What every business leader needs to know about digital transformation

Non-IT chiefs can’t be expected to comprehend every technical aspect of a digital transformation, but there are some fundamentals they must understand if they’re to make informed decisions 

Business Executives Discussing During Meeting

Who’s in charge of a digital transformation? You’d be forgiven for thinking that such an initiative must be the chief technology officer’s ultimate responsibility, given that, on one level, it’s about using advanced IT in strategic and innovative ways.

But a digital transformation is fundamentally about achieving business objectives. Any new technologies a firm adopts in the process are simply the means to this end.

Although the CTO may well be best placed to understand how these work, the relevant strategic decisions and purchasing choices should be made collectively by the whole C-suite. When digital strategy and tech investments are made in a silo, transformation efforts are likely to become fragmented and, as a result, far more likely to fail.

While the technology supremo’s C-level colleagues don’t need a detailed knowledge of the IT they’re deciding whether to invest in or not, they must know enough to make informed choices. So what must they understand when planning a digital transformation?

Keeping the focus on business needs

Finding the perfect combination of technologies to meet an enterprise’s unique needs is no easy task. According to research by the Boston Consulting Group, as many as 70% of digital transformations fall short of their objectives, often because of a failure to align the new tech with the strategic goals of the business. 

As a first step, leaders need to gain a deep understanding of their business’s various operations, assessing their strengths and weaknesses.   

By involving employees in the decision-making process, leaders can foster a culture of innovation, collaboration and ownership

Tim Wright, head of operations at finance software solution provider Xledger UK, explains the importance of process mapping before starting on any procurement.

“They must think about their own procedures, needs, wants and pain points. Doing this process before going out to the market makes a massive difference to the success of a digital transformation project,” he stresses. “All too often, organisations commit to a piece of tech, thinking that it’s going to fix everything. Then they end up trying to retrofit their processes to a tool that doesn’t work for them. This causes the transformation to be abandoned and mistrusted.”

Unlocking the true value of digital tech involves a systematic and disciplined approach from the outset, using the C-suite’s collective insights and experiences to map out goals and gaps and form an understanding of where the technology can be best applied to help the business grow. Members of the leadership team will need to ask themselves questions such as: are our existing processes delivering what’s required to grow the business? What problems are we encountering? How can technology help us to plug gaps and remain competitive? And how will we overcome any challenges we encounter in embedding the new tech?

As Scott Dodds, CEO of Ultima Business Solutions, says: “This is not just about adopting new tools; it’s also about changing how a business operates, competes and delivers value. To overcome challenges and achieve success, a business must define a clear vision and strategy.”

What do employees need from a digital transformation?

While the C-suite may be flying the flag for technological innovation, the rest of the organisation may not embrace it with the same enthusiasm. Some may be fearful that new tech will render their jobs obsolete, while others may simply see it as an extra burden

Before a firm embarks on a digital transformation, it must understand its employees’ skills, shortcomings and needs. All too often, purchasing decisions are made in the boardroom with little input from employees, but wise business leaders recognise that they must avoid doing this. 

All too often, organisations commit to a piece of tech, thinking that it’s going to fix everything

“By involving employees in the decision-making process, along with the design and implementation of digital initiatives, leaders can foster a culture of innovation, collaboration and ownership,” Dodds says. 

Wright agrees, adding: “Teams must ensure that they invest time in understanding how technology will be best rolled out in their organisation. It’s essential to have buy-in from key stakeholders, who should come to an agreement on how this tech will help teams to work more collaboratively.”

Employee feedback forms and internal councils can be effective ways to gather organisation-wide input on areas of the business where radical changes would be beneficial.

Understanding the digital skills of the workforce is also key. Leaders who commit to a digital transformation must understand that they are starting a continuous process of learning and adaptation. This will require many businesses to make educational interventions. A digital skills assessment will help business leaders identify where the most significant gaps are.

While firms may have to recruit as part of their transformation efforts, they should not underestimate the importance of investing in their existing employees by offering them training and hands-on development opportunities. Understanding a team’s digital literacy and its members’ comfort in learning how to use new tech will enable leaders to commission appropriately targeted courses.

New tech raises questions about data and security

Beyond the organisational hurdles, choosing the right tools can be daunting. While there may be a temptation to purchase an all-singing, all-dancing software service package, business leaders would be wise to exercise some restraint and remember the particular problems they want the technology to address.

It’s unlikely that anyone outside the IT department would be asked to analyse the technical specifications of any new software that may be under consideration, but that doesn’t mean business leaders will approach the selection process completely blind.

There are two essential questions that they must consider: is the technology in question flexible enough to enable their teams to develop and innovate? And how will it help them to collect and use data more effectively?

Experts agree that digital transformation should provide the foundation for teams to continually develop. A distributed technology model that enables the whole organisation – not only its IT department – to innovate should ensure resilience and scalability. This means ensuring the enterprise-wide accessibility of good data. 

Cybersecurity is the last essential C-suite consideration. Business leaders must have a basic understanding of the potential data risks before committing to a piece of technology. They also must have confidence in their organisation’s cybersecurity leadership, policies and training.