Amplify business value through digital transformation

With Forbes estimating the average failure rate of digital transformation to be 84% [1], it’s clear to see that the majority of organizations are failing to unlock the full potential business value of digital transformation efforts. While various factors can contribute to the failure of a transformation initiative, many organizations tend to only focus on implementing the correct technologies, systems or processes while neglecting organizational issues that can significantly impact the overall success of the initiative.

To increase the likelihood of success, organizations need to take a more holistic approach to change by developing a strategic plan, in alignment with your business goals, that better prepares your entire organization for change.

Defining strategic goals

It’s important to define your strategic goals prior to launching any transformation initiative as it provides a clear road map, aligns organizational efforts and ensures that technology initiatives are purposefully directed towards achieving specific objectives, enhancing the likelihood of achieving a successful and sustainable transformation. The following outlines key steps to help you get started:

1. Frame your vision

Regardless of where you sit in the organization, it's essential to understand what strategies are currently driving business decisions and then align the vision for the transformation to support those objectives. Your people will be more likely to support a change when the organizational vision is clearly connected to the benefits of the change or the potential risks if you don’t change.

2. Lead with focus and intention

Once you've framed the vision for where you're trying to go and why, it’s important to speak and lead with focus. Articulate to your workforce why the transformation is needed, how it will be accomplished and what it means to them specifically in their day-to-day work.

Start by defining the benefits, communicating how the change will help them do their job and how they will be more satisfied and engaged in their roles. It’s important to remember that change success or failure will impact your employee experience and culture which, in turn, impacts your customer experience, ultimately determining your competitive advantage and market growth opportunities.

Build, align and refine on the why (why are we doing this?) and the what (what do we hope to achieve?) and get be intentional in communicating this message regularly to keep team members collectively focused on these outcomes, keeping in mind that information that comes directly from a direct manager or supervisor is the most impactful form of communication.

3. Laying the path for growth

As a leader, thinking about how you define the path for growth in a way that helps team members understand how technology will help them or why it matters to the business is critical. When we seek to transform, the vision for change and the impacts to people are just as important, if not more so than the technology itself.

It's easy for the excitement of the features and benefits of a new technology to become the primary focus of the change, so it’s important to ensure you have a firm strategy to guide you, otherwise you may risk of losing focus on your people. When defining your strategy, it’s important to answer: Why are you doing this? How fast do you want to move? Who are the key people that need to be involved in defining the vision and path to success? Who will be responsible for bringing the vision to life and what is their capacity and capability for driving the change?

4. Balance rigor and bias for action

As you think about translating your organizational strategy into a road map, there are several critical items to ensure you’re focused on the highest priority outcomes:

• Think about the why, the what, the how and the when
• Clearly define your budget and prioritize investments based on drivers
• Incorporate an explicit element of time to ensure the team will have the resources, capabilities and technologies in the proper sequence to carry out the strategy

Your road map should lay the foundation for the tactical plans used to guide operations and ensure they're in line with the longer-term strategy. It should validate that the work is supportive of the organizational objectives, identifies the potential risks and instills plans to mitigate them. Lastly, your road map and strategic vision should serve as effective tools for bringing awareness to your entire organization, informing them of where the business is going and how it will get there.

Enabling organizational alignment and engagement

Keeping people at the center of digital transformation is essential to ensure that the organization is ready, aligned and engaged to drive the transformation. Maintaining a people-centered approach that focuses on the impacts beyond immediate change is critical. There are three components to enabling organizational alignment and engagement:

1. Organizational competency: Build the muscle your organization needs for change by taking inventory of how ready your organization is to drive the change. Be sure you have the culture and leadership mindset to lead people through change, and that your leaders understand their role in the path to success.

2. Change enablement: Execute on your strategy by helping people navigate through the transition and successfully adapt to the future state. Assembling the right stakeholders and leaders to align the organization and business to the change is an essential step in driving adoption, proficiency and optimum utilization of the solution. Building trust through transparency and authenticity and communication and providing effective training are also critical to achieving success.

3. Value realization: Once you deploy your new system, the focus of how you will sustain success in the new environment becomes the priority. Defining key measures of success and regularly assessing each opportunity based on its performance in driving progress to the defined goals is crucial. It’s also important to clearly define the roles and people responsible for fully embedding the new operating models into your business functions and checking in frequently to see how you're tracking towards goals and if people finding success in the new ways of working.

Tracking value realization through reporting and analytics

As value realization for digital transformation initiatives is best measurable with tangible results, it’s important to build a return on investment (ROI) model when planning for any initiative. Most base-level ROI models start with cost reduction as their baseline as it is typically the easiest to measure, making it an effective way to get your financial leaders to approve the project based on a tangible cost benefit.

And with the largest expense for most companies on their profit and loss statement (P&L) being the salary expense, it's important to build a model for measuring the cost of people's time. This is done by calculating what a fully burdened cost per hour/day/month is for an employee and then calculating the cost savings related to that. It's important not to overlook the cost of employee attrition caused by their frustration with inadequate technology, as well as employee recruitment and retention costs associated with replacing those employees.

It’s also important to consider the benefits beyond the cost savings resulting from headcount reduction. Just because a manual task becomes mostly automated or eliminated doesn’t necessarily mean you have to eliminate the employee who performs that task. As you think about your business case, think about what those employees could be spending their time on, that’s more strategic and value-added.

In looking for benefits beyond cost reduction/reallocation, your revenue cycle and customer experience can often be the largest source of ROI. The following highlights areas of ROI opportunities your organization should consider when tracking value realization on your digital initiatives:

• Revenue leakage due to unbilled revenue or missed opportunities
• Streamlining billing and collections can significantly reduce accounts receivable write-offs
• Identifying and actioning upsell/cross-selling opportunities
• Identifying churn risk and increasing customer retention by automating customer heal tracking
• Monitoring customer behavior to measure product adoption and usage
• Improving your customer experience and measuring your customer lifetime value (LTV)

Ready to take the first step?

Baker Tilly's digital team believes achieving a successful digital transformation doesn’t have to be an overwhelming process. By taking a holistic approach to change, our digital strategy services can help you develop a strategy and road map that better prepares everyone in your organization to transform the way you do work to achieve your goals

It’s about more than just technology, getting your business where it needs to be tomorrow requires a dedicated focus on the people that will lead your digital transformation. Interested in learning more?

[1] 12 Reasons Your Digital Transformation Will Fail

This article was derived from the Amplify business value through digital transformation webinar, watch the full recording below.