Pursuing a digital transformation? Here’s what you need to know
A true digital transformation reimagines how an organization uses people, processes, and technology.
The pursuit of a digital transformation is no longer just for technology companies. Increasingly, more businesses across industries are modernizing their technology in the hopes of meeting increasing customer demand for seamless digital interactions (think chatbots, easy payment processing) and an appetite for more comprehensive brand experiences. According to a 2020 Salesforce report, “88 percent of customers expect companies to accelerate digital initiatives due to COVID-19,” and “80 percent of business buyers expect to conduct more business online post-pandemic compared with before.”
Of course, some companies may see digital transformations as a cost center and fear failure, resulting in wasting resources. Research from consulting firm Kearny finds that “85 percent of digital transformation projects do not deliver the expected financial outcomes.” Yet we find that transformation missteps are often down to companies failing to consider the factors outside of technology and how they must also evolve to support modernization. A true digital transformation reimagines how an organization uses people, processes, and technology to support largerbusiness and tech goals.
To succeed, companies should ensure they have the right people in the right roles and the right processes in place to support their tech objectives. While companies can undertake this effort on their own, working with a flexible, strategic partner can help businesses address their blind spots in these three areas at the outset and make recommendations to address them early. While there are many ways to pursue a digital transformation depending on factors including industry, company size, products, and services, this article will discuss the most common issues and solutions across people, processes, and technology.
While most companies, whether in the tech industry or not, have IT teams, new technology such as cloud or hybrid infrastructure requires skill sets and technical knowledge that many legacy IT teams don’t possess. To be sure, companies may choose to re-skill their employees as the more cost-effective option: World Economic Forum research found that the average cost to re-skill a US employee is $24,800 per person, and “employee turnover costs 33% of the departing employee’s salary,” which can really add up depending on the position. However, hiring from outside the organization can be beneficial and save precious resources. Re-skilling programs requires significant investment, and if employees feel it doesn’t help advance their career then they’ll leave, leaving organizations with a costly program.
In contrast, bringing in external talent at the top of their game provides an opportunity for employees to learn on the job. And new people can bring new perspectives to processes and technologies that are harder to get from people who have been at a company for a while, no matter how talented the person.
To build the best transformation teams, we suggest start by asking these questions:
- What technologies and capabilities are we trying to build?
- What skill sets will we need to support these goals? Data engineering? Machine learning?
- Experience leading large-scale transformations?
- When comparing the current and desired skills sets, where are the knowledge gaps in our teams?
- Be sure to consider both tech skills and “soft” skills such as communication and collaboration.
- Can we invest in re-skilling or up-skilling our current talent pool? If so, are there any gaps that we’ll
- still need to fill with outside talent?
- What does the ideal hiring process look like? How can we ensure people align with our transformation goals and cultural values?
Working through these questions with a strategic partner can help identify hiring or re-skilling blind spots in any of these areas that a nontechnical HR team might not see.
Many companies push forward with a transformation without securing buy-in from the top. Without C-suite support, however, it’s difficult to make changes stick at any level. Research shows that “ 50% of the variability in group or unit performance being attributable to the individual leader.” Thus, organizations’ first order of business is to get support from the top.
Leadership should also support regular review and improvements of existing processes. Businesses often run into process-related issues such as an outdated development workflow because people are used to old ways of working and return to those processes. However, stakeholders who model new processes can inspire widespread adoption.
Businesses often run into process-related issues such as an outdated development workflow because people are used to old ways of working and return to those processes.
Ideally, processes evolve to better support specific transformation-related goals and how people work. For example, we’ve observed development teams track projects using analogue processes, such as paper reports or simple spreadsheets. While this can work for smaller scale efforts, this process becomes unwieldy in large transformation efforts. Team members cannot follow tasks or issues in real time, a critical capability for a project with lots of moving parts. Instead companies might adopt a development workflow that looks like the following:
1) Product manager creates issues in Jira (or similar issue tracking software) and puts them in order based on project priorities; team members can track the progress of each case based on status such as “in-progress” or “under review.” Deprioritized tasks are stored in a backlog.
2) An engineer takes a Jira issue and begins development work.
3) Once development is finished, the issue is tested, usually by QA engineers and perhaps product managers; if there are any problems, the issue goes back to development.
4) Once an issue passes QA, code from the new feature is merged into the main branch of a source code management system and deployed to the production environment.
5) The feature is released and monitored in production. The development team then starts working on the next issues in the task list prioritized in collaboration with the product manager. In this way, teams can efficiently work through the backlog.
Companies can create their own version of a development process based on feedback collected during all-hands or sprint retrospective meetings. While there are many different styles of retrospectives, a common and constructive format is asking “What went well? What didn’t go well?” and then voting as a team on which points will be discussed. A strategic partner can also help facilitate feedback sessions by observing existing processes and making objective recommendations based on their observations.
Companies can fall short when it comes to technology because they lack the appropriate channels to facilitate knowledge sharing between the tech side and the business side, resulting in silos. Furthermore, if an organization has a good development workflow and related processes that are not communicated across business units, then they will have little effect. We’ve also observed that companies that hire top talent forgo building a robust onboarding process for new engineers—a critical opportunity to learn company culture, processes, and communication styles.
A strategic partner can help team members learn about the business before they start working on a project. They can also bridge the gap between tech and business by setting up an initial development workflow with clearly defined processes and making sure engineers have access to all the tools and services they need to do their job well.