Process and Governance is not exactly the most sexy or popular topic to write about. Yet, as we established in our previous article “Why isn’t our Digital Transformation Progressing Faster?”, it is one of the six key barriers and enablers to Digital Transformation that Transformation Leaders need to understand and address.
Prioritization against Business Strategy
In 2012 Procter & Gamble wanted to become “the most digital company on the planet”, but within a few years its then-CEO Bob McDonald was asked to leave by his board. The lack of direct return on these initial digital investments has been cited as a key reason for this. (Davenport, 2018)
With technology solutions abundant, easily accessed and implemented, options for Digital Solutions can seem endless and unlimited. It is very easy to invest in Digital, but the reality is that many companies do not see the required returns.
The problem is a lack of prioritization against the right criteria. “Let’s just build an app”, “Let’s compete with this new startup”, “Let’s have a chat bot” – are just some of the things we hear all the time. This scattergun approach to digital investments can be fueled by hype, and by pressure “to do something digital”, but it is rarely effective.
So how can Leaders prioritize?
Each potential initiative requires a review against a set of criteria. These should include:
- Alignment to Business Strategy: the first test of any Digital initiative must be alignment to business strategy. For example, an established B2B company may well put a promotional app on the app store, but it may not be more than a gimmick, or something that vaguely “looks digital”, but it may not contribute much to help achieve its business goals.
- Value: what’s the return on investment? Leaders need to rigorously review and test the return on investment of each initiative, both short- and long-term. In many cases, this requires a whole new capability of being able to effectively measure the business case for digital investments.
- External Readiness: Are Customers ready for the new solution? Being too early isn’t always right either. Timing the market is key.
- Internal Readiness: What barriers exist internally to adopt the initiative? This considers both the cost of implementation, as well as the adoption and change we must overcome.
Approvals with Speed and Agility
Just as important as critically evaluating and prioritizing digital initiatives, is the ability to quickly provide budgets and resources to progress the selected initiatives.
Large corporates are of course burdened by established and rigorous processes. Often this is combined with a long-standing “CYA”-culture. Investors, shareholders and stakeholders are asking for transformation and business results; but are just as ready to judge decisions made and misplaced investments. This, and the slow speed of corporates can delay and even hold up important investments.
Digital investments need to be treated differently. Alongside the rigorous prioritization process needs to be an agility and ability to make decisions, and fund initiatives quickly. This is best achieved by a dedicated fund of moneys that are committed to digital investments, and can be quickly applied by the Digital Transformation leader, after checking the prioritization criteria. This needs to sit outside the usual thresholds and budget approvals of the company and be dedicated to these investments.
Processes that enable business value from technology
We’ve established already that achieving business results from Digital Transformation is not really about Technology. The effectiveness of process is a key factor to achieving business value from Digital Transformation.
One key area of achieving business results is establishing, and championing, the processes of how the technology is used. It’s about aligning processes and ways of working to effectively use new technology and data.
Many companies have invested in analytics solutions that include executive reporting of key KPIs in real-time. Some see tremendous value from this, others report little difference to their ability to effectively lead their companies. The difference? Those companies who integrated the new insights and data into the way they actually do work and run the companies saw the biggest return. This requires a considerable shift in ways of working, including for example how meetings are run and using the data as a basis for executives and how decisions are made. This can be uncomfortable and difficult, as the availability of data and insights also provides a new level of transparency.
Effectiveness before Automation
The other key area is the effectiveness of processes before they are being automated. New technology, such as Robotic Process Automation (RPA), provides opportunities to automate processes and tasks that humans once performed. But what if these processes are outdated and no longer fit-for-purpose? Automation can bring great cost-savings and efficiencies, but the first step should be to do a process analysis, and, if needed, improvements, before taking the step to automate.
Internal processes and governance need to be adjusted to enable true transformation. Here are the areas to test:
- Prioritization against Business Value – how are we selecting which digital initiatives to fund, and how quickly can we fund them?
- Speed – do we have an adequate discretionary budget that is committed to digital initiatives and that can be readily applied by the digital transformation leader?
- Processes that enable business value – are our processes set up so that we are getting value from new data, technology and automation?
- Are we putting process effectiveness before automation?
Successful Digital Transformation requires a digital governance process that effectively prioritizes initiatives, and then quickly funds the initiatives that meet the criteria. The price of not asking these questions is too high. Not only can this result in unnecessary investments that result in little return, it can also completely destroy confidence in all Digital Transformation efforts and investments, as well as in its leader.
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Davenport, Thomas H. and Westerman, George, Why So Many High-Profile Digital Transformations Fail, Harvard Business Review (2018) , Available at: https://hbr.org/2018/03/why-so-many-high-profile-digital-transformations-fail (Accessed August 19, 2018)