LLC

’Innovate or die’

I will amend the statement to ‘Evolve or die’. You don’t have to be a cutting-edge innovator to conquer and control market share. You do, however, have to continue to evolve or transform to maintain relevancy. If you take nothing else from this article, take this-

Fundamentally, Digital Transformation is really about transforming the business first, then the technology.

Business Transformation usually focuses on these core elements—process, capabilities, margin, and people. To transform a business through technology, an IT organization must understand ‘how’ a business works. Its detailed processes, inputs, outputs, dependencies, and metrics by which they measure success. This understanding is integral to informing IT’s future enterprise architecture, solution design, technology choices, and integration points to satisfy the core elements of business transformation.

’Business Processes- They are the Business’

Changes to business processes need to direct and inform Digital Transformation. If your company makes significant changes to the ‘Procure’ aspects of the ‘Procure to Pay’ process around raw components used during manufacturing, those changes will affect cost and inventory recognition processes as well. This change causes a cascade of interdependent actions that affect your supply chain organization and your accounting organization as well. As a CIO or leader in your organization, you must be aware of and account for these changes. The interconnected nature of business processes, supporting technology systems, and integration points, if not fully understood and scoped, will lead to cost and project timeline overruns as well as temporary ‘stop-gap’ solutions that will become permanent.

‘Capabilities- Not just for Consultants’

Do you have a documented Business and IT capabilities model? Does your model show where capabilities facilitate value stream activities? Are those value stream activities components for end-to-end business processes that map to supporting technology processes? Does your model show the systems and integrations that facilitate these technology processes? If not, no worries, you are in the majority.

 The interconnected nature of business processes, supporting technology systems, and integration points, if not fully understood and scoped, will lead to cost and project timeline overruns as well as temporary ‘stop-gap’ solutions that will become permanent 

Capabilities are not just matrixed frameworks that consultancies tout as maturity models or innovation growth templates. Business capabilities, similar to business processes, should stand alone independently of their facilitating technologies. IT leadership must understand the business’s current capabilities and desired future state capabilities in order to build its own capabilities.

Technology has evolved to the precipice of creating and driving new and innovative business models through IT capabilities. This puts IT into the driver’s seat of partnering with the business to determine “What is possible?” This pure form of a digital transformation is truly a business transformation and can be synthesized as-

Technology no longer runs the business, it is the business.

‘Transformation enables margin, not diminishes’

Post digital transformation, if the business is not able to quantify improvements to its operating margins within the agreed upon timeframe, you have failed.

It does not mean your transformation efforts failed, it means your transformation has not achieve its intended effects. How many IT programs have you seen with budget overruns and missed time lines, that continue to consume resources that patch, create work arounds, or even augment the missed transformational effects with more tools? Or worst case scenario, a project that hails success by automating bad business processes. These activities are destructive to the intended effects of digital transformation, margin, and ultimately the survival of the business.

I pose the above questions to emphasize-digital transformation’s success hinges heavily on changing how a business works prior to changing the technology. Technology solutions should be the driver of Business Transformation and the conduit through which margin improves.

‘Success is won or lost by relationships and incentive structure’

Of all the things that can cause a digital transformation to succeed or fail, relationships, and subsequently people, are what should be focused on the most. Before any large digital transformation project begins, you need the following-

1) One or many executives deeply trusted by both Business and IT

2) One or many Project managers that has an established relationship with 80 percent of key stakeholders

3) An incentive structure that aligns with the success of the project

People are always the most challenging part of any transformation, digital or business. People inherently dislike uncertainty and change. Unfortunately, transformation, by its nature, includes heavy doses of both.

To combat this, established relationships can serve as the voice of calm in the storm by continually affirming, “Yes, this is difficult, that’s okay.We will get through it.” Common goals (incentive structure) also serve as a strong reason for people to stretch and overcome uncertainty and change. If an organization or individual’s goals do not align with transformation, escalation often becomes the only path forward that ultimate sours relationships, slows progress, and puts transformation at risk.

All digital transformations are truly Business Transformations and I encourage all IT professionals, CIO’s and the remaining organization, to embrace the business and its processes. If IT organizations are truly to be respected as equals and partners, we must know our world and understand theirs.