Developing a Digital Transformation Strategy: A Comprehensive Guide

The overall idea of building a digital transformation strategy has turned into a full-fledged hot topic in IT and business circles alike. But what does it actually mean in tangible reality, i.e. creating a digital transformation strategy? This piece by Andersen’s team will attempt to explain what exactly “implementing digital transformation strategies” means, in non-theoretical, even “mundane” managerial and IT terms. Our team hopes that the task of developing a digital transformation strategy will become a more well-balanced and actionable concept after one reads this.

So we invite you to dive deeper into IT digital transformation strategy topics and dilemmas.

In a nutshell. What actually is implementing a digital transformation strategy?

To kick off the discussion, what is the phenomenon of a digital business transformation strategy? How could it be properly defined and described? Well, a digital transformation strategy entails the technique of reshaping an organization for the sole purpose of integrating next-gen technologies into various aspects of its existence and operations. The key rationale here is attaining increased efficiency, enhanced collaboration, accelerated delivery, and heightened customer satisfaction rates.

That said, the domain we are exploring cannot help being way too huge and vague to operationalize or measure. Yet we have some relevant estimates:

• Per Gartner, 91% of entities are actively involved in various digital initiatives;
• The same source says that as many as 40% of entities have already brought their corporate digital initiatives to life, to some extent at least;
• Again, according to Gartner, a significant 89% share of board directors surveyed affirm that digital elements are inherent, across all of their business growth strategies.

What do these IT figures say? The major message is that a modern business cannot expand, develop new directions, and survive without digital dimensions. At this stage, we propose taking a glance at how a typical digital transformation strategy roadmap could look, so that you can develop a unique route.

Defining a clear and actionable digital transformation strategy roadmap

Andersen - a software development company - would stress: the notion of a roadmap is decisive in the context we are examining. In this capacity, it must be treated as a plan, outlining the maneuvers an entity must undergo for a fruitful and cost-effective transformation. Therefore, a previously developed roadmap provides a crystal-clear, well-balanced, and structured path for entities to advance their operations, processes, and culture, on a new tech basis, to boom in the modern age.

Wrapping up, any roadmap is intended to serve as a guiding document that assists with attaining digital transformation ends, both systematically and efficiently.

Enumerating IT digital transformation strategy components

Serving our satisfied customers as a team of IT professionals in general and custom software development professionals in particular, we would put forward the following sequence to develop a transformation strategy.

Component # 1: Vision and Objectives. Here, develop a general vision for digital transformation and specify the key practical objectives the entity wants to attain. The first part represents your “ideal” state, while objectives are more “down-to-earth” and measurable quantitatively. In this context, developing a system of comprehensible and transparent KPIs, 100% aligned with the transformation ends, is a must.

Component # 2: Current State Assessment. This element implies conducting a thorough and detailed evaluation of a company's current tech capabilities, infrastructures, processes, and culture, in the light of the desired “ideal” state of affairs. This step makes it possible to pin down existing strengths and weaknesses.

Component # 3: Gap Analysis. Find and explore the gaps observed between the current state of affairs and the planned future state of the entity. Determine what must change or be upgraded to align with the digital transformation objectives.

Component # 4: Timeline and Milestones. Develop a timeline that breaks down the digital transformation schemes into manageable and measurable phases or milestones. This empowers companies to monitor their respective progress and provides actionable schedules to stick to.

Component # 5: Technologies and Architectures Re-approached. Once you have a set of goals and transformation stages at your disposal, it is time to select a set of optimal means via which objectives can be attained on time and within budget. Outline your technology stack and architectures needed to pillar the digital transformation undertakings. This might involve choosing and introducing new software tools (both bespoke ones and off-the-shelf ones, cloud solutions, data analytics tools, IoT devices, etc.).

Component # 6: Business Process and Data Management Redesign. Concurrently with introducing new solutions, start redesigning and adjusting business processes. Re-evaluate daily practices and routines to make them more cost-efficient, speedy, productive, and customer-centric, so that you can make the most of the chosen digital technologies. Simultaneously, develop a fresh data policy that outlines how data will be gathered, stored, processed, and utilized to drive insights and decision-making for new processes. Data is a crucial asset.

Component # 7: Resource Management and Allocation Issues. Set the budget, assign the workforce, and provide resources mandated by the digital transformation journey. This includes funds for IT investing, purchasing, hiring, and training.

Component # 8: Project Governance. Someone must assume responsibility for tracking and managing your initiatives. Thus, establish a monitoring and governance structure, with clearly defined roles given to individuals and task forces, to oversee and control ongoing sub-projects.

Component # 9: Resistance to changes, no matter how productive and beneficial for all these changes might be, is a challenge to be reckoned with. Develop a change management framework to tackle cultural shifts within the entity. Encourage and promote buy-in attitudes among the staff and other stakeholders by fostering a flexible atmosphere of innovation and adaptability.

Component # 10: Lay the ground for continuous improvements. Even if your technological and organizational journey seems to be a total success, make sure you keep on self-improving. Accentuate the importance of continuous improvements and agility. Regularly review and tailor the roadmap, based on feedback and changing circumstances.

Some measures to take while developing a digital transformation strategy. Our recommendations concerning digital transformation strategy steps.

Let’s zoom in on the processes associated with situations when a company needs to develop an IT digital transformation strategy. As our custom software development team believes, on the basis of an extensive track record of large-scale initiatives, these digital transformation strategy steps should not be ignored.

1. Identify the circle of major stakeholders and influencers to develop and realize a plan:

• Grasp who, within the entity, will play a crucial part in driving and supporting those life-changing initiatives and strategies. Pay attention to guarantee that both actual formal decision-makers and informal opinion leaders get engaged;
• Involve top managers, department heads, and the most important employees from various levels to provide for alignment and buy-in attitudes, via meetings, incentive programs, workshops, seminars, team building activities, etc. This is the main way to train, entourage, motivate, and upskill staff members to make them both digitally competent and open to change.

2. Build standing cross-functional teams and ad hoc task forces, when needed, to develop and realize a plan:

• Such cross-functional teams, uniting staff members from different departments (IT ones included) and varying corporate hierarchy levels, must collaborate on digital initiatives;
• Stimulate open and regular communication sessions and seamless teamwork to tackle the problem of organizational bottlenecks and data-related silos.

3. Initiate a far-reaching transition to next-gen practices with pilot projects and prototyping efforts, as this helps recognize potential obstacles and internal points of growth to realize a strategy.

• Put newer technologies and processes to test in separate environments and limited directions;
• Apply prototypes and proofs of concept to validate ideas before attempting to heavily invest in scaling them.

4. Iterate and adjust, on the basis of metrics tracking the outcomes of your undertakings and reports submitted to stakeholders:

• Practice agility and stay prepared to iterate on your plans, based on feedback, dynamic market conditions, and ever-emerging technologies;
• Constantly refine the roadmap and the objectives it sets.

5. Scale and expand success stories:

• Once an entity accomplishes pilot IT and organizational projects, these are to be scaled all across the organization, according to your approved strategy;
• Gradually, digital transformation policies and IT improvements must cover all relevant fields of the business.

Obstacles to assess while implementing digital transformation strategies

Let’s not forget about the factors that might hinder and even undermine digital transformation strategies. Per the McKinsey experts, an astonishing 70% of transformation campaigns fail. Some other estimates are even more pessimistic, asserting a 95% high failure rate.

Here are some factors to be reckoned with and consider, on the basis of what we observe in the market:

1. Resistance to change and daring strategies. Both staff and management might resist the ongoing changes disrupting their well-established processes, instilling a fear of job displacement or showing their lack of mastery of new IT solutions;
2. Old-fashioned legacy systems together with technical debt. Obsolete IT systems and tech debt are extremely likely to stop the introduction of modern technologies. At the same time, integrating new systems with legacy tech can be complex and costly;
3. Business-related and IT skills gaps. Multiple entities lack the skills required to introduce and capitalize on new technologies;
4. Lack of adherence from the top-management members. Without strong support from top managers, any company-wide aspiration would struggle to gain pace. Leaders must champion the changes and set an example for the rest of the entity, by sticking to their chosen IT strategy;
5. Regulatory and compliance issues. It’s not unusual for organizations, privately-owned ones and non-profits, to be obliged to navigate through tightly controlled and regulated environments, depending on their respective domains and locations. Complying with data protection, cyber safety, and other regulations could constitute a significant challenge, when trying new IT solutions and organizational practices is at stake;
6. Scope defects. Overly ambitious or inadequately scoped strategies and plans could lead to the so-called “scope creep” cases, where the project grows beyond its original boundaries, resulting in delays and extra unforeseen costs;
7. Budget limits. Projects of this sort often mandate significant financial investments in technology, training, and infrastructure. Budget constraints could impose limits on the entity's ability to execute its plans effectively;
8. Data silos, low data quality, and inadequate data governance can impede the use of data-driven and IT-empowered insights;
9. Cybersecurity concerns. As organizations adopt new digital technologies and strategies, they may become more vulnerable to cybersecurity threats. Ensuring robust cybersecurity measures is critical to protect against data breaches and cyberattacks;
10. Failure to learn from failures. Again, not all digital transformation initiatives and sub-projects will succeed. It's important to foster a culture that encourages learning from failures and adapting strategies accordingly;
11. External market disruptions. External factors, such as changes in market conditions, competition, or unforeseen events (e.g., a global pandemic), can disrupt digital transformation plans and require rapid adjustments.

If you are contemplating transforming your organization, yet cannot help thinking of potential impediments, consider the benefits. If you’re successful, your company will be in the right position to exploit an entire range of competitive advantages: smarter decision-making, higher productivity, better IT talent acquired, improved sustainability, a more positive business reputation, mitigated risks, enhanced market offerings and propositions, wider reach, outstanding customer experiences, and more. To sum up, developing a plan of this sort is certainly worth the expenditure.

However, to get the upper hand in projects of this kind, collaborate with trusted IT partners, such as Andersen. Our 1000+ accomplished projects, 3500+ IT specialists (not only development experts, but also PMs and BAs), and high industry rankings prove that you can entrust portions or even all of your scope to us. We are ever-ready to help develop and realize your strategy.