This article is an extract from Lumenia Consulting’s latest whitepaper on Digital Transformation, ‘Demystifying Digital Transformation’. The full whitepaper explains the fundamentals of a well-defined digital transformation strategy and sets out important criteria for a successful transformation programme.
There is any number of paths that can lead to digital transformation. Perhaps historic underinvestment in IT has seen your business fall behind the curve as your industry advances and technology trends evolve. Maybe you can see business opportunities to improve customer experience or competitive advantage, but you lack the IT infrastructure, agility, and capability to seize them. You might have started to undertake some digital initiatives already, and find them to be disjointed or lacking control. Or perhaps you’re looking to build on the success of a recent ERP implementation, extending out from that digital core to realise greater value.
No matter how you arrived at the point of initiating a digital transformation programme, confidently establishing a path forward can be difficult. As with any large programme of work, breaking it down into a logical sequence is key, starting with a strategy.
Digitally Enabled Future
A good digital transformation strategy sets out a clear plan for investment in digital solutions and supporting capabilities, aligned closely with the organisation’s business strategy. This should help you to:
- envision a digitally enabled future;
- identify the benefits you expect to achieve from your investment;
- define a series of initiatives intended to deliver those benefits;
- determine what is achievable over your intended transformation period;
- prioritise your spending, decide where to focus first, and develop a realistic plan.
Each initiative described within your digital transformation strategy should be explicitly tied back to an established business objective or imperative, ensuring an unambiguous connection between IT investment and business needs.
Six Steps to Developing a Digital Transformation Strategy
Developing a good digital transformation strategy is not an easy task. It requires a structured approach, strong stakeholder engagement, careful analysis, and sound reasoning. We have summarised Lumenia’s recommended approach to this process in six steps below:
- Understand the business strategy. Start by gathering insights into the leadership team’s vision for the future by reviewing existing strategy documentation and having conversations with senior business stakeholders. These set the direction for your digital transformation. For example, business strategies to ‘prioritise growth in online sales’ versus ‘double the number of physical branches’ have different implications for IT investment.
- Determine digital transformation scope. Consider how broad your digital transformation should be, taking into consideration the wider business context. What does ‘digital’ mean for your business? Do you need an all-encompassing overhaul and modernisation of your IT portfolio, or are there specific areas that the digital transformation strategy should hone in on?
- Survey your existing business capabilities and support the digital landscape. Assess the current maturity of relevant business processes and supporting technology to identify strengths, weaknesses, risks, issues, and gaps. This will reveal opportunities for improvement and associated benefits.
- Identify and assess opportunities to improve business processes through digital enablement. Improvement opportunities typically include a range of people, processes, and technology changes. Your digital transformation strategy should specifically focus on the opportunities that can be achieved through the application of digital solutions and supporting IT capabilities. These should become initiatives for inclusion on your digital transformation roadmap. Explore each of these, considering information such as likely timescales, cost ranges, benefits, resource requirements, and constraints associated with each.
- Develop a roadmap of digital transformation initiatives. With initiatives identified, you can start to determine their optimal sequencing for your digital transformation roadmap. Be realistic about how much change the business can take on and the time required. Typically, large organisations can manage more parallel activities than smaller ones. Create a visual roadmap representation to highlight interdependencies, potential parallel activities, and estimated timeframes. The roadmap should be accompanied by a description of each initiative with an explicit link back to business objectives. Not everything on the roadmap will be clear at this early stage. Early initiatives should be relatively well-defined, but later ones may be notional. As the business and IT environments evolve, and further-out elements become nearer and clearer, the roadmap itself should be refined.
- Finalise the digital strategy. Your digital transformation strategy comprises the key outputs from the previous steps. It will need to be socialised and signed off by senior stakeholders and may require multiple rounds of review and refinement. This is a critical part of building buy-in for its subsequent execution and will be made easier by actively engaging with those stakeholders and validating your thinking during the preceding steps.
With your strategy signed off, you can prepare to embark on the first initiatives on your transformation roadmap.
About Lumenia | Lumenia Consulting is an independent ERP and Digital consulting organisation, specialising in business transformation through the implementation of Enterprise Resource Planning, Digital, and related enterprise software applications. Download the full white paper from the Lumenia Consulting website. For further information on Digital Transformation, please contact Edward Abrahamson, Principal Consultant at Lumenia.
