Table of Contents
- 1 Introduction to digital transformation
- 1.1 Digital transformation challenges and opportunities
- 1.2 Digital transformation business objectives
- 1.3 Digital transformation key success factors
- 1.4 Measuring digital transformation success
- 1.5 Digital transformation roadmap
- 2 BPA Project Management Workbook
- 3 Frequently Asked Questions
The following guide to digital transformation will provide you with the information and resources you need to identify, validate, create, execute and report on the success of your transformation programme. In short, this article will blueprint your digital transformation roadmap from start to finish.
Throughout this article you will find useful resources such as a workbook on digital transformation or tables highlighting transformation KPIs. This will help you formulate a successful digital transformation strategy that meets your unique set of circumstances.
Introduction to digital transformation
‘What is digital transformation?’ is probably the first question you will ask yourself and, to be honest, it’s critically important you fully understand the answer as it will ultimately determine the success of your programme. Digital transformation isn’t just about technology, it’s about bringing the power and adaptability of digital technology together with a cultural shift in the way organisations are run.
The most important takeaway from this entire article is that digital business transformation is not fundamentally about technology.
This might sound strange coming from a business that clearly provides business transformation software, but it is true. We only facilitate part of a much wider strategy that incorporates more than business process automation, integration and portal software. For example, it could incorporate strategic adaptions to the way people are deployed, suppliers are managed, or customers are serviced.
So, what is digital transformation?
Put simply, this subject matter encompasses:
- Establishing very clear business objectives
- Identifying where current business processes do and do not align with these objectives
- Validating that the business objectives and proposed transformation changes will deliver the desired business benefits
- Executing a controlled rollout programme
- Monitoring and reporting on successes achieved against the expectations set out during the validation stage. And then refinement, if required.
Diagram: Digital Transformation
Digital transformation challenges and opportunities
On the surface, digital transformation appears to be a big business subject, but this assumption is wrong.
The fact of the matter is that changing business processes, working culture and systems within an organisation of 10,000 employees is much harder when compared to one with just 100 employees. So, the great news is that smaller organisations can be in a better position to achieve the opportunities faster. But what are the common digital transformation challenges and opportunities?
Digital transformation challenges
Most businesses, regardless of size, struggle with the strategic planning aspect of business transformation. In too many instances businesses rush out and purchase business systems badged with ‘digital transformation’ with no clear objective, process-aligned plans, validation, or rollout, monitoring and reporting plans.
IT transformation can be a major challenge when trying to modernise your business model. It is often too expensive. This is exactly why the validation stage is critical in a digital roadmap, as it is this activity that can burn through the largest of budgets.
It is also important to understand that business transformation does not necessarily mean new systems. In many instances, software integration, process automation or portal creation will enable you to leverage your greatest assets: your existing processes, data, people and systems.
The availability of a budget is often the number one challenge you could face, but it really shouldn’t be. If you have planned your automation and digital transformation project correctly the validation phase will remove any budget objections you face. If the business benefits exceed the initial investment there really cannot be a case for not pursuing a business transformation strategy.
Digital transformation business objectives
The most critical stage of any business transformation project is establishing your business goals. At this stage you should be defining very clear strategic objectives that are not technology based. Technology is just an enabler and potentially just one tool in your armoury.
Here are 3 common digital transformation business objectives and examples that illustrate the above:
Business Objective: Change or diversify the company’s business model
COVID19 completely transformed the way that businesses think. Digital transformation for small and medium enterprises very much became a ‘thing’, with many organisations pivoting their business from Manufacturer – Retailer – Consumer to Manufacturer – Consumer.
Image: Changing Business Strategies
As a consequence, manufacturers adopted eCommerce platforms such as Shopify, Magento, WooCommerce in their droves to facilitate transactions directly with the customer. However, this technology-led pivot in business models opened-up a whole host of problems down the line because adequate planning was not undertaken. Problems included:
- Manual order processing between eCommerce and accounting solutions
- Heavy administration when processing orders through courier services and handling returns
- Adapting to more rapid changes to stock levels
- Establishing JIT systems with material suppliers
- Dealing with customer service issues directly
- Aligning marketing activity with production and stock activity
- Bank reconciliation pressures placed on under-resourced financial teams
- Onboarding and management of trading partners
Some manufacturers that pivoted without an end-to-end digital transformation roadmap in place haemorrhaged money through ‘pushed down’ administration, struggled with customer experience and damaged brand reputation.
If this sounds like a familiar experience, or is something you are looking to implement, please download our mapping eCommerce processes workbook and avoid the pains so many have experienced.
Business Objective: Reduce operational costs
Cost reduction can be a perpetual business objective, but decision makers often focus solely on siloed cost centres without considering the wider business process. For example, finance departments are increasingly moving towards the digital capture and processing of employee expenses through spend management solutions, such as SAP Concur.
Without question, spend management tools significantly reduce administrative overheads and play a role in transforming business operations. However, like so many siloed approaches they can, in some instances, inevitably ‘push down’ costs.
Processed expenses ultimately need to be written back into an ERP or accounting solution. Therefore, whilst some of the administration has been removed, other manual costs are often created. This gets even more complicated when intercompany trading is part of the value chain.
Learn more about expenses management and how to avoid pushing costs further down the company value chain within your digital business transformation strategy by reading: Expense Management Integration with Accounting and ERP Systems.
Business Objective: Improve customer service
Amazing customer service is the hardest competitive advantage to copy. As a result, businesses are beginning to look hard at their current digital transformation vision and evaluating whether it is still fit for purpose when aspiring to create this competitive advantage.
Enabling customers to purchase products or services when they want, have their complaints resolved quickly or get the information they need via any device, is the backbone of great customer service. Choice is also very important, so businesses should not undervalue the importance of person-to-person contact.
Improvements in customer service will inevitably result in some form of digitalisation, but enhancements to employee training, process flows, and feedback loops may play a more fundamental role.
Discover how the FD Centre revolutionised its customer service level, reduced costs and exceeded customer expectations through the enhancement of existing IT investments and the addition of a simple customer portal.
“The first benefit received is the saving of time. From a finance perspective, having automated the billing process we are saving around three to four days a month in the UK alone. Once each country is added, I believe we’re going to save a month of an individual’s time. I estimate it will save us around £50,000 per annum in time / monetary savings. The system will ultimately pay for itself (and some).”
Financial Controller, The FD Centre
Digital transformation key success factors
The success of your digital transformation project ultimately depends on realistic planning and robust implementation. Digital transformation key success factors typically include:
Digital transformation objectives are the foundation of everything and are key to the success of your digital transformation plan. They need to be clear in terms of business benefits delivered to the business, customer, supplier or other stakeholders.
More importantly, these objectives must be clearly communicated to people that play a role in the delivery of your digital roadmap
Digital business transformation is not about technology. The relevant stakeholder(s) must buy into the strategic objectives of the company. However, you must accept that in some circumstances this may not be possible.
For example, call centre operatives will not go above and beyond to define the question trees for a self-service, customer portal unless it is made clear at the very onset that this will not result in their role being made redundant.
Typically, the common stakeholders required to achieve digital transformation include your company’s leadership team, employees and value chain partners.
Mapping existing business processes upfront can save you a lot of time and money. The temptation of any digital transformation project is to acquire lots of new systems when it is the business processes that flow through them that can impact most on the success of your project.
Measuring digital transformation success
Measuring digital transformation success ultimately results in the creation of digital transformation KPIs being set at an operational level. It is important that at this stage you do not go KPI crazy and set hundreds of KPIs when only a core selection really matter.
The key to setting KPIs is to set a weighting to them in terms of importance. For example, in the customer service function, which KPI is more important between:
- Processing more customer services requests per hour, or
- Achieving a higher customer satisfaction score
You would think the answer to the above is obvious, but what if you customer satisfaction score is already the best in the market, or your own 90% of the market with no short-term competitive risks? This is why setting digital transformation KPIs should be intrinsically linked to the organisations overarching business objective(s), strategy and current market position.
Common business-specific digital transformation KPIs that may be relevant to your project or industry may include:
- Customer revenue types
- Reduction in operational costs
- Order to fulfilment times
- Employee performance
- The speed in which new products can be launched
- Market share
- Brand recognition
- Profitability ratios
Digital transformation roadmap
If you’ve scanned through this article and are looking for a digital transformation roadmap, the good news is it’s all laid out for you below with your own project planning workbook available for download. Here are the steps you should follow:
Decide what you want to achieve
The key here is to smart small. It may be to create a self-service experience for customers or to streamline purchase / payment processes. For example:
|Business Objective||Business Benefits||Primary Risks|
|Enable customers to self-service||Reduce costs||Customers might prefer speaking to a person|
Start planning your roadmap by downloading the workbook below.
Map your current and proposed business processes.
Map the current and proposed business processes and itemise the points where people, systems or other stakeholders contribute to the process. Having a visual flow of your business processes will help you to identify any prerequisites and constraints involved within the project. A great resource for helping you start this process can be found here: Guide to BPA Project Management
Stress test your proposal
This is when the senior management team should look to analyse the potential gains against the investment. A simple scoring card can help with this analysis.
|Benefit goal||Change required and its projected cost||Measurement of success||Proceed with project (Y/N)|
Reduce cost of customer service
Improve customer satisfaction levels
Change customer behaviour towards self service
Likely adoption rate of self-service compared to contact centre calls to exceed 50%
Customer satisfaction levels to increase by 20%
Potential £70,000 cost reduction to be achieved through self-service
Start planning your digital transformation roadmap by downloading the workbook below.
Execute your project
Project plans differ significantly between organisations, but at the very core of you plan should be the following elements:
- Clear summary of the project
- Roles and responsibilities of all stakeholders
- Realistic timelines
- Agreed budgets
- Monitoring and checkpoint systems
- Agreed criteria for the closure of the project
Run the outcomes of the project against your stress test
By the time you reach this stage of your digital transformation project it will already be clear whether or not you’ve achieved your goals. However, it is very important to collectively share and analyse the results with the senior management team.
The reasons why you should formally review your project post-delivery at board level include:
- To get collective acknowledgement of the outcomes delivered
- To identify common problems to avoid for the next digital transformation project
- To discuss the speed in which future projects can or cannot be achieved
- To evaluate the value-add of external suppliers and their future relationship with you
- To establish reward systems for key stakeholders that are key to future projects
- To recognise gaps in people, resources and knowledge that the project highlighted
You now have everything you need to start your digital transformation strategy. However, the most important takeaway should be that digital transformation is not about technology. Don’t be duped into buying software just because it’s positioned as such. Engage with your colleagues, suppliers and stakeholders in a consultative fashion to identify what will really make a difference to your business.
For more information on how you can start planning your digital business transformation journey download the workbook below or call us +44 (0)330 99 88 700.