Digital transformation: from words to the actual implementation
Digital transformation – a phrase that can be heard almost everywhere. But what is it, how should companies start it, and what impact will it have on their business? Unfortunately, there is no uniform answer to these questions that would apply to each company.
What does transformation mean?
Transformation means a comprehensive change profoundly affecting or changing the company’s business component. It affects almost all functions of the company – from procurement, finance, HR, development departments, etc., up to the implementation processes and the required supporting technology. If a company develops a new product or defines a new service, this in its essence does not represent a turnaround or transformation. A real transformation is when the company realises that the market develops differently or faster, and responds by changing the envisaged course or changing the strategy.
And why do we call it digital?
In simple words, digital transformation means that the technologies, machines and devices, connect to each other and provide us with the information we need in a certain situation. Our way of life became dependent on the technologies around us, and practically all decisions we make depend on the information from the world around us. A growing portion of the purchase path (from the first impulse to the realisation of the purchase) is done via the internet, the users of our services and the entire user experience are gaining importance. So, it is no surprise that regardless of the transformation the company undergoes, its largest influence will be because of the technology itself. Digital transformation actually means a race for a faster adaptation to new habits of the market, buyers and competition; in its essence, it is based in technologies.
How to begin a digital transformation?
So, machines, devices and integrated systems are within reach; how well we use them, depends mostly on each individual company. Digital transformation is a complex process, where risks – and failures – are and will be present. Yet, if we wish to be successful tomorrow, we must start today; the key is that the transformation initiative comes from the management. Surely the process is accompanied by uncertainty, so it is essential for the management to lead this process in a structured and controlled way:
- Develop a strategic framework
In the company’s strategic framework evaluate the vision, mission and objectives, and carry out a thorough SWOT analysis of the current activity.
- Define the strategy
In the strategy, define the contents and results with the focus on the expectations and needs of the market. The main element of this step is to discover and define what your customers expect from the company in the area of products and services, and to define the value offered by your company. It is essential that you are aware of the limitation, and on the other hand also the new possibilities you have because of the available technology.
- Define the strategic objectives
The company’s strategic objectives (these should be S.M.A.R.T.) must arise from the defined strategic framework, and at the same time must connect to the definition of strategic contents and results defined in the previous step. For each goal, the metrics must be defined, and based on this, it can be determined later whether each objective has been achieved, and to what extent.
- Prepare a comprehensive plan
When the strategic contents (topics), objectives and metrics are defined, prepare a comprehensive strategic plan. This means that strategic objectives are connected with strategic topics based on cause-effect relations. The plan should clearly indicate in what way the company generates value for its customers and how and why added value is created.
- Define special initiatives
Some strategic objectives will not be achieved just via the regular functioning of the company; to achieve these special and often crucial goals, special initiatives must be defined. Actually, these are strategic projects the company must carry out to ensure its success. Usually this is the most demanding step in terms of contents, time and finance – and often the transformation of the company will fail here. To avoid this, an adequate support from the management and a regular monitoring of these projects are of utmost importance.
Crucial in this process is the regular monitoring and controlling, and adapting the strategy as required, if certain projects or strategic orientations prove to be incorrect or do not provide the right results. In any case the entire process must be repeated regularly in a certain period (for example once a year).
So, the digital transformation should be initialised and supported by the management, but this does not mean that the management should prepare the entire strategy. Usually each unit of the company (for example the departments) arrange the preparation of the strategy and development of the department, following the aforementioned steps. In this way, strategic topics, goals and metrics at lower levels become more tactical and operative, while the management still retains an adequate supervision over the strategy implementation at lower levels. The larger the organisation, the more complex the strategic plan; therefore it is extremely important to support the transformation with the right tools. From the aspect of content, time and finance, the most complex step is the implementation of strategic initiatives or strategic projects, and this is why the role of the project information system is important. With such a system, the management has a comprehensive overview of the project portfolio and the implementation status of each project. Many risks of failure can be avoided on time when the system alerts us to possible delays, budget exceedance, new risks and other extraordinary events. The system is used to prescribe the methodology to project leaders, so the projects are run in the agreed way; in addition, the planning and supervision over the running are easier, and this is one of the key conditions for a successful completion. Successfully completed strategic projects are the key for any correct transformation of the company – digital included.
Tomaž Kuralt, Project Manager and Microsoft P-Seller for Microsoft Project