Digital transformation has become necessary for enterprises that want to thrive in a hyper-competitive landscape. 89% of enterprises have already adopted a digital-first strategy or plan to do so in the future.
Digital transformation helps enterprises generate more revenue, enhance customer experience, and improve employees’ productivity. According to a Gartner survey, 56% of CEOs witnessed an increase in revenue due to digital transformation.
Enterprises are even willing to allocate a considerable portion of their budget for digital transformation. However, research shows that most of these transformation projects fail to meet business expectations. For instance, in 2018, more than 50% of digital transformation efforts failed.
There could be various reasons for the failure – ranging from unrealistic expectations to poorly planned strategies and bad change management. An MIT Sloan Management Review research showed that a lack of governance was one of the leading reasons for the failure. Enterprises did not have a well-established governance team and processes to guide these projects. There was no alignment between the business and IT teams. This led to silos in the teams and made the projects more complex.
The only way to make the digital transformation successful is to establish a multi-level governance system.
A multi-governance team will include different stakeholders from different functions who will work together to ensure that the transformation process meets all the requirements of the enterprise. It will help the business and IT teams bring multiple perspectives to the table and ensure that the transformation happens seamlessly.
Who Should Be A Part Of The Multi-Governance Team?
Typically, 12-20 people are centrally involved in the digital transformation process. They are divided into different committees depending upon their role.
- Steering committee
The steering committee is the one that champions the digital transformation project. It comprises the C-level executives and business leaders who have a deep understanding of the business, customer needs, business landscape, etc. They are responsible for making critical decisions on which business processes should be prioritized, how to allocate resources and budget, etc. They establish the governance framework, assign roles, delegate responsibilities, and oversee the transformation project to ensure successful completion.
- Innovation committee
According to Capgemini’s research, some enterprises also have an innovation committee that identifies business opportunities to implement emerging technologies. These committees include people from multiple disciplines that bring a fresh perspective to the business. For example, Nestle has a digital acceleration team that hosts worldwide experts who share their knowledge on using social media and other related technologies to business. Every enterprise might not want to invest in an innovation committee. But they could consider having a dedicated resource such as a Chief Digital Officer (CDO) who has the digital expertise and business acumen to help the enterprise with digital transformation and drive innovation.
- The technology experts
Technology experts play a crucial role in comparing and choosing the right digital technologies, vendors, and partners to make the digital transformation successful. To ensure that they think from the overall business perspective, the technology experts have to work with business leaders. They need to consider the skills of existing employees and the processes and systems they use while planning the digital transformation. They must be careful in selecting technologies that are easy to use, and at the same time help the enterprise achieve its goals.
- The security and compliance experts
One of the reasons most enterprises hesitate to use digital technologies is that they worry about their ability to adhere to stringent compliance and security regulations. Over 82% of respondents in a survey confirmed that they experienced at least one data breach due to digital transformation. Experts say that rushed digital transformation can put the enterprise at a security risk. Often enterprises seek approval from security and compliance teams at the end. In reality, they should be involved from the beginning to safeguard the enterprise from security breaches. The security and compliance experts will ensure that the technologies or applications chosen for transformation adhere to security policies. They also ensure that the vendors and technology partners are aware of the policies and strictly comply with them.
- Project and implementation managers
Project and implementation managers are the ones who ensure that the project is implemented successfully. They monitor the progress regularly and update the steering committee on the status. They ensure that the project is happening as per the schedule, there is enough staff working on the project, and they are not going over budget in any way. They raise concerns if something goes wrong and ensure that the problem is addressed on time. Implementation managers focus on the actual implementation and change management to ensure that the employees can easily adapt to the changes.
It’s clear that multi-governance is critical at all stages of digital transformation – right from ideating to implementation and post-implementation. However, most enterprises find themselves in a lurch as they have to choose between doing it in-house or outsourcing it to digital transformation specialists. Here are a few parameters based on which enterprises can make a decision.
- Business understanding: Digital transformation is not about technology alone. Transformation is built around processes, systems, and organizational culture. One needs to have a deep understanding of the business, processes, and customers to transform the business successfully. Although external SMEs come with a lot of industry experience, they might not be aware of the enterprise’s unique challenges and business needs like in-house experts. These experts know the business workflows, security policies, processes, and people like no one else. They know the pain points of their business and customers and are capable of addressing them. Hence, when it comes to choosing based on business understanding and governance, in-house specialists may be the right choice for the business functions.
- Cost: Digital transformation is expensive. Chances are that enterprises might want to work with in-house designers, developers, or technologists to save costs. However, they must know the industry’s best practices. Most often, they follow the best practices of the enterprise that are redundant. A poorly designed UX, for instance, could cost almost $1.4 trillion to the economy. An external SME knows what’s trending and will be able to bring their knowledge and skills to the project. A well-planned digital transformation project could save millions for the enterprise and even generate better returns.
- Innovation: Digital transformation is not just about transforming legacy businesses digitally. It is about bringing innovation to the business model. In-house experts work with proverbial horse blinkers. They are so deeply entrenched in the processes and systems of the enterprise that they can barely bring a fresh perspective to the business. External SMEs work with several industries and even competitors. They have a fair understanding of what’s working and what’s not and can bring a unique perspective to the business that can help the enterprise evolve.
The best way forward would be to bring the in-house and external SMEs together. The business knowledge of the in-house SME combined with the fresh perspective and expertise of the external SME will help the enterprise leverage the best of both worlds and make transformation a success.