Blog Digital Transformation

How to Screw Up Your Digital Transformation Project in 5 Easy Steps

Brendan O'Brien

4 May 2022

Enterprises of all shapes and sizes, in industries and geographies far and wide, continue to invest copious amounts of capital and resources to digitally transform their businesses. Research analyst firm IDC tells us that 70% of companies either have a transformation effort in place or are working on one. Spend on these transformation initiatives is predicted to exceed $2 trillion – with a “T” – by 2023.

The motivations for launching digital transformation initiatives vary from one company and industry to the next. At the end of the day, it’s about finding new monetization and revenue opportunities and delivering the modernized products and services that meet the demands and expectations of today’s digitally connected B2C and B2B customers.

For some enterprises, particularly those getting a late start, the perceived pressure to digitize can lead to mistakes that can undermine the effort and diminish prospects for success. We’ve seen our share of missteps and false starts and have identified how companies can royally screw up their digital transformation projects in five all-too-easy steps:

Step #1: Prioritize Technology Transformation Over Business Transformation

Before transformation initiatives begin, those leading the charge must first consider how processes, people, and thinking will need to change within the organization. In all likelihood, existing systems such as on-premises, capitalized assets will have to be replaced with newer, modernized ones capable of supporting the new business. Finance needs to understand the implications of these changes and adjust the way it looks at the cost of goods sold and profit margins as the business shifts. Expectations must be considered and established at the outset of the process.

Step #2: Neglect to Achieve Consensus from Key Stakeholders

In addition to incorporating finance teams into the process, transformation leaders must be sure to secure buy-in from leadership at the highest ranks and ensure they understand how every facet of the business will change, from the way products and services are delivered to the way revenue is recognized and so on. For example, if you are an automotive company and, instead of selling cars in a one-time transaction, you are now selling the right to use a vehicle and billing for usage over time, the way you recognize revenue and assess the performance of the business will change dramatically. Ensure that the C-suite and board members truly understand how success metrics and KPIs will change as the business changes.

Step #3: Immediately Jettison the Past

Most companies cannot afford to simply turn off their legacy business while building the new digitally enabled one. Some of your customers may be perfectly happy to continue receiving services from you via the existing model. Simply flipping a switch as you endeavor to digitize could ruffle feathers and needlessly cannibalize revenue. As part of the planning process, transformation leaders must build a bridge that, at least for a period, accommodates the legacy business and the revenue it continues to generate while establishing a migration path for existing customers and employees.

Step #4: Start by Buying Technology

For sure, the new digitized organization will need new and modernized technology systems capable of supporting new services, usage-based billing arrangements, and recurring revenue streams. However, technology procurement should come toward the back end of the process once business goals have been established and the aforementioned buy-in from stakeholders has been secured. Ultimately, technology must support the organizational digital transformation effort, not drive it.

Step #5: Take an Inconsistent Approach to Technology Procurement

Before any technology sourcing or evaluations begin, transformation leaders must first determine the strategy route they will pursue to acquire the systems that underpin the newly digitized enterprise. A best-of-breed approach means procuring the most capable and effective solutions from multiple specialist vendors. A suite provider may not have the best individual solutions but offers “one throat to choke” and a single source for integration or for addressing any problems that may arise. Comparing and contrasting suite and point solution providers is an apples-to-oranges proposition. Leaders must consider organizational culture, size, and structure to determine which approach is best.

Brendan O'Brien

Chief Innovation Officer & Co-Founder at Aria Systems. Brendan leads the product direction and drives the launch of new products. He introduced the world to cloud billing, and innovated database-driven, enterprise-grade web applications – before the concept of “cloud” was even on the horizon. Brendan is at the forefront of the recurring revenue revolution that is empowering enterprises — and specifically enabling information systems and new business models to secure predictive revenue streams while improving business processes.

4 May 2022