Introduction

Digital Transformation has three stages. Third stage is the most successful phase and the most important phase of Digital Transformation.

But most organizations fail to reach that third stage of success.

Why is it so?

What can you do differently to make sure your Digital Transformation reaches the third stage of success?

My name is P. K. Saxena.

I am the CTO of Sofcon Systems India Pvt. Ltd.

Sofcon Systems is an Automation Solution Provider that helps customers to go through their Digital Transformation journeys.

Three stages of Digital Transformation

I will describe three stages of Digital Transformation in this article which I learnt from Eric Kimberling who is the CEO of Third Stage Consulting firm.

Let me reproduce Eric’s word below:

“When we first started and named the company third stage, it was named after a Rocket launch analogy

so when rockets launch historically there were two stages or two boosters that got the rocket up into space

but it was the third stage launch from the two boosters that would get it up into its ultimate height

and speed and up into orbit and that was a big part of why the company is named third stage

and I felt like that was a good analogy for digital transformations

because many digital transformations fail to reach that third stage.

They fail to get off the ground, they fail to fight gravity

and they have that inertia that they have trouble getting past

so we really like that analogy as a way to talk about how digital transformations go and what some of the challenges are that organizations face

so why is it that most organizations fail to reach that third stage of success what are the ones that do reach that third stage what are they doing differently

and more importantly what can you be doing differently to reach that third stage of success.”

Business Process Alignment

Eric’s firm Third Stage Consulting have studied those companies which are successful and have reached that third stage of success.

It was found that one of the biggest things they do well

and better than their counterparts

that do not reach that third stage is they do well their business process alignment.

They do not assume that the technology is going to solve their business problems for them.

They define how they want to solve the business problems

and what they want their operations to look like

and then find ways to use technology to automate that.

So for example, a lot of times, what happens is organizations will choose a new technology

and the software vendor or the sales reps will convince the organization

that they do not need to worry about their business processes because their new technology has best practices in it

or industry best practices

and therefore they will come in with the answers of how the business processes should look.

Now that may be true at the granular level of how transactions work within a software system

but that is not true at the high level of how you want your business to function.

So that is one problem.

Software Vendors

With that philosophy and with that same flawed approach the other problem

that software vendors typically perpetuate is that today’s technology is very flexible

and can handle a plethora of different workflows and business processes and different options within the system.

So to assume that somehow the software vendor or the software solution itself is going to answer the question of how to run your business.

For you it is simply not true.

You need to have a clear vision of what you want your business processes to look like.

Now it is not only an upfront decision that needs to happen well in determining business process alignment

but you also need to make sure that as you are implementing technology and ultimately going live with the new technology

hat you figured out and determined how that technology is going to be embedded within your business processes.

So it is one thing to get the technology to work and to do what you want it to do

but it is a very different thing now to figure out how to embed that within your day-to-day operations.

It was found that a lot of times organizations will implement new technology but the people do not use it.

So if the people are not using it and the business processes are not fully in sync with those new technologies,

it does not matter that the technology works because it is really not working.

It is not working for your business.

So organizations that reach that third stage of success know how to handle business process alignment very well.

And they are also very good at defining ways that business processes will improve and leverage the technology to enable those improvements.

Organizational Change Management

One of the biggest things holding companies back from reaching that third stage of success is organizational change management.

Thereof most organizations are so focused on the technology, maybe they are focused on the business processes but they are rarely focused enough on the organizational change management or the people side of the equation.

Eric’s firm look at those organizations that are successful.

What they do well and what they do differently?

Eric’s firm studied their organizational design.

It was found that they define what people’s roles and responsibilities are going to look like in the future.

They take the time to define that future state organization

and more importantly they take the time to start rolling out those changes to the organization before they get to go live.

They think of change management and organize training at the end of project.

So there is a lot of upfront strategic work that needs to happen to ensure that the training and communication stuff later in the project are going to take them to third stage and helping them to be successful in their digital transformation endeavour.

Your Culture

Another example of something that needs to happen early on that most organizations overlook is an organizational assessment in really understanding your culture.

What the potential pockets of resistance are going to be which every organization faces.

Resistance whether you know it now or not your organization will face resistance to any sort of changes you might want to roll out but the key is how do we assess your organization in your situation so that we can define a change strategy that is very specific to your needs and very surgical and focused to what your change needs are.

So organizations that are successful and effectively handle organizational change management are the ones that are more likely to succeed now.

Business and Technology Integration

Another differentiator for organizations that reach that third stage of success is business and technology integration.

So in other words, not just implementing technology and business process changes in isolation from one another but looking at the entire big picture of how this is all going to fit together.

How will our business processes flow?

What will those handoffs between processes and different parts of our organization take place?

What would that look like with technology?

We also have to look at how our technology interacts with one another?

How are we going to tie this all together?

How is data going to flow?

What is the single source of truth going to be where is that data going to reside?

How are we going to manage the master data?

All those sorts of questions are things that are not necessarily critical to implementing technology per se but they are critical to getting the full business value out of your Digital Transformation.

And that is one of the things that companies that reach the third stage of success do well is they get the ROI and the business value that they expect out of their Digital Transformations.

Data and Security

Another common afterthought that is a big mistake in Digital Transformations is data and security.

So the technology might be in place.

Technology is working.

You have tested it.

Even if you have aligned it with your business processes.

It can all fail if you do not have a solid focus on data and security.

And what we mean by this is a couple of things.

One is you want to make sure that the data you are bringing over to the new technology is clean.

That it is the right data.

That you have cleaned it up.

That you have mapped it to the new system appropriately.

Master Data

The other thing you want to do is to ensure that you have master data management processes in place to ensure that once you have the data brought over

and you have cleaned it up,

you have mapped it over to the new system that you are not corrupting the data because people are not tracking the data or maintaining the data the way they should.

So you want to set up a master data management processes that enable data to remain clean even after implementation.

And then the final part of this is the whole security aspect of things.

How do you ensure that you do not just make your systems hacker proof and ensure that people cannot hack into the system but just as importantly maybe even more importantly is make sure that you tighten up the security within the new technologies so that people internally are only accessing.

What they should be accessing and so that you have the right division of controls and the right separation of duties so that organizations are not faced with situations where for example an employee can create a new vendor in the system and then go pay a new vendor which theoretically that person can create themselves as a vendor and go pay themselves some amount of money.

So you want to do that via security profiles and different security mechanisms within technology to ensure that you avoid that common security problem.

Testing

Testing is another common problem with transformations.

Now most organizations know that they need to test.

Most organizations do not simply skip over the testing process but the way they do it is significantly flawed.

Typically testing is more focused on ensuring that the technology works from a technology perspective.

In other words making sure you worked out all the bugs and that the technology is sound but that is not nearly as important as making sure that the technology works for your business.

So the user acceptance of testing or the conference room pilots is what I am talking about here.

So really making sure that you have worked through all the different scenarios and the major exceptions that you might see in your day-to-day operations and ensuring that you have worked through all that stuff.

Because not only it is important to ensure that you have defined our processes and your technologies clearly but also to make sure that people internally within the company understand how those new processes are going to work and have been a part of testing.

And making sure that you have poked holes in it and that can be very helpful from not just a testing perspective but also from a change management communications perspective as well.

So making sure that you have a very robust testing process is very important.

So when you are looking at your vendor’s proposed testing plan you want to make sure that you have added some buffer to that to account for your own user acceptance testing in addition to the technology testing that they might be doing.

Benefits Realization

Finally when you look at what companies that reach the third stage are doing differently to fully realize the value of their investments in technology then you find that it is benefits realization.

As a result benefits realization in its simplest terms is really a way to define what it is you expect to get out of your new system and then actually go measure the actual results after you have gone live with the new technology or technologies.

This is an area that so many companies overlook.

They do not even think about doing and the value of doing what I am suggesting here is that the level of effort and cost to do this is so minimal when compared to the overall time and cost and effort that has gone into the technology implementation and the value you get out is so massive.

So it is important to do this but one of the problems people run into is they are afraid to go back and look at what results are we actually achieving.

Because chances are quite frankly you are not going to have achieved the benefits you expected right away.

While that is the whole point of going through a benefits realization exercise to ensure that we look at where we are achieving our benefits.

Benefits

Besides where we are not achieving our benefits.

And where we are not achieving our benefits what is it we need to do to tweak our deployment to make sure that we fix those problems.

And a lot of times it is real simple things.

It is things like we did not train this group on how to use this certain function within the system.

And that is undermining our business benefits.

Think about that for a minute and the level of effort that would take versus the amount of effort it just took to go through the entire transformation.

It is pretty minimal but the amount of impact it has on positive ROI is huge.

Key Takeways

So these are just some of the things that we commonly see organizations do wrong that undermines their ability to reach that third stage of success.

In addition to the things we have dealt about in this article there is also things that you could be doing from a quality assurance perspective.

But the concept behind quality assurance is really making sure that we look at the implementation to identify risk throughout the implementation from an independent technology agnostic perspective to ensure that we are identifying those risks early on in the project and that we are doing the things right that we need to be doing to achieve that third stage of success.

So having a solid project management and quality assurance framework in place can be one of the best ways to address the things we have dealt about in this discussion but also uncover other risks that we have not talked about in this discussion as well.

I hope you found this information useful.

                                                                                       By Digital Prabhat

Resource: Eric Kimberling-Three Stages of Digital Transformation /

Third Stage Consulting Group

                www.thirdstage-consulting.com