Digital transformation projects are complex. These days they are not just about technology. They cover an interconnected set of changes aimed at making a business become truly customer-centric. It’s not a one-off process, it requires a business to be reprogrammed for change through systematic testing and learning, which means new skills and new ways of working.
That’s not to say that technology has become simpler. In fact, getting the technology right in the context of a wider scope of change has become more complex. Typically there will be integrations with a wide range of business systems, such as product information management, client account management, customer service platforms, and commerce systems. Rarely are these integrations available out of the box. These projects rely on sophisticated software, they demand skills that are in short supply, and they inevitably result in having to learn new ways of working.
The timelines for delivering this level of change can be long, which all adds up to a significant investment in time and money if you want to do things right. To add to the complexity, digital transformation projects often span multiple business stakeholders, such as IT, marketing, sales, and customer services which means debates about ownership, budget approval, and prioritisation.
Given this amount of effort and inevitable risk, how do you go about getting buy-in from business stakeholders to approve a significant piece of business transformation, and the budget needed to achieve it?
A common approach used in some businesses is to take the stealth approach to transformation like the “technical debt” approach, i.e. justifying an investment in a new platform to replace an aging one. The business case for this type of approach is usually built on a platform of cost saving and risk avoidance. This may appear as a low risk approach - after all, who is going to say no to the replacement of a platform that is out of support and represents a significant reputational risk? But how can this or any other equally 'low ambition' approach act as a driving factor to help bring about fundamental business change?
While the stealth approach works in the short term to get approval for at least the first piece of investment, in the longer term it inevitably creates a high risk of failure. By replacing what you already have you’re resolving problems of the past. The scope of these changes rarely incorporates the organisational change required to truly transform. You’ll inevitably find yourself in the same position in three or four years’ time, doing the same thing again, and explaining why it didn’t work last time.
The fact is that no businesses today exist in a digital bubble. A digital strategy is a business strategy. Digital does not exist for its own good, it is an essential and integrated capability needed to deliver on your business strategy. Think about how you can demonstrate that digital is a critical tool for delivering on your business strategy. So start your business case with that in mind.
Effectively this may imply being more ambitious in the scope of your vision and tying that vision to delivery of your business strategy. Yes, this is kind of counter intuitive, because more often than not this will mean asking for more budget than you would have done in the stealth or ‘technical debt’ case, which on the face of it seems risky. But, and here’s the important bit, you start the process by mapping out clear linkages to business strategy and the delivery of value.
What do we mean by the delivery of value? It means demonstrating in a systematic way how your digital investment will deliver on the stated goals of your business strategy. For example, how digital can contribute to generating a greater number of sales opportunities, greater or faster conversion of customer opportunities, increasing share of wallet or average purchase size. This is not to say that cost saving and risk avoidance shouldn’t also be in there too They absolutely should be but they shouldn’t be the sole basis for change.
I hear you thinking “but what about if we don’t have a formal business strategy”. Don’t worry, that’s not uncommon. I know of one European bank that invests over €900m a year in IT without any reference to a business plan (I know!). Not having a plan isn’t ideal, but the absence of one means you need to take the initiative to demonstrate what you plan to deliver. What it does mean though is putting yourself on the hook to deliver.
So, what are the steps to success?
1. Build the linkage to your business strategy
This first means boiling your business strategy down into its core elements. What is your business tasked with delivering? If it’s about growth, then how is that going to be achieved? What is the role of digital? Is it about acquiring more customers? Or is it about getting your existing customers to spend more? If it’s about spending more, is that through increasing frequency of purchase or increasing average purchase vale? The answers to these questions will shape the nature of your investment and capabilities. If there is no formal strategy for these things, then you are just about to write one.
2. Translate these business outcomes into a desired customer outcome
Assuming you want to achieve this growth, what is going to happen differently for customers to make this happen? This is the critical difference between a cost and risk avoidance approach. Are you going to reach a newer, larger audience, or is it about improving the experience for your existing customers? Are you going to have more targeted offers? Or is it about increasing conversion through personalisation? Having a crystal clear plan of how you are going to deliver business value establishes the basis for your capability roadmap. At this point you haven’t asked for any money - you’ve set out the stall that describes what the prize is for the business. Next comes the capability roadmap which describes what the business needs to do to reach it.
3. Map your desired business outcomes on a business capability roadmap
This is where you start describing your roadmap to success. The roadmap identifies the business capabilities that are required to deliver the customer outcomes you described in step 2. Business capabilities include technology, but that’s not all that should be included. Capabilities also include the data, people, skills and business processes required to make your customer outcomes a reality.
A capability roadmap describes what your business needs to be able to do, and in what order, over the next 2-3 years to achieve the customer outcomes you have described. It also feeds into your business case and describes how the outcomes are supported by the investment required.
Yes, that’s right, I said ‘over the next 2-3 years’. Unless you already have all of the capability you need and you’re only making incremental changes, you’ll need to describe a realistic long term roadmap. If you don’t, you run the risk of asking for the first item on your roadmap and everyone will think the job is done when the tech is delivered. It may seem appealing to gloss over the length of time it takes to achieve real capability change, but that only sets you up for failure if you only get half the job done. Bear in mind that implementing the technology may only take a few months, but learning to use it and getting the most out of it is not an overnight thing. You’ll need a plan for both.
4. Be clear on how you’ll measure success
So you’ve outlined your vision for delivering on the business strategy, you’ve described what this will mean for customers, you’ve described what the business needs to do to make that happen, and you’ve put that into your business case. Great! But there’s one more thing to consider: When you’re implementing a multi-year roadmap, it’s going to span multiple budget cycles. Given that the rewards for your work only start appearing after the work is done, you need to give your stakeholders confidence that you are making progress against them. If you don’t maintain their confidence that you’re making headway, then you run the risk of failing to jump the hurdle of the next budget cycle.
A success measurement framework aims to measure the lead indicators for success i.e. the things that lead to the achievement of the financial outcomes that you have in your business case. For this, it’s useful to look at multiple dimensions across a balanced scorecard for success. Not only do you want to measure critical customer outcomes such as improving engagement, growing traffic or greater conversion, but also operational outcomes that lead to success. For example, improvements in efficiency or speed of getting content, offers, and campaigns to market, as well as demonstrating that you are continually improving skills, refining your methods of attracting and retaining the right talent. If you aren’t able to measure this, you won’t be able to manage it and you won’t be able to argue your case for funding at budget time.
To use an inevitable sporting analogy, if your vision is to win more rugby matches, you need to be able to show that you are improving fitness, passing, tackling, kicking, scrummaging and lineouts because being good at these things improves your chances of winning.
And that’s it. Simple huh? Seriously though, this is not an easy task, but if you do it correctly you will have built a robust case for achieving your vision. By going through this process you will not only have a much clearer idea of what work needs to be done, but you’ll have a much higher likelihood of success. You’ll also most likely be better prepared than anyone else that’s competing for a share of an already limited investment pot.
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