropriate investments in foundations and scale activities?
The questions surrounding financing and funding a transformation are usually well defined in a business case before a project is even started. We have learned that ROI is often overstated or hard to quantify and having models to efficiently put real numbers, metrics, and KPIs in place is crucial in ensuring that clients meet their goals.
One of our clients in the agriculture industry was implementing an enterprise platform to support sales and service capabilities across 13 divisions in three global business units. They needed to centralize and streamline sales operations while providing a cohesive customer experience across all 13 divisions. A pilot revealed their current approach would not scale.
The solution was a pragmatic, scalable, actionable roadmap and architecture to realize the value quickly and maximize their investment in Salesforce. The roadmap included seven program and 53 project investment recommendations with an estimated cost of approximately $25 million over three years. The payback would occur in year two or three based on a governance model that included Objectives and Key Results (OKRs) and ROI models. The client is continuing to use both OKR and ROI models on new business cases.
Conclusion
The questions surrounding these elements provide a holistic approach to defining and scoping digital transformations. We use these six elements in conversations with our clients to develop and create a plan that meets the goals and outcomes of each program. Utilizing this methodology, we’ve seen that we can drive an approximate 30–50% acceleration in many of our client’s digital transformations.
Thinking about or working on a digital transformation and want to continue the conversation? Leave a comment or reach out!
Slalom is a global consulting firm focused on strategy, technology, and business transformation. Learn more and reach out today.
