Step by step in the right direction: Kicking off the digital transformation

The digital revolution has the potential to boost revenue and productivity or cut costs in many business areas. 

Technology opens the door to diverse, ground-breaking opportunities and even new business models.

But developing digital strategies and integrating them into everyday operations is hardly a trivial undertaking. It involves launching projects, gathering experience, taking stock, and drawing conclusions – while following improvement cycles. And many companies struggle to identify which project to start with.

Of course, everyone is keen to prioritise a project that can yield the greatest benefit. But which one is it? The first step is defining objectives and focusing on the essentials. Digital transformation projects and strategies can be judged by their impact on finances, customers, processes, and overall potential for the business.

A strategy map can help highlight the primary objectives and the cause-and-effect relationship between the various perspectives. Strategy maps are laid out much like a “balanced scorecard” used to measure, document, and manage a company’s activities as they relate to the company vision and strategy. Small and medium-sized businesses are at an advantage here, as they can more easily chart their own course due (usually) to a less complex organisational structure.

An example: A company is looking to deploy ERP software to manage enterprise resources, such as capital, employees, and supplies. Their strategic objective could, for example, be defined as “visibility across global processes” or as “uniform system environment”.

Building upon this, further objectives can be defined. Process objectives could include workflow streamlining, system harmonisation, or reducing the number of interfaces. This in turn would meet one of the possible customer objectives to get better and faster access to data.

These objectives derived from the overall goal then lay the groundwork for making the company more efficient and thereby lowering costs or increasing revenue. They all pay into the top-level objective as defined under “finances” on the strategy map.

Further objectives such as speed, adherence to deadlines, or a defined level of quality could be added and categorised under customers’ objectives. Any and all strategic and operational issues can be mapped in this way.

This strategy map forms the foundation for the next step: Defining the key performance indicators (KPIs). KPIs make it possible to track both progress and objectives clearly and reliably. Once KPIs are established, measures to achieve or implement the objective can be derived.

Example: Customer KPIs often include increases in revenue, order frequency, or prices. KPIs and according measures to achieve this must be broken down into individual steps to ensure operational feasibility and measurability of results: return on sales, cost reduction, transport cost savings, costs per employee, or customer satisfaction (in percent) – on applicable timelines.

To then successfully implement the defined strategy into a company’s everyday business without impact on running operation while achieving the desired effects can be a challenge. That’s why it is important to focus on addressing basics first instead of trying to do everything at once. It’s good advice not to spend a year on the strategy map either – the digital world is a dynamic environment and agile project management is recommended in the approach.

And the final key factor for success lies in the people working in an organisation. The digital age is no different from any age before, and successful roll-out of digital transformation projects relies on stakeholder commitment and good change management. This includes onboarding employees across the organisation early on, involving them, and keeping them in the loop. It’s critical that all employees across the business know what the strategy means for their everyday work and what their role during and after implementation will be.