How to Create a Digital Transformation Plan?
When planning for an effective Digital Transformation there are a number of key decisions that you need to make sure that you are aligned As well as you need to make sure that you have got a clear strategy and plan that is going to work for you.
Hence I will be writing in this article what are those key big decisions that you need to make in order to be successful.
As well as I will let you know what you need to be ready for a Digital Transformation.
My name is P.K.Saxena and I am CTO of Sofcon System India Pvt. Ltd.
Sofcon is a 27+ years old company in India in Automation field.
I will be taking you for a joy ride to explore further in this regard.
And my Guide for this journey will be Eric Kimberling who is the CEO of Third Stage Consulting Company.
This is an independent consulting firm that helps clients throughout the world with their Digital Transformation journeys.
Strategy
As I mentioned in the beginning of this article that there are a lot of decisions that you have to make in any sort of Digital Transformation.
Hence please keep in mind that there are dozens or hundreds of decisions that need to be made throughout the project.
Indeed there maybe even thousands of decisions depending on the type of organization you are in.
But there are some key fundamental ones that set the parameters of the guard rails for which direction you are going.
What your strategy is.
How well aligned you are.
All that good stuff and these key decisions need to be articulated and understood by the team.
Ultimately these decisions should be part of your overall project governance to ensure that you are on the right track
As well as you need to ensure that you are all aligned as a team.
So what I would dwell upon in this article is to deal about those handful of things in detail.
Which you need to be aligned on and have clarity on before you start your Digital Transformation.
Level of Customization
The first decision that you need to make is how much customization do you expect in your Digital Transformation?
Let me presume what you are probably thinking.
Probably you are thinking that I have heard from everyone out there in the industry that I should not customize my software.
Well the reality is that is a noble vision and oval goal.
You are probably not going to achieve it.
Most organizations do not nor should they.
Because most technology is not going to fit your needs 100 %.
So you are going to have to do some level of customization to make it work for your business.
Then the question becomes how much customization do I really want to do?
Do I want to standardize my operation?
And do I standardize my business processes?
Do I leverage off-the-shelf software?
As well as do I force my business to change to fit software?
Am I more concerned about retaining my general operating model?
Or
Am I more concerned about retaining my general business processes and changing the software to fit?
Basically the chances are that it is not an either or answer.
Moreover it is not either you are customizing or you are not.
Usually it is somewhere in the middle.
You have got to look at it as sort of a continuum of where you are going to be.
And it is not just one general decision you need to make.
Functional Areas
Oftentimes you need to make these decisions based on functional areas.
Because different parts of your business are going to have different answers.
For example functions like accounts payable are paying vendors faster.
This may not be a competitive advantage for your organization nor is it for most of the organizations.
So you might be willing to accept whatever package functionality you get in your software you are going to accept it.
And you will change your business to fit that.
But when it comes to the customer experience.
Or
When it comes to how you are going to manufacture your
Product.
For example that may be a situation where you have a pretty good operating model that you want to retain.
And you may change your processes a little bit.
But it is more likely that you are going to change the software to fit that operating model.
Therefore you have to look at different parts of your businesses differently.
So that you are understanding that you are going to have different answers for different parts of your business.
And this is something that is really important to get aligned on early.
Because it is easy to just assume that you are not going to customize but you are going to solve the problem.
In fact you have to be realistic about it as well.
And really you do more of a fine-tuned approach to understanding how much you expect to customize.
vs
How much you expect to leverage off-the-shelf functionality within different parts of your business.
Single System vs Best of Breed
Single System
Enterprise Resource Planning or ERP software vendors have done a great job of selling a vision of utopia.
This utopia of one single system that is going to do everything we needed to do within
- our entire organization,
- across all of our organizations,
- all of our departments,
- all of our business units and
- Locations.
And the reality is that is true for some organizations.
But a lot of organizations are not going to find one system that can do everything they need it to do.
So the question then becomes are we really looking for one single ERP system?
Or
Are we going to go to the other extreme and just look for different technologies for different parts of our business?
And again this is not an either or answer.
It is somewhere in the middle for a lot of organizations.
You may be able to find say 60% or 80% of what you need in one core ERP system.
But you might need best of breed points focused solutions that can address some of the other parts of your business.
Best of Breed
And again just like we discussed about business processes that different processes are going to have different answers.
Different functions within your business might have different answers.
There might be some parts of your business where you are more likely to use a niche focused solution like CRM within the sales side of things
Or
HCM on human capital management.
Or
Business Intelligence.
Those might be areas where you are going to accept and adopt best of breed.
But you are also going to use a core ERP system.
So going into your project it is important to understand where you fall on that whole spectrum of single system
vs
More of a best of breed approach to technologies.
Big Systems vs Niche Tech
Big Systems
Just as we need to think about single systems versus best of breed we also have to think about the type of software vendors.
We need to consider that the type of our selected software vendors will be the best fit for our organizations.
Is it one of the big massive ERP vendors like SAP or ORACLE or MICROSOFT?
Would it be an organization like that or a product like?
Which is the best fit for our organization?
Or
Is it going to be more of a focus solution that is specific to our industry?
Or
Maybe is it going to be more specific to certain functions within our business?
In fact this is an important decision to make.
Because a lot of organizations get caught up in analysis paralysis trying to figure out what their technology roadmap is going to be.
And you really do not need to spend time evaluating dozens or hundreds of different systems out there.
You should be able to quickly narrow in and hone in on those solutions that are going to be the best fit for you.
And in order to do that and avoid wasting a lot of that time going down rabbit holes that are not going to be a good fit for you.
In fact you need to define what types of vendors are going to fit us best one or the big ones.
Niche Tech
Maybe one of the smaller niche ones
Maybe there is some mid-size vendors like EPICORE and INFOR and others that provide core enterprise technologies.
That are not quite as big and complex as SAP or ORACLE.
But they are not quite as small and niche as some of the other products out in the marketplace.
So really have a clear vision and alignment internally on what it is you want.
So that you can better direct your evaluation process and your overall digital strategy and road map.
Magnitude of Change
Of all the things on the list I think the one that is the most overlooked is magnitude of change.
How much are you as an organization really willing to change?
And a lot of this gets back to your culture as an organization.
For example are you risk adverse or are you willing to take big risks as an organization?
Historically it just may mean that you wanted to find a digital strategy that aligns with that risk adversity or it aligns with low tolerance for risk.
If you are an aggressive organization or you are a young tech company that is changing quickly then you might have a higher tolerance for risk.
And you might have a different digital strategy and approach based on that.
Moreover it could be that where you are today is not necessarily where you want to be in the future.
But it is not realistic to think that you are going to shift one extreme to the other overnight or even in the short term.
So you want to be realistic about what kind of incremental changes we are willing to make.
And what is that magnitude of change that we are willing to make.
Are we looking for an incremental improvement?
Or
Are we looking for massive wholesale changes for our business model and how we do business?
Choice on Change
Now sometimes one thing to note is that you do have a choice on how you want your digital strategy to look.
And how much change you are willing to take on.
But there are some industries and some moments in time where you may not have much say.
It may be thrust upon you.
The changes may be thrust upon you.
You may have to change more than you want to.
Or
You may have to change more than you are comfortable changing.
So for example especially after COVID in the retail space, bricks and mortar retailers were sort of forced into this whole e-commerce model.
If they wanted to survive whether they elected or not they had to do it.
Of course this is the exception rather than the rule.
But you have to recognize where you are in the economy.
And you have to recognize your growth trajectory and the way the world is today to understand.
Where you fall on that whole spectrum of the magnitude of risk and the magnitude of change.
That you are willing to take on as part of your digital strategy.
And that is going to affect everything from the types of technology you deploy.
How big the process improvements might be.
How quickly you might deploy technology.
Or
How much you might want to space out the deployment to be for longer term and to be for more incremental.
All those things are influenced by or should be influenced by the magnitude of change that you are willing to take.
Future State Operating Model
Now probably the most complex and time-consuming aspect within our list is your future state operating model.
That is one big decision that needs to be made early in your Digital Transformation.
However the problem here is a lot of software vendors and system integrators will tell you that you do not need to worry about that and just use our technology.
Use our best practices and that will define the future state operating model for you.
And in my opinion that is a complete myth and if you follow that prescription that will take you to a disaster track.
Instead what you need to do is define what your future state regardless of technology is.
Define where you want to re-engineer business processes.
Define what the processes and roles and responsibilities are going to be.
And then you find and deploy technologies that best fit.
If you pick the technology first without that clear vision.
And if you start deploying technology without that clear vision of your future state.
Time vs Money
Then what is going to happen is one of two things.
Either you are going to spend way too much time implementing the system.
Or
You are going to be spending way too much money on the implementation.
Because you are anyway spending time.
As you go trying to figure out what you want to be when you grow up or perhaps even worse.
Then you are going to pave the cow paths and just take your current processes and automate what you are already doing today.
But you do not make the tough decisions that need to be made around what your future state is going to look like.
So those are some things to think about.
You want to have a clear operating model to serve as sort of a blueprint for your Digital Transformation.
It is just similar as you would never build a house without a clear blueprint.
In fact you should not be embarking on your Digital Transformation without a clear operating model and business process blueprint.
Change Strategies
Another component that is often overlooked is to build Change Management Strategies.
And it needs to be a big decision.
That is deliberately made early in a project.
It is what your change management strategy is.
How are you going to enable human adoption?
How are you going to bring people along?
What are their roles and responsibilities going to look like?
What are you going to do with that extra time that you have now automated or eliminated as a result of new technology?
Those are all decisions that need to be made early on for a few reasons.
One is because it affects how your business processes are going to look and what your future state is.
But also you have to help your people in your organization to get from point a where they are today to point b where they will be tomorrow.
And the best way to do that is to define a change management strategy that is going to help them get there.
So organizations that have clearly defined change strategies.
Also that have made those decisions around their change strategy.
As well as that have made plan and devise tactics.
Then they are going to be those organizations which tend to be wildly more successful than the ones that do not.
Data Migration
Another big decision that needs to be made is what your data migration strategy is.
And there is a whole lot of sub decisions and micro decisions.
That need to be made within this.
But in general if we are talking at a high level more strategically,
Then some of the key decisions that you need to make should be centred around,
What data are you going to bring over into the new system and what data are you not?
It is easy to think that we are just going to bring everything over from the old system.
And everything is going to be fine.
Yes you can do that.
But it is going to take a lot of time to cleanse that data
And then to map it to the new system.
And ultimately migrate the data.
On the other hand you could say well then we just will not bring any of the old data.
However we will just bring over master data and leave all the transactional data behind.
In fact you could do that but that is going to create a lot of manual rework.
It is going to make reporting difficult in short to intermediate term.
And you are not going to have visibility into your operations the way you would otherwise.
So you probably are going to settle somewhere in the middle.
Some organizations are on one side or the other.
But you need to have a clear vision of what you plan to do with data.
What your overall data strategy is in order to get where you want to go with your Digital Transformation.
Solution Architecture & Integration
Now the final thing to think about is what your overall solution architecture is.
That decision needs to be made early in the project.
So you have a clear road map for how you are going to deploy the technology.
How you are going to integrate it.
Where the data is going to reside.
How you are going to build reporting across multiple sources of data
All that stuff that needs to be defined.
If you do not have that clear solution architecture defined early on.
Then you cannot possibly know how long the implementation and the magnitude of change are going to take.
How much it is going to cost.
What the business value is going to be.
You do not know any of that.
So you are flying blind.
Conclusion
Hence you need that solution architecture and the overall integration strategy to ensure that you are successful in your transformation.
For more information on Digital Transformation best practices I encourage you to check out some of the links I have included below.
I have included a number of guides and podcasts and videos that I think will help you in your Digital Transformation.
I encourage you to check that out in particular Eric’s annual Digital Transformation report.
You can find that in the links below that provides general Digital Transformation best practices reviews.
And rankings of different software vendors in the marketplace such as
ERP / CRM / HCM vendors etc.
So be sure to check that out for more information just to give you some more depth and understanding of how to make your Digital Transformation and your overall digital strategy successful.
So I hope you found this information useful.
Digital Prabhat
Resources:
2021 DIGITAL TRANSFORMATION REPORT:
TOP 10 ERP SYSTEMS FOR SMALL BUSINESSES:
