Whenever an organization decides to embark upon a digital business transformation, frequently the first step is to analyze the business case for the project. Understanding the anticipated business impact and costs will help to answer the question as to whether the project is worth pursuing, or whether it is best to leave things as they are. For those who have seen that the business case for transformation is valid, the next question is how to ensure its success.
Unfortunately, success is something that is impossible to guarantee. According to McKinsey research, 70% of transformations fail to achieve their goals, and that says a lot in itself. Nevertheless, the likelihood of success can be increased by paying close attention to those factors which ensure it.
These factors are easy to remember if you think of digital transformation as a train. We need a locomotive, railcars, a route, happy passengers, and, of course, helpers like a conductor or a salesperson in the dining car. Let’s take a look at what these components are in the context of a large-scale digital transformation, and examine how these factors can work in a successful or unsuccessful project.
THE LOCOMOTIVE – Project Leaders (Sponsor and Manager)
Every transformation process requires a sponsor in the senior leadership team: this is absolutely critical. However, it is important to realize that the sponsor cannot act alone: the project team must help the sponsor to be visible and active. This includes involving the sponsor in all key project milestones, as well as planning events where the sponsor can communicate the end-goals of the change to a wider audience.
Leading change is preferable for business people, even if the change involves the implementation of IT platforms. Business leadership will ensure implementation quality, because once the project is launched, it is those very business representatives who will have to work in the new environment, rather than technical experts from the IT team.
The project manager (PM) must be motivated to succeed and be accountable for the quality of the project work. Communication, persuasion and contractual skills are important for the PM, as digital transformation involves many people from different functions, and it is necessary to find an approach to accommodate each and every one of them.
THE RAILCARS – the project team
Simply assembling a team to participate in a transformation project is not enough on its own: it is essential that they are the «right» people, with an appropriate level of involvement in the project.
Transformation teams are often quite large, so they need to be organized effectively. Typically, the rules and processes are set out in a project charter or equivalent, one of the most important aspects of which is the precise assignment of responsibilities to roles, and an equally clear description of the decision-making process (who makes the decisions, who consults, and who executes).
THE ROUTE – Progress towards the goal (Project Management)
Project management is a complex topic that cannot be covered in one paragraph. Nevertheless, I would like to draw your attention to the importance of the following:
– Regularly comparing the results achieved with the original project goals;
– Managing expectations;
– Monitoring the risks of achieving the project KPIs (budget, schedule, scope).
Setting up regular feedback gathering from all project participants and stakeholders will help to identify risks in advance. Have you received negative feedback during a regular survey? Great! This is a real gift for the project team, because it means that there is time to work on the negative feedback and react to it, unlike in a situation when it comes at an unexpected moment, for example at a steering committee meeting, or along with a refusal to accept the results of the project stage in the process of its closure.
THE HELPERS – external transformation partners
Choosing the right partners is critical, because they are also part of the project team, contributing (or not, as the case may be) to the success of the project. The higher the stakes, the more reliable those we rely on for this journey need to be. How do you select the right partners? This is where everyone can share their experiences. I would note that it is important to consider the following:
– Reputation;
– Responsibility and professionalism in the negotiation process;
– The experience of each member of the partner’s team assigned to your project;
– and, of course, the existence of a mutual understanding, a kind of «chemistry» with the partner.
THE PASSENGERS – company employees, and all those who are inevitably affected by the movement of our train
In order to work successfully with the company’s employees, we can be effectively supported by change management techniques (the human side of a transformation), such as the Prosci methodology, one of the most recognized in the world. The main tools are as follows:
– Analysis of the project’s main stakeholders;
– Analysis of the scope of change for different groups of employees;
– Development of communication and training strategies and action plans;
– Managing pushback/resistance.
It is important to keep in mind that the project will end at some point. Whether there will be setbacks along the way will depend, among other things, upon how well you can work with people and gain their support in the process of implementing change.
Let’s look at some real-life examples of change.
A large manufacturing company decided to implement an ERP system with unified business processes. The project had the full support of the deputy CEO, and the business and IT team was assigned by a separate mandate. Goals and KPIs were defined, and vendors and implementation partners were carefully selected.
At the same time, the project charter did not clearly state who was responsible for the quality of project decisions and how they were made. The project manager was an IT representative who failed to establish an effective decision-making process and communication with the business team. There were complaints that «the PM was not involved», and matters reached a point whereby business representatives were not invited to the relevant workshops, and risks identified by the experts were ignored. As a result, the project was canceled after a year from the launch, amid considerable negativity from the business team.
Another example is a vertically integrated production company with a project to digitally transform its distribution planning processes. The senior management sponsor was actively involved at all stages, had his own vision of the outcome from the outset, and was always responsive to any issues that arose. The project was overseen by an IT representative, but managed by the head of planning, ensuring that practical business outcomes were the default priority. Progress was reviewed on a weekly basis, with all key decision makers involved.
However, not everything was plain sailing. For example, process standardization and IT platform deployment in a historically siloed production site had to be postponed, as keeping it within the perimeter would have required significant additional team effort. There were issues with the availability of internal business experts, who were difficult to gather for process workshops, which extended the project timeline. However, identifying these risks in a timely manner helped to maintain the team’s success and enthusiasm, ensuring the positive outcome of the project.
Of course, the digital transformation path is like a journey where there is always a risk of encountering obstacles. It is important to remember that success does not only (and not to any great extent) depend on the quality of the technical solutions. Hopefully, understanding all the components of this «train to the future» will help you to overcome all the challenges you may face, and to make a real difference to your business.
Yulia Staneva, Partner, Lead of Business Consulting Practice at Planingo
