How to lead a digital transformation in 6 steps - SystemsAccountants

Estimated reading time: 8 minutes How to lead a digital transformation in 6 steps

Digital transformation fundamentally alters how an organisation operates and delivers value. Get it right and the result can drive new levels of success, but any wrong step, particularly regarding data management, can provoke damaging inefficiency, even dysfunction.

“Staff hear about ‘digital transformation’ and wonder what it means for them,” says Julie Downs, Interim Senior IT Director at video game developer Jagex, who has overseen many digital change management projects.

“It can mean different things to everyone, but it really relates to the business as a whole and how all the departments inside a company can share information, solutions, processes and data to continually improve.”

The process often involves changing culture as much as technology, as digitising systems can radically alter the shape of a workforce: as repetitive manual tasks like data entry become automated, new and different skills become desirable. It also gives individuals the opportunity to move from transactional processing to provide a value-add service.

For Julie, there are six key steps leaders should take when spearheading a digital transformation project:

  1. Understand why change is needed, and what it takes
  2. Create a bullet-proof business case and MVP
  3. Be technology agnostic and focus on business needs
  4. Appoint the right people to deliver
  5. Fully commit and do not cut corners
  6. Embed a continuous change culture

1.     Understand why change is needed, and what it takes

True digital transformation changes the way an organisation operates, affecting its systems, processes and culture. This poses substantial risks, and organisations must have a clear vision and purpose – one that serves customers, partners, and employees – before they begin.

“One of the main roadblocks to successful digital transformation is businesses not truly knowing what their requirements are, and not really knowing what their challenges are,” says Julie.

For any business that has maintained the same structure and processes for many years, the biggest challenge may come down to culture: the company simply will not have a culture of integrating technology to drive continuous improvements.

Planning and executing a digital transformation takes leaders with a strong set of both soft and hard skills, who have input into the entire technology roadmap. It will involve engagement with finance systems, so a level of technical knowledge is required, but just as important is being able to communicate well and manage a broad range of stakeholders at many different levels across the organisation.”

Interim leaders like Julie are often brought in as experts who can objectively identify where technology can improve a business, help it move away from traditional thinking and help create a culture of continuous improvement.

“It can be an end-to-end process, so you are likely to be tasked with selecting the solution and the implementation partner, building the technology template for the business, and then delivering,” she says.

2.     Create a bullet-proof business plan and MVP

The importance of thorough planning before your digital transformation journey begins cannot be overstated: thin business cases and ill-defined scope can lead to huge problems later in the process, including the possibility that future decision-making may be compromised by incomplete, inaccurate, or bad data.

For Julie, this means adopting the software development approach of pursuing a minimal viable product (MVP) that can help you reach your digital transformation goals.

“It’s important to draw up a MVP in the first instance, then you can make continuous progress later on,” she says. “As an organisation if you believe that you can achieve 100% you will fail. You have to work on the 80/20 rule. Get 80% right and the other 20% will follow as the solution and processes embed.

“Not having the MVP at the very start will make the process three times longer, and it will probably cost three to four times the estimate simply due to scope creep.”

A bullet-proof business case, a detailed scope and a clear analysis of the benefits by which to gauge progress also helps to open reticent eyes within the business, Julie says.

“Convincing all business stakeholders that the transformation is right for the business and the benefits they can achieve is like convincing a toddler to eat their vegetables – you have to put the same vegetable in front of them around 20 times sometimes before they will try it.  You have to continually and consistently sell the benefits of the transformation on a regular basis and at every stage of the project.”

3.     Be technology agnostic and focus on business needs

The ability to lead a digital change project and deliver value is highly desirable across the business world. While knowledge of what technology is out there is advantageous, soft skills are equally if not more important.

“Businesses often want knowledge of a particular solution, such as experience of working with a specific finance system like SAP. But more valuable is being able to look holistically across the whole project and understanding the needs of the business will enable the right solution to be selected,” Julie says.

“The technology doesn’t matter as much when you have the appropriate Governance Framework for the project. I am solution agnostic; it’s more important to identify what the business really needs.”

Julies says the acronym to have in mind is WIIFM, short for “What’s in it for me? This is what all business stakeholders will want to know — even if they don’t say it!”

“Understanding the business challenges at a detailed enough level to be able to select the right solution for the business for the future is so important.  There is no such thing as perfect software, there will be compromises but they should not impact how your business operates.”

Having a template for the business as a whole that enables you to describe the benefits and discuss the current challenges and how they will be resolved.

“No project will ever be as successful as the business would want if there is not the appropriate executive sponsorship and buy-in to the transformation,” says Julie.

4.     Appoint the right people to deliver

Identifying the right team members is a crucial part of the process. In Julie’s experience, bringing in outside specialists to deliver the digital transformation while training up a team of permanent replacements to eventually take over offers the best chance of success.

“The skills needed to lead a digital transformation are heavily underestimated,” she says. “It’s less about knowing how all the bells and whistles work on a particular piece of software than the knowledge of the end-to-end process, the migration, reconciliation and sign off, and the go-live process.”

Leaders must select personnel with a skillset that can only be developed through multiple complex project deliveries. Often this will come in the form of interim specialists, but attention must also be paid to knowledge transfer from the experts to the organisation’s full-time employees. Digital transformation is a perpetual process, which means it’s essential to embed the required expertise on an institutional level.

Data analytics skills are also very important, as one of the main tasks of a transformation – particularly in a finance office – is dealing with legacy data “which is usually very challenging”, Julie says.

Structured and unstructured data, such as archived spreadsheets or communications data like texts, emails and paper invoices have to be cleaned and readied for migration.

“Bad data can kill a project before it gets started,” Julie says. “For that reason, test leads and business analysts are also required. If it is a finance transformation, having resources that have come from a finance background is essential.  These individuals have usually started their career in finance and moved into technology, bringing with them the accounting and data knowledge required to make a project successful.”

5.     Fully commit and do not cut corners

A digital transformation can involve substantial changes to how a business operates and require significant investment. Ensuring there is a robust Governance Framework in place that is adhered to and that the stakeholders are engaged with is essential.

When things get difficult it can be tempting to cut corners and costs, says Julie, by adopting tactics such as using existing staff without backfilling their business as usual role, to carry out tasks related to the project. “In my experience people that are seconded 100% to the project make the project more successful and timelier, than those that are only committing a percentage of their time alongside their permanent role.”

This results in diminishing returns: existing employees, particularly if they have been at the same company for many years, may not have the commercial experience of working on similar projects elsewhere.

“They absolutely cannot deliver effectively for the project alongside managing their normal role workload,” Julie adds. “They may also feel like if they speak out it could limit their careers, whereas this is not something an ‘interim’ has to worry about, so they can speak freely to management.”

External interim contractors are often more likely to have the practical experience and “the battle scars of delivering a programme”, such as knowing what may trip an implementation up.

Organisations should avoid the twin temptations of minimising investment both in the necessary external expertise and the training of operational staff on new systems once the initial digital transformation project is complete.

“Backfilling roles is critical,” says Julie, “as is training up or finding permanent replacements from elsewhere.”

Organisations that are fully committed, use specialist expertise and don’t cut corners are best placed to realise their digital transformation vision.

6.     Embed a continuous change culture

Digital transformation leaders can lay the groundwork for future success by reinforcing the message that change is never complete – both in terms of technology and the way the business operates. It will only bring significant return on investment if leaders understand that it isn’t a project that comes to an end. It may require the most effort in the beginning, but fundamentally it is an attitude, a mindset, not an event.

This means embedding a culture of continuous improvement, says Julie.

“I always repeat the message that digital transformation is best thought of in terms of what it can do for the entire company, rather than the impact it will have on single departments, which can be siloed,” Julie says. “You are putting something in place that is continuous, different to what they have done, maybe for many years, this takes time to change.”

This may even mean a degree of staff turnover as new technology is adopted, but this can be a necessary part of improving culture and creating an information-driven identity for the business. This will enable executives to make the most appropriate, strategic decisions for the future of the business.