How to properly prepare a company to implement digital solutions

It is 2024, and the concepts of "digitalization" and "digital transformation" still live in the business information space as current topics. At the end of 2022, Gartner reported that 52% of surveyed companies (not belonging to the high-tech industry) still operated in a traditional manner, implementing only some tools from the wide range of "digital". And although 30% of enterprises at that time recognized that they were on the path of transformation, only 7% received the title of "digicorp", i.e., a business whose 1/3 of revenue came from digital business (“Quick Answer: What Proportion of Traditional Companies Have Truly Become Digital Businesses?”). Although more than a year has passed since this study, extrapolating the current dynamics, it can be estimated with high probability that no more than a few percent of companies have advanced to the "digicorp" league. Therefore, the digital transformation of business occurs relatively slowly.

There are many reasons for this state of affairs. One of them is the fact that getting caught up in the trend and riding the wave of digitalization in the “digital first” paradigm led to initiatives that had more to do with “digiwashing” (the equivalent of “greenwashing”) than tangible business outcomes. Forbes, citing the results of the KPMG 2023 US Technology Survey states: that over half of the surveyed managers claimed that investments in digitalization in the last 2 years had no impact on increasing efficiency or revenue. What's worse is that digital solutions successfully implemented (defined in terms of project parameters) may have significantly reduced costs in the short term, but they had a negative impact on Customer Experience, indirectly contributing to a decrease in revenue stream (a.k.a.: “digitalization - you're doing it wrong”).

Especially now, in times of uncertainty and economic crisis, companies are more cautious about transformational initiatives, trying to undertake only those that are feasible and have a high probability of achieving results. This approach can be described as "Digital Prudence". Statistics regarding the scale of successes and failures in IT system implementations have been known for years (the iconic "Chaos Report" from The Standish Group). The implementation of digital solutions, as part of a broader business transformation program, involves even greater complexity. Not only budget, schedule, and scope are the criteria for success. Business outcomes, customer responsiveness, and the speed of adoption within the organization are also critical. Aspects related to stakeholder expectation management, securing their "buy-in," and change management become necessary conditions for achieving the intended results. The business case, as a traditional tool for making financial decisions, must be supplemented with artifacts that will win over the "hearts and minds" not only of decision-makers but of the entire team or even the whole company.

According to a study conducted by McKinsey already in 2021, proper preparation has a significant impact on the success of transformational endeavors. To put it more precisely: improper goals definition and a lack of solid planning reduce the potential value to be gained by nearly half!

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Goals should be defined and agreed upon during a dedicated, appropriately moderated workshop that gathers key stakeholders from all levels of the organization's hierarchy. The presence and active participation of both top-level managers (C-level executives), middle managers of relevant departments, and representatives of line employees from teams that will implement and use the digital solution are essential for building a common understanding of why the initiative is being undertaken. This includes both business goals and their connection to the strategic and tactical objectives of the company, as well as customer goals – since it is for them that the enterprise generates value for which they are willing to pay. Therefore, if we are dealing with the real "digitalization" of business, its impact on customers will be tangible.

Defining the goals of the organization and its customers not only helps avoid making decisions at the expense of the latter ("digitalization – you're doing it wrong") but also understanding the mutual relationship between goals, which in itself more clearly justifies the purpose of the undertaking. It is also important not to forget about the goals of individual stakeholder groups within the company and to map them in the context of their impact (positive or negative) on the process of implementing the initiative. The intentions of individual groups should also be at least named and addressed, and ideally considered and agreed upon – in order to gain actual engagement and support from them. Looking at an organization from a bird's-eye view, at the intersection of its current state, the barriers that need to be overcome, and future plans offers a new perspective. Thanks to this, it is possible to identify areas that often act as enablers for delivering an initiative with measurable success.

Depending on the size of the digital initiative and its estimated impact on the business, initiatives are formulated that specify its scope and decompose it into individual business domains and subdomains. Initiatives are strategic areas of activity that are necessary to achieve the previously defined overarching goals of the project. Initially, their objectives (subordinate to the overarching ones) are defined, and the expected business outcomes and potential benefits for customers are formulated. Subsequently, key business capabilities (along with their most important characteristics) that the organization must acquire or develop are identified. Based on these, the required technological and IT capabilities are outlined. A program composed of initiatives not only specifies what is to be achieved and what needs to be done. It also serves – later on - as a management tool for monitoring, control, and supervision. Like the entire project, each initiative has an assigned owner responsible for achieving the set goals. The fact that initiatives are defined at a strategic level for the entire program and have formulated objectives and expected results enables the owners of the initiatives to use OKRs (Objectives and Key Results), which allow them to manage more effectively at the tactical level.

Defining and outlining initiatives as a cohesive program of digital transformation or the implementation of a comprehensive digital solution is not sufficient to begin execution. Initiatives broadly specify what needs to be done and achieved in various business domains and subdomains, but they do not answer how to do it and in what order. From the perspective of objectives, initiatives are discrete. However, from the standpoint of required business and technological/IT capabilities, they often share common elements. Implementing one capability can fulfill the goals of several initiatives to varying degrees – for example: the implementation of a Customer Data Platform can, on one hand, enable personalization of offers for the customer, supporting sales objectives, and on the other, achieve an omnichannel experience, which improves customer satisfaction in after-sales service. Therefore, the realization of a digital initiative is based on a properly formulated plan for implementing and developing business and technological/IT capabilities, taking into account a series of dependencies and different levels of maturity/development of these capabilities over time.

This plan takes the form of a manageable roadmap, and the elements that constitute it are known as Value Packages. They represent specific work to be done, which may take the form of a single project or program (understood according to project management methodology as a collection of related and coordinated projects). Value Packages must be defined in such a way that the results of their implementation bring real value to the business and/or customers and demonstrate the extent to which they achieve the objectives defined in point 2 of the initiatives. Adopting a roadmap format at this planning stage with a conventional time perspective of three periods (Now, Next, Later, rather than detailed schedules) allows for flexibility, effective prioritization, and management and monitoring of progress. This is possible by maintaining a high-level view of the roadmap with the ability to delve into the details of each Value Package and track its connections to initiatives and mapping its impact on business and technological/IT capabilities.

Since Value Packages focus on implementing new or developing existing capabilities, it's essential to use tools that support their definition. The most natural tool is architecture – both business and high-level IT, which describes and presents capabilities in a structured manner. By applying the MECE (Mutually Exclusive and Collectively Exhaustive) method, it ensures that any missing elements not identified in the initiative definition stage (step 2) are supplemented. Using methodologies and best practices from the domain of architecture allows for proper modeling of capabilities along with dependencies and making rational decisions regarding their decomposition, structure, and implementation order. In essence, the processes of formulating a roadmap and architecture are parallel and synchronized. The roadmap stream optimizes the achievement of business value over time, while the architectural stream provides the basis for technical feasibility.

As a result, both products (roadmap and architecture) are fully compatible and closely linked. Architecture, through a series of intermediate views, shows the transition from the current state (as-is) to the target state (to-be), and the intermediate states correspond to the various stages of the roadmap and the implementation of individual Value Packages. Architectural models not only direct IT changes in the context of the transformation but also serve as a complementary management tool to the roadmap. A balanced approach, where roadmap elements (Value Packages) must bring business benefit and achieve initiative goals, and architecture ensures their optimal technical feasibility, means that each subsequent step in the project maximizes the achievable value. Such a strategy provides agility and flexibility in execution because even if the goals and directions of the transformational project are revised at an advanced implementation stage, the fact that subsequent milestones (implementation of Value Packages) have been reached means that the organization has net created additional value for itself and its customers.