The Digital Transformation Checklist (Part 2)

EducationSummary: Digital transformation is a hot topic for many businesses these days. However, it’s a complex task. Many don’t know where to start, or what steps they must take in the process. In this article, we explore 5 more steps in your digital transformation checklist.

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There’s no question that the world is going digital. The question is, “What are you doing about it?” Is your company keeping up or falling behind?

Gartner sums up the importance of going digital in their 2016 CIO Agenda Report: “As digitalization moves from an innovative trend to a core competency, enterprises need to understand and exploit platform effects throughout all aspects of their businesses. Not doing so will threaten their ability to: deliver; attract and retain talent; and have their products/services perceived as value-adding by customers.”

Now, I realize that digital transformation is a complex topic. Not every organization understands all of the steps they need to take.

The big question: If your business hasn’t yet embarked on a digital transformation journey, where do you start?

In the first part of this article we looked at these 5 points on the digital transformation checklist:

  • Create a clear definition of success
  • Get the right leader in place
  • Get buy-in from all levels
  • Create a process for handling the change
  • Evaluate your talent

Today, let’s take things a step further. Here are 5 more steps to add to your digital transformation checklist:

Answer the “change” question

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Before you begin a digital transformation journey, you must ask (and answer) this question: “How will this impact/change our ______?” Fill in the blank with different aspects of your business.

For instance:

  • How will this change our culture?
  • How will this impact our leadership structure?
  • How will this change our current processes?
  • How will this impact our employees?

The list could go on, but I think you get the picture. Digital transformation can alter many aspects of your business. It’s critical that you understand and prepare for this fact before you dive in.

“The most important steps to take before reinventing an organization using technology is to assess how it’ll affect the current organization’s dynamic,” says David Kosmayer, CEO of Bookmark. “For example, will setting a customer service A.I chatbot empower your customer support team or eventually replace them? Another thing to consider is the on-going cost associated with such changes; are costs going to increase as a result on the performance improvements? Is it worth the cost?”

Let go of the “sunk costs” fallacy

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The “sunk cost” fallacy occurs when people continue a behavior or endeavor as a result of previously invested resources. This often occurs even when that behavior is counterproductive or harmful.

For instance, how many times have you eaten food you didn’t enjoy simply because you had already paid for it? Or, suppose you purchased a ticket for an event. But, there’s a massive storm on the day of the event, making travel dangerous. Due to the fallacy of “sunk costs”, many people will go anyway, simply because they’ve invested money in the ticket.

Believe it or not, this fallacy even applies to digital transformation. If you don’t believe me, look no further than your legacy systems.

Many businesses will continue using a legacy system/application simply because they’ve invested so many resources into it. That legacy system may slow them down. It may be costly to maintain. But, it represents a massive investment over the years. So, the business holds onto it.

If you hope to succeed in your digital transformation efforts, you must let go of this fallacy. How? As explained below, focus on future costs. Ignore past investments when evaluating legacy systems.

“When evaluating your legacy systems for a digital transformation, you need to look at them through a different lens,” says Tyler Wassell, Software Development Manager at mrc. “I know it’s difficult, but don’t focus on all of the time and resources you’ve poured into those systems over the years. Instead, focus on the future. How much will this cost to maintain going forward? Will our legacy systems hurt our efficiency, or hold us back in some way? Do these systems fit with what we’re trying to accomplish with our digital transformation? If not, can we augment them in some way to make them fit? The answers to those questions depends on your business, but it’s important that you approach them with a ‘going forward’ mentality.”

Now, I’m not trying to say that your legacy systems must go. I’m saying that you evaluate them without bias. Does this make sense from a business perspective going forward?

In some cases, it will make sense to replace them. In other cases, it will make sense to keep your system, and “extend and surround” it with modern applications. In still other cases, you might come to the conclusion to keep things as-is. It all depends on your business.

Set up self-service options for your users

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About 10 years ago, I remember speaking with someone who worked at an insurance company. He complained about the time it took to get new solutions. It took them over a year to roll out a basic reporting system. Once it was delivered, only the most technical end users could even understand it.

Unfortunately, these types of stories weren’t uncommon. The worst part: We still hear stories like this today.

To succeed in a digital world, this needs to change. One of the overriding goals of your digital transformation journey must be agility. You must deliver solutions quickly, when the business needs them. Why is this so important? Besides the obvious efficiency boost, here are two reasons why this is so important:

1. Competition
In a digitally-driven world, speed is the name of the game. Your competition moves faster than ever. You must keep up if you hope to stay in business.

2. Shadow IT
Users have more options than ever before. If you make them wait around for new solutions, what do you think they’ll do? Most will bypass the IT department and find their own solutions.

What can you do? After all, most IT departments are understaffed and overworked. It’s not like you can magically create more time. How can you deliver solutions when the users need them?

As part of your digital transformation efforts, you need self-service options for end users. Business users should have access to the software they need, or have the ability to create their own solutions. This critical step helps all parties: The IT department has less on their plate, and end users get solutions when they need them.

Create a data security plan

As your business goes digital, the need for cybersecurity becomes critical. The problem is, many businesses don’t have the skills to address these new security threats.

As mentioned in this article, “Gartner predicts that by 2020, 60 percent of digital businesses will suffer major service failures due to the inability of IT security teams to manage digital risk.”

Before you begin your digital transformation journey, you must address this issue. How will you keep your data secure?

I’ve seen organizations handle this in a couple of different ways. First, some hire security professionals who understand modern risks and best practices. While this is a costly approach, the need for high-quality security talent is increasingly important.

Second, I’ve seen others move their applications and development to the cloud. As explained below, modern cloud services often provide better security than many businesses could create on their own.

“While your business may be late in its digital transformation, it does not need to be late to the game in its security and data storage decisions,” says Alexandra Bohigian, Marketing Coordinator at Enola Labs. “I highly recommend building your digital products within the cloud to save money, ensure for scalability in the future, and to provide multiple layers of data security that will not be guaranteed in an on-premise data center.”

Look long-term

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Here’s a problem we see all too often. A business starts evaluating a software product using a few users. If that evaluation period is successful, they roll it out to more users.

The problem: They often don’t plan for scalability during the evaluation process. Sure, the software offers a low per-user licensing option. Sure, it has the features that a few users need. But, what happens when you roll it out to the whole company? Does it become prohibitively expensive? Does it include the features that everyone needs?

When you’re implementing new tools, think long term. Look at the licensing model. Look at the included features. In this way, you can deliver the solutions your business needs now, and in the future.

“Bear in mind the growth plans of the company,” says Iskra Evtimova, a Marketing and SEO Specialist. “What are you aiming for the next 1-2-5 years? Does the software that you are testing include all the features you will need? If not, you may end up integrating a new software the following year which is unnecessary.”

Summary

Over these 2 articles, we’ve explored 10 steps for your Digital Transformation Checklist. If you would like to add anything to this list, I’d love to hear it. Feel free to share in the comments.

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