A journey toward Digital Transformation through three regions

These days, almost all kinds of organizations that we serve are pursuing some form of “Digital Transformation” effort. Why? Because digital has become critical to:

• improving customer experience with faster, easier service
• reducing process friction (causing delays and waste)
• increasing productivity
• creating new product opportunities, and
• enhancing profitability in general.

In business lingo, “Digital Transformation” means integrating digital technology in all areas of an enterprise – from internal operations to customer-facing activity, to digitized products [NOTE 1]. It results in fundamental, sometimes drastic, changes to how businesses work and how they deliver value to customers.

Digital Transformation may be described at a high level as a “journey” through “three different regions”, or steps, as the enterprise matures in its digital capabilities:

1. Enabling Digital Transformation with a Unified View
2. Optimizing Digital Transformation with Streamlined Decision-Making
3. Becoming more Agile: Agile Digital Transformation for Continuous Improvement

Step 1: Enabling Digital Transformation with a Unified View

Enterprises have refined how they deliver their products and services over years and decades. Digitization represents a major organizational disruption, which generally cannot be fully planned. Its implementation is often fragmented and can encounter reluctance or even resistance from both management and staff.

Moreover, gaps in planning and execution may not be readily apparent. Surveys suggest that executive leaders receive fragmented views of the digitization progress and most are frustrated by the slow pace of progress as it becomes apparent [NOTE 2]. Information about the Digital Transformation program is scattered among numerous sources, and management is poorly coordinated.

When management lacks visibility into the Digital Transformation program’s various projects, then friction and bottlenecks in data gathering result in slow decisions or no decisions. When leadership defines an enterprise vision with a multi-year roadmap – and with Objectives and Key Results (OKRs) or other goals – but lacks a clear, overall picture of the enterprise’s “Book of Work” (the list of all the organization’s current and planned projects) – then investment decisions are made “in the dark” and prioritization effectiveness falters.

Lack of visibility also means that project teams often can’t see their contribution. Even when they have embraced the strategic vision, they can’t see progress, or their own part in it. Under such conditions, morale and commitment fade.

To “connect the dots” and provide visibility requires a process, supported with tools, that consolidates portfolio, program, and project data into a clear, single source of truth:

1. Executive views of that data support strategy
2. Program/project manager views support execution
3. And team-member views let them manage their work and see their own team’s contribution.

Step 2:  Optimizing Digital Transformation with Streamlined Decision-Making

Success of an overall Digital Transformation program will depend largely on whether the effort optimizes:

1. Resource allocation focused narrowly on digital
2. Quality delivery, to avoid technical debt.

Often, to project/program managers and teams, digital initiatives are “just one more thing” added to the list. The resources allocated to a digital project are allocated to two or three other projects as well as their ongoing activities (meetings, admin, etc.)  This dilution of effort kills productivity, dragging out the duration of project delivery.  To optimize resource allocation, start by focusing those allocated to digital efforts on those efforts, and those efforts only:

• Target overallocations
• Monitor inefficiencies from interruptions and task switching
• And support bottleneck resources.

“Quality is Job #1” for the delivery of digital products or processes, to the market or internally to the organization.  When a bad digital product or process is introduced and creates customer or user frustration, it imperils the whole transformation.  Overly complicated, poor-performing, or defective product offerings or digitized processes will result in market or user rejection and resistance.  Projects may very well be on-time and on-budget but will fail to achieve market adoption or user acceptance.

Step 3:  Becoming more Agile: Agile Digital Transformation for Continuous Improvement

Achieving Digital Transformation requires the ongoing ability to apply digital technology to opportunities as they arise, and make rapid adjustments to strategy and market changes as needed. On this third step of the ongoing Digital Transformation journey, organizations integrate an Agile process into their portfolio methodology framework, to enable quick adaptation.

When mentioning Agile, many think it refers to how IT Departments, or software companies, deliver applications – that it’s “not for me” – but this is a misconception “An Executive’s Action Plan for Enterprise Agile Transformation and Sustainment,” Matt Light. With roots in Quality Management and Lean Process Improvement, Enterprise Agile is applicable to any kind of organization. It is not limited to application methods like Scrum or the SAFe Scaled Agile Framework (though these and other methods are fully supported by Planisware).

Case Study:  Life-Saving Digital Transformation

Pharmaceutical companies are heavily regulated, and it can take years for them to create, test, and distribute products, with each project costing hundreds of millions of dollars in R&D spending. They can’t iterate to incrementally improve the drugs they release to the market. They can’t sell a new product without rigorous government testing and approvals.

With Planisware’s support for Agile methodology, this pharmaceutical company was able to pivot its operations in a matter of months to start developing COVID-19 vaccines.

They were able to reallocate hundreds of millions of dollars from other initiatives, adapting their company strategy at a pace that they had never seen before. As a result, they met expedited governmental approvals, and not only delivered an effective product, but adapted operations to produce the vaccine in volume.

Our Planisware Enterprise solution:

• Provided software capabilities to simulate and assess different strategic and product development scenarios
• Supported a continuous, agile budget allocation process to assess the impact of reallocating budget or shifting resources
• And enabled modification of complex, rigid processes, including the annual budget cycle.

Most enterprises budget annually and find that halfway through the year, reallocating budget is difficult to impossible. This company modified budgeting to a more continuous, flexible process, which let them quickly pivot among their various R&D explorations, and deliver one of the most critical products in decades.

Conclusion & Recommendation

Digital Transformation is no walk in the park – it’s a long journey.  Do products, processes, and projects that develop them continue to support the digital strategy? Or has it fallen by the wayside? Organizational inertia has left many a change initiative stuck in the mire.

Is value delivery continuing to improve resource utilization, reducing friction, bottlenecks? Monitoring and promoting the benefits being realized by Digital Transformation will sustain it.

Is process complexity declining, as complicated practices give way to simpler, more agile processes enabled by software solutions? The risks of undue process complexities often outweigh the mitigation they’re meant to provide.

And you, what do you think is critical to a successful Digital Transformation journey?

NOTE 1: “A 3-Step Guide to Digital Transformation,” Raman Mehta, CIO of Visteon, CIO Magazine, Nov. 3, 2017.

NOTE 2: Gartner  View From the 2020 Board of Directors Survey: Complete Survey Data, Partha Iyengar, Jorge Lopez, Apoorva Chhabra, Toolkit Presentation for What the Board Needs to Know About Digital Business