Three common pitfalls in digital transformation projects

17 May 2017Kieron McCann

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Digital. Transformation. Project. Three words that, when used in sequence, generally strike fear into the hearts of mortals and gods alike.

We’ve all been involved in at least one. You know, the project that promises to eliminate all our problems. When the project’s done, we’ll all recline on a fluffy cloud of happiness, put our feet up on a rainbow of wonder and incredulously marvel at how life could have been so difficult before our problems disappeared. All we need to do is hand it over to ‘the guys in IT’ and they’ll have it installed in no time. Right?

Wrong! That’s not the way it happens. Ever.

The problem with digital transformation projects is that, more often than not, they involve a lot of digital, a lot of project, but sadly not much transformation. And when everything goes wrong, everyone shrugs their shoulders, points at the ‘guys in IT’ and says “well, 70% of IT projects fail anyway”, making it perfectly clear where the blame lies.

But digital transformation is not a blame game. It’s a collaborative process that should involve most of the organisation, at some stage. It’s the chance to finally break down some of those silos that are preventing you from becoming the agile, customer-focused business that you want to be.

Before you start thinking about embarking on a digital transformation project, you need to think about exactly what you are setting out to achieve and how that will be done. The best place to start is with a business plan for change that has been agreed by all stakeholders, not just those at the top. Then make sure that you avoid these common pitfalls on the way.

Too much focus on ‘digital’

Digital transformation is about business transformation. Technology is simply the means to achieve this end. Despite this, many businesses expend nearly all of their effort on designing, building and funding technical solutions without spending time up front considering how the business plans to work differently as a result of using that technology.

If your plans for digital transformation don’t start with a plan for how you are going to work differently then it’s almost guaranteed that you won’t. Sure your new platform might help you to make your existing ways of working more efficient, but you’re unlikely to maximise or even optimise the return on your investment.

At Cognifide we call this the “Invest” stage. It’s a recognition that the technology investment is the means to an end, not an end in itself, and it’s only the start of the process. To get real payoff, you need to plan what you need to change to really get the most out of your investment.

Too much focus on the ‘project’

An over-focus on technology frequently leads to the second common pitfall - too much focus on ‘the project’. The word itself suggests an activity with a defined start and end date. But a transformation to digital has no end date.  It’s a continuous and iterative process.  A complete business case for digital transformation must consider not only what existing ways of working need to change, but also what new ways of working are going to be enabled through the digital investment. In other words, the creation of a new operating model.

Often this fundamental redesign of the operating model is overlooked because it is easier to justify the digital project on the basis of cost saving alone. Who doesn’t like to save money? Existing costs are known and the new cost savings can be modelled against the investment. If the point of the business case is to get the project funded, surely that’s enough, right?

Well, no. Although this approach helps to get ‘the project’ funded, the cost saving case often doesn’t place enough emphasis on what happens after ‘the project’ is closed down.  In most cases that’s actually where the savings, and even better, the revenue growth happens.  So, if your business case lacks a wider context, the opportunity to make real and lasting change and to generate really significant returns on your investment are lost.

There needs to be as much focus placed on the adoption of the technology as there is on the deployment. In many cases the real missed opportunity in digital projects is in the failure of the business to adopt and adapt to the new capability that it delivers. You need to have a plan to reach beyond the project team and into the wider business to engage people in the transformation.

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At Cognifide we call this the ‘Realise’ stage. It’s where your investment begins to pay off. It’s where your business moves from merely being proficient in operating your digital platform to the platform becoming integral to how your business behaves. It’s about your business continually iterating to use your capability in new ways that were never even anticipated in your original business case. That’s when you start seeing real returns.

Not enough focus on ‘transformation’

Not every transformation project needs to be radical, but the fact is, if your business has recognised the need to transform you are  probably doing it for some pretty fundamental reasons. Usually either,

  • You believe there’s an opportunity to grow revenue, exploit market opportunities and disrupt your competitors (and perhaps your own business) with a new approach that differentiates you, delivers more customer value or achieves a different price point
  • You are responding to pressure from competitors or new entrants that are threatening disruptive business models that will change the game

Perhaps it’s a bit of both. Either way, there should be a business payoff beyond incrementally shaving cost from your existing model that will inevitably be accompanied by transformation in both technology and operating models.

If you have done your job well in the ‘Invest’ and ‘Realise’ phases, you’ll need to worry less about iteration and incremental improvements to your existing business model. That should now happen as part of your day to day business. Real transformative thinking comes when you are free to consider how you’ll be able to leverage your investment and new ways of working and apply them to new products, markets or business models.

We call this the “Multiply” stage - it’s where you take your business model and capabilities and apply them to new areas. It’s why Amazon isn’t just a book retailer anymore. It might seem a long way away from where you are today, but this thinking is what gives your transformation project context and motivation. The Multiply stage is not where you’ll eventually get to once you have all your ducks in a row, it’s where the entire transformation process starts, not ends.

The Multiply stage sets the future vision that galvanises your business into action. It creates the context for the digital projects you plan to run to get you there, both in terms of technology implementation and adoption. Sure, things will change along the way, but without this vision your projects can seem like a series of disconnected activities.

These are the common pitfalls that we see when it comes to digital transformation. Our Invest-Realise-Multiply model aims to help you navigate these pitfalls and set an actionable path towards realising the true value of your digital transformation project. It isn’t a sequential effort, all of these phases run in parallel. They continuously shape and inform each other. And when that happens, you’ll know your digital transformation project is achieving real change and delivering a real return.

Author: Kieron McCann
Published: 17 May 2017
digital transformationproject managementtechnologyoperating modelamazon

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