Special Feature
Part of a ZDNet Special Feature: Digital Transformation: A CXO's Guide

Want to create digital transformation? Make a solid plan first

Recent surveys show that many digital transformation efforts are fragmented, with no clear owner. Here's why it's important to have a good roadmap before beginning.

Digital transformation: Where is the shift in IT taking us?

The advantage of working in IT is that you are usually well ahead of digital and computing technology information and adoption curves. The downside of this is that you often understand the value propositions of a new technology before your colleagues do.


Digital Transformation: A CXO's Guide

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The quandary for the CIO, then, is how to get buy-on from the CEO and other key stakeholders in the organization for technologies that you regard as essential to the business.

To consider this question at closer range, let's look at digital transformation.

TechRepublic recently conducted a poll of CIOs, and more than half said their company doesn't have a formal digital transformation strategy. "Our business supports constantly varying needs from a shifting pool of clients," said poll respondent David Wilson, director of IT services at VectorCSP. "We embrace opportunities for digital transformation when they present themselves, but would not have a clear path for such a formal plan overall."

Does initial buy-in require a formal plan?

Such a fragmented approach to digital transformation seems like a recipe for disaster, but is it?

With digital transformation, it just might be possible that the usual steps that CIOs take, like recommending solutions and approaches for technology introduction and adoption, constructing a rolling three-year plan for implementation in specific business areas, calculating estimated ROI (return on investment), budgeting for all of this, and then selling it to the CEO and others, isn't needed -- at least not right away.

Here is what leads me to say this:

In a recent Tech Pro Research survey on digital transformation, 28 percent of respondents said that IT was the driver of this initiative; 26 percent said it was the CEO, CMO, CFO or another non-IT, C-level executive; 22 percent said that a VP, a business leader, or an IT director was leading the digital transformation; and another 24 percent of respondents said that it was someone else.

This suggests that corporate adoption of digital technologies, unlike the adoption of many other previous technologies, is a distributed and democratic process in companies that no one person seems to own when it's first introduced to the organization.

For CIOs, who usually have to do the heavy lifting when it comes to selling and funding new technology, this is welcome news because it gets digital transformation in the door, and with many different end user areas doing the selling and the adoption, the likelihood of finding an appropriate business case that can pay back on the technology investment also theoretically increases.

But stop right there, because initial buy-in does not necessarily translate into continuous buy-in and support -- especially if projects don't go as planned and value isn't delivered as expected.

Working in a decentralized technology adoption environment without a plan

The dangers of independent digital transformation adoption efforts by end users is that 1) end users usually don't know the IT that will be needed to integrate their system into the other company systems; 2) users might inadvertently negotiate a contract with a vendor the locks them into a solution that doesn't work well in the long run; and 3) users might think the payoff from their digital effort is bigger than it really is.

Industry research backs this up.

In 2015, Forrester Consulting reported from its survey work that over 60 percent of digital experience projects were failing. The top three reasons for failure were: 1) CMOs believing that existing legacy technology in their companies could power the digital technologies they wanted to introduce; 2) lack of a full understanding of how end customers of the technology would use it; and 3) lack of technological (specifically digital) maturity. Also that year, Genpact, a business processing and IT services company, published a survey of managers working at 100 large global enterprises, with managers reporting that only 30 percent of their digital projects were delivering a return on investment that met business expectations.

At the end of the day, end users (and management, too) recognizes that IT has be part of the mix -- if for no other reason than to consolidate all of these independent efforts.

In the same Tech Pro Research survey where respondents reported that their digital transformation efforts were highly distributed and decentralized, 42 percent of respondents came back to say that they believed that ultimately, IT would be the owner of all of these digital transformation initiatives. Additionally, nearly two-thirds of respondents in the TechRepublic survey said that they received enthusiastic support from their senior management for digital transformation initiatives, but over half said it was difficult to secure budget dollars for projects.

Selling the budget is also where CIOs add value. They are experienced in analyzing the inherent value of a new technology, the cost of not only implementing it but also integrating it with existing systems and business operations, what the payoffs are likely to be -- and then packaging all of this information into a compiling budgetary proposal for the CEO or the CFO.

Making the move into a formal plan

Since it seems that many organizations have taken an early approach into digital transformation by pursuing it piecemeal, with a majority of CIOs saying that they lack a formal plan, the key going forward may well be developing a vision and a formal plan for company-wide digital transformation.

This overall plan should first and foremost address the value that the business expects to gain from digitalization -- whether it is eliminating paper, improving access and expediting business processes; using GPS and satellite imagery and combining this with contextual data so a construction company can obtain a more complete view of a building site; cracking genomic codes to provide answers in cancer research; or better understanding the buying habits of customers.

Next, a digital transformation plan should address operational and system cross-functionality throughout the enterprise -- because to get the most out of digitalization, you have to know how to use it fully. If sales wants data on customer satisfaction, it would be advantageous for customer service reports to be in their system so they can understand their clients' pain points with their products before they call them with a new pitch. And if customer service wants to be more proactive, it would help if it had visibility of all of the RMA (return material authorization) documents in manufacturing -- and which products were most often being returned and reworked.

These issues of business value estimation, selling the budget (and the CEO/CFO), and understanding the requirements of the systems and operations implementation and integration efforts are all squarely in IT's (and the CIO's) wheelhouse.

To this end, a digital transformation plan for the entire organization should be developed, ideally by IT. The plan should illustrate how digital systems can (or will be) linked together, what the levels of initial investment (and returns on investment) are likely to be and when they will occur, what the order of system integration will be, and what changes in business processes and IT infrastructure are necessary to support digital transformation.

This plan should be the final product of continuous IT engagement with other key managers throughout the company before the plan is shared in budgetary meetings or presented to the CEO and the C-level for buy-in and signoff.

Does this assure that your digital transformation plan will get the buy-in?

"Behavior precedes belief -- that is, most people must engage in a behavior before they accept that it is beneficial; then they see the results, and then they believe that it is the right thing to do...implementation precedes buy-in; it does not follow it." said Douglas B. Reeves, founder of Creative Leadership Solutions.

He's right -- and many companies with their distributed digital transformation projects have been doing exactly this. But what Reeves doesn't mention is that buy-in must also be sustainable for a company-wide technology strategy to work.

Sustainability depends on a continuous chain of project successes, and those successes depend on effective technology investments, integration and delivery of business value.

These are the final payoffs.