Why Digital Transformation and Major Systems Implementations are So Hard to Get Right.
By Dan Feely, TSI President and Managing Partner
Maybe you are like I am and periodically embark on some home renovation project. And, like most projects, they take longer, cost more, while leaving you with a feeling like “this should have been easier”, when you look back at the contributing factors for the delays and cost overruns. There are a lot of similarities with a home renovation project and a major system implementation. But since home renovation is not my business, I don’t profess to have all the answers there. However, when it comes to digital transformation and ERP, CRM, and other major system implementations, I have a lot more expertise to draw from. Here we will share some knowledge and experience we’ve gained while being involved with well over 100 major digital transformation and systems implementation projects collectively.
Specifically in this post, I’ll highlight the top 3 factors that arise that make digital transformation programs and initiatives more of a challenge than they should be. Also, we’ve shared a few thoughts about what you can do to prevent or mitigate a less than positive situation related to the factors.
3 Top Blockers that Impede Digital Transformation Efforts:
- Lack of a “Big Picture” Perspective
- Not Having a Handle on Critical Details – How Will the Work Flow?
- The Project Does NOT just Happen
First, let’s draw a distinction between the two typical approaches organizations take with systems implementations:
- Focus simply on replacing an old system with a new one (also known as “lift and shift”). This is a bare bones approach with most of the focus being put on the technology replacement and little to no attention to transforming the business, changing processes or roles. While this may seem like the quick, easy, and cost-effective way to improve, we believe that there is no such thing as the easy button in digital transformation. There will always be data and setup challenges (just like our renovation example above) and preparing for them may be the difference between success and failure. TSI typically does not endorse this approach, but there are circumstances when this is warranted. The infographic at right highlights the most pervasive challenges that haunt lift and shift types of projects.
- Digital transformation using the new system as a catalyst to change how the organization operates. This approach will do a much better job in ensuring maximum value is extracted from the technology investment and has potential to significantly improve the organization. However, there is still complexity and risks to be aware of. Due to the number of “moving parts”, organizational change risks and other factors, this article is focused on this scenario and how to mitigate those risks.
Below are some of the top reasons (in addition to those just listed) that make it challenging for a digital transformation project and pragmatic tips to address these challenges.
- Lack of a “Big Picture” Perspective: Don’t have an understanding of how the systems, processes and people will work in the “new environment”.
Chris Detloff, a very experienced veteran of many ERP implementations and the Director of Transformation for the Archdiocese of Chicago, has this to say, “In today’s historic era of accelerating market and technology disruptions that impact our lives in every way, transformation leaders must take a solution-based approach to transformation to be successful. Unfortunately, many transformation initiatives fail for the following reasons:
- Leading with technology instead of a solution-based approach (people, process, and technology)
- Lacking an agile, flexible, and collaborative operating model with well-established capabilities for their organization
- Partnering with professionals who lack proven transformation experience.”
Chris has been one of the most visionary leaders that TSI has worked with, and we echo his thoughts. One way to put this into practice is by starting with a high-level context level process map that gives some clarity with respect to the project scope (see simple example below), the technology that is needed, even if the technology will get acquired and implemented a piece at a time.
In addition to this overview map, we also need to define the key “use cases” and supporting business case that articulates the stakeholder’s expected benefits associated with the transformation effort. This perspective needs to be kept as a central theme during the project to help maintain focus and keep the project aimed toward a finite set of specific targets.
- Not Having a Handle on Critical Details – How Will the Work Flow?
In addition to the “big picture” perspective mentioned above, an organization needs to have a solid understanding how the key processes (and key scenarios) will work. Have you thought about your desired customer experience and used that perspective to inform your processes and key requirements? If not, you have a little more work today.
To start working toward an ideal future state operating model that leverages functional technology and makes you more efficient, it is imperative to start by mapping out the current state processes. Conducting business process mapping and improvement sessions help bring clarity to a process, including who is involved, whether activities are manual or automated, and necessary action to improve efficiencies. Business process mapping is a forward-thinking action aimed to understand what is happening now in a process, why it is happening, and what is desired to happen in the future. Below is a sample template of a business process map.
- The Project Does NOT Just Happen
Kerri S. Wagner President & CEO, PharmChem, Inc. has this to say as she and her organization recently implemented a cloud-based ERP, “System implementations are harder than they should be because there are so many actors involved. Action items can get pushed back for weeks at a time due to employee shifting and job changes, and sometimes project knowledge isn’t transferred effectively, so the scoping must begin again. It can be frustrating when the system doesn’t end up doing what it was scoped to do without several months of specialized and costly development. These frustrations can be eased if a company assigns a dedicated project manager to oversee all the moving parts. If one is not on staff, hiring an outside consultant will ease the pain and ensure the project gets over the finish line.”
According to John Bosshart, Chief Accounting Officer at OneSpan Inc. in Chicago, “Change management and upgrading systems are more difficult than people first realize. Not only does your team have their day jobs but also need to carry out critical analysis, testing, and new sox controls with these new systems. These are exciting projects but can also be extremely stressful on everyone in the project.”
Use These Factors to Direct Your Success
Just like that remodeling project I mentioned earlier, even if you are not a skilled worker that is transforming a facility or building out the new space, it takes time (usually more than you’d expect) to articulate what you want, what you think you need, design the solution, oversee how the development is coming along, keep your needs in line with what you originally asked for, provide timely feedback and finally, when the time is right, move into the new space.
New systems and digital transformation projects are no different. Being attentive, responsive, and present during a project like this, AND doing your day job well is extremely hard to do.
While there is a myriad of hurdles, with the right focus and assistance, please know that you can get over all of these. Your project does not need to be another statistic on the log of failed or significantly underdelivered projects. Use this information as an input to your approach. And if you are feeling extra resourceful, check out a tool that many of our clients have found to be useful. The tool, beyond the insights above that may help, is TSI’s Change Readiness Survey (free for your use), to help assess whether your organizational change management factors are aligned.
Take this individually or share it with your team. Take it, compare scores, and see if your organization is ready to embark on a major change effort, such as a digital transformation or even a “lift and shift” from an old to a new system.
What perspectives can you add to this? We’d love to hear from you and your digital transformation experiences.
