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Digital Transformation Roadmap

Digital Transformation Roadmap

What is a Digital Transformation Roadmap?

The implementation of any significant change at your company will involve a large number of steps and will call for the concerted efforts of a large number of employees from different departments. As a consequence of this, it will be necessary for everyone to have a cohesive comprehension of the objective in order to successfully carry out this transformation. First and foremost, if you want to implement any kind of change, you are going to need a strategic blueprint to direct you through the process.

Above all, product teams can use a digital transformation roadmap to summarize the plan and goals for any move from a manual process to a digital one.

A few examples of digital transformations:

Before our roadmapping discussion, let’s briefly review what constitutes digital transformation. A business can undergo many of these transformations. For example, your company would be undertaking a digital transformation by:

  • Moving from having your customer success agents respond to inquiries via chat to answering questions automatically with an AI chatbot
  • Replacing your on-prem servers for storing corporate data with a cloud-based data management and backup solution
  • Turning your software product from a client-side, installed application to a subscription-based SaaS web app

Digital Transformation and Competitive Advantage

Operating successfully in today’s business environment is vastly different from what it was just a few years ago. Technology advancements, open access to information, and market social dynamics are forcing businesses to reconsider what products and services they offer and how they provide them. Customers in their younger generations expect every interaction with businesses to be efficient, informed by any available data about who they are and their unique needs/preferences, and enabled by modern technology. For new entrants into the market, technology-enabled business processes are all they have ever known.

Companies that have existed for more than a few years may find operating in the modern environment to be difficult and vastly different from their prior experience. For these businesses to be competitive, they must undergo a digital transformation, which will bring them up to date with modern ways of working to meet their customers’ needs and expectations.

The degree of digital transformation required will depend on a number of factors, including the nature of the industry in which the company competes, the company’s age and size, the number of legacy tools and processes that must be transformed, and the motivation of company owners and leaders to drive change within their organizations. The company’s ability to transform itself effectively will be crucial to its ability to compete successfully in the market. Customers’ expectations have already shifted, so every day a business waits to embark on its digital transformation journey is another day it falls further behind the competition, potentially losing business and harming its reputation among potential customers.

What Purpose Does a Digital Transformation Roadmap Serve?

You’ll want a digital transformation roadmap for the same reasons it’s a good idea to have a product roadmap, IT roadmap, or any other type of roadmap. Namely, this high-level strategic blueprint can help you:

  • Communicate the vision and strategy behind your digital transformation
  • Earn buy-in for your digital transformation from stakeholders and decision-makers
  • Provide a guiding document for executing your digital transformation strategy
  • Keep your team aligned around your digital transformation plans
  • Ensure everyone stays up to date on any changes to the plan

What Is a Digital Transformation Roadmap?

Each company is different, as are the goals it must accomplish and the amount of work that must be put in to realize a digital transformation of its operations. Your organization’s digital transformation roadmap is the plan that will be used to coordinate and drive change throughout the entire organization. Depending on how your company handles its projects, programs, and investment decisions, your roadmap may need to include some specific content or be presented in a specific manner; however, there are a few essential components that should always be included in a digital transformation roadmap.

An articulation of where you are trying to go

What does digital transformation mean for your company? How much of a transformation do you want to make? What is “good enough”? Companies undertake transformations (of all sorts) because they have a vision of a target state they are trying to achieve. Articulating the leadership vision of this target state (what it looks like, what it feels like, and why it is important to the company) is critical for securing support and buy-in from individuals throughout the company that will be required to achieve success. A clearly stated vision that resonates with employees, partners, and customers will help ensure everyone’s actions are aligned and promote patience and understanding if the path of change isn’t always smooth and some rough patches are encountered.

Your strategy for arriving at your destination

How much time are you expecting the transformation to require? (Months, years?) Are you intending to change everything in one big-bang approach or take incremental steps to reach your destination? Do you understand initially all the changes that must occur or will you determine the details as you progress, using, for example, proofs of concept and prototypes to explore different opportunities? What are the key areas of focus for your transformation that you see as essential to overall success? Having a defined strategy for how you will approach transformation sends the message that you are serious about the change and that this isn’t just a “pie-in-the-sky” idea.

Key activities that will occur during your transformation

What are the “big rocks” that must be moved or put in place to support the transformation? Every task doesn’t need to be mapped in advance, but you must know the critical changes to complete on time to lead to a successful outcome. For each organization, the key activities will be different. They may be technology projects, organizational restructuring, changes to the supplier ecosystem, or modifications to business processes. If you are familiar with project management methods, then these activities will be steps on your critical path. If there are alternatives available, then your roadmap should include high-level cost/benefit projections to help guide decision-making.

The mileposts you will encounter

The destination of your digital transformation journey will often lie “beyond the horizon” or around a series of bends with no direct line of sight from where you are to where you are going. Your digital transformation roadmap should include descriptions of intermediate target states you will achieve as you progress. These mileposts will provide a helpful reference to ensure your transformation is on-course as well as a means of measuring progress. They can help set expectations about when people will start seeing value from the transformation and experiencing changes in their work environment. For transformation initiatives expected to require more time to complete, it is often helpful to plan for periods of normalization to avoid the fatigue from continuous change.

Why Do You Need a Roadmap (Can’t You Just Start Moving)?

Without a plan and a process, you will be essentially wandering through your digital transformation effort and that can be both expensive and risky to the future of your company. If you don’t know where you are going, then how will you know if you are traveling there or moving in the wrong direction?

Large-scale transformations can be daunting; a roadmap helps you separate it into manageable parts, so you can plan resources effectively to generate the value your company expects.

You must know what happens first.  Digital transformation often includes a combination of technology projects, organizational changes and process adjustments that depend on each other to be successful. For example, you can’t adjust staffing levels to take advantage of automation until the technology pieces are in place. Likewise, many technology projects must be coordinated with a business process change. Understanding the sequence of events helps avoid confusion and encourage smooth transitions. Don’t worry if it requires a bit of time to become organized – once you start, momentum will build.

A roadmap will enable different teams to work on different parts of the transformation and stay aligned.  It will also ensure that the various pieces of the puzzle fit together when you’re done. Digital transformation initiatives can be exciting for your company and your employees. The enthusiasm and energy that is created are likely to encourage well-meaning employees to take the initiative and start making changes. It is important you control and coordinate individual efforts, otherwise, people may step on each other’s toes, leading to an unnecessary conflict that could derail the entire effort. If individuals know that there is a plan and a process, then they will be more likely to channel their enthusiasm in more constructive ways.

Sometimes, you don’t know the details in advance. A roadmap provides a point of reference (a common direction) to help the organization determine what projects and initiatives to undertake. Not all projects will be aligned 100% with the transformation roadmap. There may be pressing operational concerns (such as cost reduction and critical business activities); market opportunities/threats (new product offerings, large customer projects, etc.); or external factors (such as regulatory changes and security threats) that must take precedence over your digital transformation goals. Sometimes, these projects move you in the opposite direction of your destination, but more often they move your business in a complementary direction, but not on the direct course you intended. Your roadmap will help leaders make more informed trade-off decisions and enable your employees to adapt these “other projects” to keep you traveling on your digital transformation path.

Your digital transformation roadmap will keep you focused.  There are many products, vendors, trends, and messages bombarding your company and employees from the environment that can be distracting. Without a filter to help them determine what is important and what is “noise,” you face a high risk of your organization following “bright, shiny objects” that lead to dead-ends, lost time, and wasted resources.

Aligning Activities to the Roadmap

Your digital transformation roadmapdigital transformation roadmap is not a detailed set of scripted mandates. It is a guideline and reference to keep the organization moving towards the goal. When identifying and prioritizing potential projects/activities, you should be aware of three indications to guide your decisions:

  1. How well the activity aligns with the roadmap (Is it moving you in the right direction?) Most projects will generally align with the digital transformation roadmap (or at least that is the claim that will be made). As a result, a “yes/no” assessment of alignment is not sufficient. Degree of alignment (either a 1–10 scale or a high/medium/low categorization) is a much more meaningful method to evaluate alternatives in your investment portfolio.
  1. How far the activity will move you towards the goal. Here, the cost-benefit analysis comes in handy. Each activity or project you choose should help you move toward your digital transformation goal in some way. What you need to figure out is how far it will move you in the direction you want to go and how much it will cost to get there. Cost/benefit analysis is a powerful portfolio planning tool for digital transformation efforts because no two proposed projects will have the exact same effects or costs.
  1. How efficiently your resources are being used to achieve the desired outcome. Every organization has limited resources – people, money, and time. Often, the same pool of resources is involved in running your business and contributing to your digital transformation effort. As a result, resource constraints are common, and selecting the best activities to support your digital transformation goals is often a matter of optimizing the use of available resources. This may include selecting projects that maximize ROI, bundling activities that have synergistic opportunities, and considering opportunity costs (the foregone benefits of what you won’t be doing).

By taking these factors into consideration, you will not only be able to select the right projects to prioritize and in which to invest but also you will be able to identify easily the projects or activities in which you shouldn’t invest. By removing these activities from consideration, your organization will be more focused on delivering changes that add the most value to your digital transformation efforts.

Measuring Progress

There is a difference between making changes and making progress. The number of changes that are made shouldn’t be how you measure your digital transformation, but rather the impact of those changes on the organization. Often, the amount invested in supporting initiatives, the number of systems that are modernized or the list of business processes that have changed are how companies measure their digital transformation initiatives. This approach often leads to underwhelming results, change fatigue, lost time, and wasted resources.Impact is how you should measure progress towards your digital transformation goals. Impacts on products, impacts on processes, impacts on productivity and impacts on profitability. When you evaluate these metrics, what you want to see is progress towards your digital transformation goals. In the roadmap development process, you articulated the target state you were seeking to achieve, a strategy for arriving there, the “big rocks” that you must put in place, and some milestones you were expected to achieve. These are the references against which you should be measuring progress. Keep in mind, detailed activities and projects will often change during a long-running transformation initiative, but the investments you make should be generating visible and sustainable results that show you are making progress towards your goal.

Adapting as the Environment Changes

Your company’s digital transformation will likely require multiple years and your digital transformation roadmap is there to guide you. As business environments and technology change, you may find yourself needing to adjust your digital transformation roadmap to take advantage of new opportunities, avoid threats and risks and align them with your company’s business climate (resources, budgets, priorities, etc.). Rarely will you be able to map the exact course with 100% accuracy at the beginning of the transformation. Having a clearly defined digital transformation roadmap against which your company is aligning activities can be helpful when course corrections are required – they enable you to adjust in a coordinated way. This helps to minimize disruption to the progress you’ve already achieved.

Best Practices for Establishing a Digital Transformation Roadmap

To compete, businesses must modernize, provide customers with the new products and services they expect, and update their internal operations to take advantage of modern technology. Companies that do this effectively will gain a significant competitive advantage in their internal operations as well as increased profitability from automation and informed decision-making. Creating and implementing a roadmap for your digital transformation effort can significantly increase your chances of success in realizing your company’s future vision.

Here are 5 best practices for establishing your digital transformation roadmap:

  1. Define what success looks like for your company
  2. Separate the change into manageable parts
  3. Harvest value as you go, instead of waiting until the end
  4. Focus on the impacts on people (culture, process, skills, and organizational change)
  5. Adjust course if necessary (the environment is continuously changing)

Without a roadmap, your organization is left to fend for itself, hoping (somehow) to arrive at a desirable destination. By creating and implementing a roadmap as a guide, you will be able to arrive at your destination safely and effectively, reaping the benefits of digital transformation. Remember the reasons why digital transformations fail.

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