Where to Start Your Digital Transformation

There are many ways to start a digital transformation for an organization, and there is not a one-size-fits-all approach. In this post, we explore where to start your digital transformation. The best first step is to talk to an expert. Contact us any time to chat.

In January, Valence launched a “Month of Retail” initiative to help our audience better understand the unique challenges and opportunities retailers — both online and brick and mortar — face in implementing technological change to increase efficiencies and develop lifelong fans. With that well under way, I’m getting back to my series on Digital Transformation, Explained.

To recap, the first post in this series — “What is Digital Transformation?”) — provided a definition of digital transformation. The second — “Who Should Lead Your Digital Transformation?” — shared insights on who should lead digital transformation. Now let’s assume that, as the CEO or business leader, you are prepared to transform your business. Where do you start?

Here are a few example starting points from my work with recent clients:

Cloud and Mobile Fundamentals — Companies undertaking digital transformation start from different places. The current state of enterprise data may dictate the starting point. Although many digital transformation initiatives are conceived around an emerging technology like artificial intelligence, there may be significant foundational work required to organize data before moving beyond an emerging technology proof-of-concept into full deployment.

Consulting— Some digital transformation initiatives are offshoots of business transformation. A business may be changing strategy, leadership, or culture and they need support from our expert consultants. Most of these projects ultimately include a technology component (if not, they should!). When business transformation becomes an engineering project for better data-driven decision making or customer engagement, a tight link between business expertise and engineering expertise creates success for the client.

Engineering— Some companies need software engineering resources immediately, faster than they can hire and train. This is true of both start-ups and large technology enterprises. We’ll provide a project manager and engineers and they’ll work with the client on an agile development project. Sometimes there is a defined outcome, but other times they just need resources for a proof-of-concept and want the ability to scale back down as quickly as they scaled-up.

As an aside, one of the great surprises for me in leaving a Fortune 500 industrial enterprise was how many businesses outsource software engineering. Specifically, big-name technology companies that are magnets for engineering and project management talent leverage outsourced resources to quickly scale up and down. Conversely, I have observed industrial non-tech companies behave as though they have cornered the market on engineering knowledge. My preliminary conclusion is that businesses view IT spend in one of two ways — either a fixed internal resource pool with variable backlog, or, as a variable investment with an expected ROI (where cost, revenue and the timing of both matters!). As discussed in my prior article, the latter approach better represents the future IT investments where decisions are made in the same room, at the same time, by the same leaders who are making the operational investment decisions.

The final example starting point is very basic but should not be overlooked. Most business leaders in their 40s or older didn’t carry a computer with them in college. These leaders’ understanding of technology can put them in a defensive position when confronted with a technology investment decision. Giving them foundational knowledge to build upon can lead to better business outcomes.

Training — Clients simply want to explore emerging technologies — i.e. what is machine learning or blockchain? We’ll provide an executive workshop to establish a baseline of knowledge to begin exploring digital transformation in the c-suite. This can be a great kick-off to a company-wide digital transformation initiative giving senior leaders the knowledge and confidence to uncover new opportunities with their teams.

With these starting points, required budget varies widely and often depends on the initial IT infrastructure. Whether the budget is acceptable in the business depends on the businesses approach to IT spending. To clients currently satisfied with fixed internal budgets and variable backlog, a $50,000 proof-of-concept can face heavy internal resistance. Internal IT is often most resistant as they would rather have the dollars in their budget to decrease current backlog, hire more people, or provide more training. Other companies see value in quick-scaling and delivery of engineering projects, without the long-term commitment to a growing internal “fixed” IT expense. In the latter case, a million-dollar spend to re-architect data into a cloud-based solution is appealing relative to building the internal IT team capacity for a one-time initiative.

No matter how you approach digital transformation and your IT spend, you are buying both capacity and expertise when you hire a digital transformation services consultant. In my final installment of this series, I’ll share some perspective on how to leverage a digital transformation provider like Valence Group, Inc. on a digital transformation journey. As always, feel free to contact us to learn more.

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