4 Essentials for creating a digital transformation roadmap to exceed your goals
Partner-in-Charge, Consulting at Armanino LLP
Companies who manage transformation well are 2.5 times more likely to outperform their peers. Leaders must step up to the digital challenge.
April 6, 2022
6 min read
Digital transformation is rife with misunderstanding and misuse.
The confusion is a result of the variety of things it can mean - optimization through technology, positioning for scale, people enablement, or customer engagement. The list goes on, depending on what problem you are looking to solve.
Understandably, the term is quite scary for many people, seeing as it can be daunting to imagine transforming how your whole business operates. The costs, training, and change management necessary to carry a project of this magnitude to the finish line are difficult to plan for.
I like to joke that the two words combined together are seen as dirty words for a couple of reasons. To start, just as big data and artificial intelligence have taken news headlines by storm in recent years, the term “digital transformation” is obviously exciting and a buzzworthy topic. On one hand, it means too much. On the other hand, it has no meaning at all, due to overuse.
Digital transformation comes in many forms. You might not be aware that it’s already happening around you, within your own company.
The implementation of Zoom meetings exploded out of necessity at the beginning of 2020. This is a simple example of digital change, but it had a significant impact on companies who were forced to meet with clients, partners, and internally over video chat. Having to switch client presentations from in-person to digital was cumbersome at first, but many have realized how time and cost efficient virtual meetings can be.
As you can see, digital transformation is not just one thing and has multiple definitions for every company. Problems and solutions vary across organizations, therefore transformation means something different to every stakeholder. For our clients we can see it range across from CRMs, ERPs, FP&A, and general automation platforms.
Fortunately, it can be as simple as picking a few process areas that are critical to your business, and figuring out if you can automate those processes to enable your team to focus on bigger challenges ahead.
How do you tackle the daunting task of digital transformation?
Identify what digital transformation means to you
Pick your North Star - the ultimate goal of your transformation project
Break it up into easy, bite-sized chunks to get there - don’t assume you need to tackle everything all at once
Develop the roadmap
The digital transformation roadmap is key to help guide you along. There will likely be changes to the plan along the way, but adjustments are much easier to make if you know which direction you’re heading.
Your roadmap should include the following:
What change management will your organization require?
What people are required?
What communication strategy will you carry out?
How will this affect your upstream or downstream teams?
What investments have you already made?
What other changes are happening in your business or in your industry that should be considered?
Technology can only do so much. It is a tool that can help us get to our North Star, but these important pieces of the roadmap listed above are essential to actually make transformation effective and implementable.
CEOs, CFOs, and business leaders who are interested in digital transformation often ask, “What tool is the best thing for X?” This is where we must dig deep to understand what X is solving for, and who is involved in X. You can have the best technologies in the world, but if your people can’t or don’t want to use it, it doesn’t integrate with your environment, or it isn’t aligned to your bigger strategic goals, it is likely to fail.
Reasons why digital transformation projects fail
Forbes reported that 84% of all digital transformation projects fail. I don’t say this to scare you, but in reality failure is common, especially when companies don’t have a plan. As I alluded to earlier, there are few cases that fail just because of a particular technology.
The biggest failure point in almost any project, whether it’s digital transformation or something else, is people. No one technology fails by itself. No one process is wrong. The root cause of failure for digital transformation projects is typically bad decisions around:
Lack of planning
Choosing tools that aren't relevant to the roadmap or not aligned with reaching the North Star or goal
Not having that North Star goal defined, and thus, not understanding what success should look like
Implementing change management with unclear communication and expectations - or worse, not considering change management at all
These causes of failure can all be boiled down to preparation, decision making, and communicating expectations. If you go into a project without a roadmap, it's kind of like going on a hike without a map, a compass, or water - you don’t know where you're going and definitely won’t get to where you want to be.
Identifying your North Star and developing a roadmap don’t negate your ability to iterate on the plan along the way, but at least you understand how those changes will affect the overall plan of what you set out to achieve.
How is the CFO involved with digital transformation?
As a top 20 accounting and consulting firm, Armanino works with clients in all of their core business areas. We have several branches that allow us to help organizations within their technology needs, supply chain, manufacturing, operations, customer experience, compliance, human resources and sales and marketing enablement.
Our broad expertise gives us the opportunity to work in the full spectrum of an enterprise and see digital transformation in all those segments, sometimes at a micro level, and sometimes at a macro level.
It could be automating people processes to allow easy new employee onboarding, or in the supply chain, simplifying and automating backdoor receiving at the warehouse to allow warehouse workers to have clear visibility into what's coming and going.
The Armanino CFO Evolution 2.0 has been conducted throughout the last 10 years and has shown that the CFO role has evolved significantly. Our 2019 survey results enumerate the top three skills an innovative CFO needs to exhibit, including:
The ability to influence culture change with an innovative mindset
The ability to understand and identify groundbreaking technology
The ability to build a strong network of business partners
Those principles remain the same today. The change since that survey is that the pace of change has increased, the volatility in the world has increased, and leaders of all types have more complexity than ever to deal with. So, if you as a leader have not addressed them yet, you are at more risk than ever before.
We’ve seen successful CFOs get more and more involved in helping their peers, whether they're in sales, operations, marketing, or other departments to look for ways their organizations can operate better, more efficiently and enable people to thrive. This is a common change we're seeing. The CFO may not own the project by themselves, but they are influencing the strategy and results.
This shift in leadership from accountant to strategist has proven data that demonstrates success. Companies who manage transformation well are 2.5 times more likely to outperform their peers and 6 times more likely to meet or exceed their objectives. Our CFO study also notes that CFOs are best positioned for this challenge because they have the ability to engage the board more productively on strategy, and the hard data with an empirical mindset can be invaluable in setting and executing a company’s game plan.
When talking about the importance of the transformational financial leader, Matt Armanino, Armanino CEO says, “The old adage, ‘If you don’t know where you are going, any road will get you there,’ has never felt so relevant. The pace of change today is remarkable and although that presents new threats, opportunities for differentiating your business and enhancing your personal value proposition abound! It’s time to lean in, make a plan and embrace the opportunity.”
Time is of the essence for modernizing your business
The CFO isn’t just producing the board reports anymore. Yes, that is part of the job, but all of the data points and results that are plugged into those quarterly or monthly reports tie together, and can be positively impacted by a financial leader who gets involved. Connecting the dots between departments and knowing what your customers expect sounds simple, but is so vital to sustain over your competition.
The time to hyper-automate your processes is now. There is a startup or competition around the corner that is shaking up all the traditional spaces, so if you are a professional services firm, a manufacturing company, a real estate entity, an investor entity, a financial services firm, and you're not thinking about innovation or transformation, it's already probably too late. This doesn't mean your plan has to be perfect, but doing something is necessary for your business to survive. Get started with the digital transformation steps and roadmap listed above and connect with my team to help start your digital transformation journey.
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