Digital transformation strategy: 10 questions to ask about yours now
Whether you’re putting together your digital transformation strategy from scratch or revisiting the plan in light of disruption, try to start from a point of curiosity. The most effective digital transformation strategies begin not with a slew of answers but with asking the right questions.
At a time when every organization is pivoting in response to the ongoing COVID-19 pandemic, IT leaders can take a step back to assess – or reassess – the business needs and opportunities they might address with digital solutions by posing some targeted questions.
Consider these 10, experts suggest:
1. Is my digital transformation strategy still relevant?
The rate of innovation in technology and disruption of business models is greater than ever – which makes it next to impossible that a digital transformation strategy will remain relevant beyond a couple of years. “If you are in year two or three of your strategy, it is important to assess if the roadmap you laid out to enable your IT strategy is still relevant,” says Rahul Singh, managing director of IT and business services transformation advisory firm Pace Harmon. “Assess and course correct, so you do not keep investing in a strategy that has become obsolete due to disruption in technology or business model.”
[ Do you say no to innovation theater? Read also Digital transformation: 11 habits of successful teams. ]
2. Is our current or proposed digital transformation strategy holistic?
“We see a lot of organizations pursue what we refer to as ‘random acts of digital’: point solutions to address urgent problems or pet projects for specific leaders that don’t have a lot to do with one another or a compelling vision of where the organization wants to go and how technology will support that journey,” says Holly Lyke-Ho-Gland, leader of the process and performance management team at benchmarking, best practices, process and performance improvement, and knowledge management firm APQC. The best digital transformation strategies are comprehensive.
3. Is the digital transformation strategy aligned with business priorities?
“Often IT organizations focused on what I call ‘IT for the sake of IT’ do not ask the fundamental question of how their IT strategy is enabling the business to drive differentiation in products and services that they are providing to the end consumer,” says Singh. “Unless IT leaders are able to think strategically and answer the question as to how their IT strategy is enabling key business growth objectives, IT will be seen as a cost center and not a value center. In today’s digital world this is a lost opportunity for an IT organization.”
[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]
4. What might hold us back?
If your current approach isn’t delivering anticipated results, old-school thinking may be standing in the way of execution. “For example, we’ve interviewed several organizations where IT metrics needed to be adjusted to encourage rapid, fail-forward innovation, or the annual IT budgeting cycle couldn’t keep up with the speed with which digital projects need to be funded,” Lyke-Ho-Gland says.
5. How agile is our approach?
“When implementing an IT strategy it is important to ask the questions as to how nimble your strategy is and how will it be able to adapt to technology and business disruption,” says Pace Harmon’s Singh. “Building in stage gates and adaptability is key in today’s dynamic business environment.”
Elizabeth Ebert, IT advisory lead for North America at IT consultancy and service provider Avanade, advocates for planning sprints. “This structures planning and execution in a ‘learn fast’ motion so that different themes are addressed and refreshed as new technologies, programs, and processes are implemented,” Ebert says. “Planning horizons are also greatly reduced, rarely planning beyond two to three years.”
One way to do that is with emerging technology adoption sprints, she says, to create the capacity to address new technology opportunities that need to be considered as part of business innovation and transformation efforts.
Let’s explore 5 more important questions to ask:
6. Are we measuring the right factors?
Speaking of metrics, the ability to track the value of digital initiatives is paramount to success, whether that’s looking at increased revenues, operational cost reductions, access to new markets, or customer retention rates. “Always be asking, ‘How can we track the value of our currently running initiative?’” advises Prashant Kelker, partner for digital strategy and solutions at global technology research and advisory firm ISG.
7. What technology debt can we remove during our currently defined projects?
This question is particularly important right now, as working capital is expected to remain scarce over the next 18 months, says Kelker. Technical debt is insidious and costly, not only in terms of dollars and cents, but also in terms of increased risk exposure and the prevention of greater transformation. However, if IT leaders can identify opportunities to address some of that legacy liability within the framework of digital initiatives, they may be able to address this ongoing issue.
8. Where is the network effect?
True transformation delivers exponential returns. IT leaders must create clarity on what network effects are possible, what ecosystems the organization should participate in, and what value might be derived from that participation, says Steve Hall, partner and president of ISG.
9. Where’s the key data?
IT leaders should consider what data assets are important, either in terms of monetization or driving the strategy forward, and how analytics and API strategies should shift to take advantage of those assets, says Hall.
“Enterprise data strategies are key as data analytics place greater demands on IT leaders and are key opportunities to engage and align with the business organization,” says Lyke-Ho-Gand of APQC.
10. Do many people outside of IT know what’s happening?
“A lot of IT teams focus on ‘check the box’ plans when it comes to digital – whether they’re meeting milestones and getting things done,” says Lauren Trees, who heads up APQC’s Knowledge Management research group. “That’s important, but also meaningless if people out in the business aren’t using and liking the solutions you’re deploying.”
High adoption rates and upwardly trending digital-specific metrics can be good positive indicators of success. “But if no one outside IT or the digital team knows what you’re doing or how it can help the organization,” Trees says, “then you either have the wrong strategy or you haven’t communicated it well.”
[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]