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5 Tips for IT Leaders to Ensure a Successful Digital Transformation

Here are five tips to avoid potential pitfalls and ensure digital transformation projects deliver the expected benefits.

6 Min Read
hand turning a knob with the words "digital transformation" on it
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"The price of doing the same old thing is far higher than the price of change." While these words were famously said by President Bill Clinton during an Oval Office speech about investing in jobs, education, and economic opportunity in the face of a federal deficit and high unemployment, the sentiment also applies to the current approach to digital transformation in the business world.

Companies have long hesitated to implement new digital technologies out of fear — whether it's fear of the unknown or disruption to the organization, or concern that the process will be overwhelming, expensive, and time-consuming. But the benefits of digital transformation have become clearer. Increased efficiency, greater business agility, and unlocking new value for employees, customers, and shareholders far outweigh unfounded fears. In fact, global spending on digital transformation of business practices, products, and organizations is expected to hit $2.8 trillion in 2025 — more than double the amount allocated just three years ago, according to IDC.

As more business leaders begin to prioritize digital transformation, here are five tips to avoid potential pitfalls and ensure projects deliver the expected benefits.

#1 — Align digital transformation with business goals

Related:An Enterprise Guide to Digital Transformation in 2021

Digital transformation is not just technology application. Technology is a facilitator that helps organizations execute the digital transformation strategy, making it possible to do things faster and more accurately, at a lower cost.

Technology is a foundation for digital transformation. It helps organizations drive change, whether it's improving operational efficiency, modernizing cybersecurity defenses, or delivering value to customers.

#2 — Involve key stakeholders

Digital transformation requires a shift away from traditional thinking and toward a more collaborative, experimental approach. No matter how big the change is, there will always be some risk aversion since the goal is to fundamentally change the way things have always been done. At the beginning, it's important to assess cultural impediments and create a strategy with a unified roadmap — starting at the executive level so there is minimal resistance from employees. And, it's important to emphasize to employees that the digital transformation process provides them with an opportunity to upgrade their expertise to suit the marketplace of the future.

Companies must maintain close partnership and alignment with all business functions to achieve success, while also placing customers and employees at the heart of every digital transformation effort. Key stakeholders will be dependent largely on the business objective that is undergoing transformation. For example, if the goal is to transform procure to pay, then finance, sourcing, legal, accounts payable, and top cost center spenders all must be involved in the conversation.

#3 — Formulate the right team to carry out the transformation

Organizations that seek digital transformation frequently go to consultants who tend to apply a one-size-fits-all solution in the name of best practices. However, no one understands the nuances of your organization better than the employees that work for it.

The best approach is to rely on a blend of outside consultants and the internal team. Outside resources — from high-end architects to boutique design houses or deep subject matter experts — will be crucial to accelerating the design and build phase of your digital transformation project. Outside resources should also be paired with high potential team members who can offer key insights from the company and also upskill in the process. The right mix of outside and internal resources can lead to product line improvements, higher close-win rates, lower customer churn, and reduction in the cost to serve.

#4 — Outline a realistic and flexible timeline

Macroeconomic events and internal profitability challenges can have a dramatic effect on an organization's willingness to continue investing in large and expensive initiatives that often take years and rely on multiple providers. Although costly, digital transformation must be undertaken because it is essential to improving the business.

Implementation timelines are unique to the scale of the goals and the culture of the organization. Define objectives that can stand alone and provide some level of incremental value to the organization. While this approach may take longer to get to the final destination, doing so provides greater value to the organization and gives management the most flexibility in responding to environmental conditions outside of their control.

#5 — Evaluate the cost of buying vs. building a solution

Third-party solutions are a critical component to any digital transformation. Often, companies lose time trying to build commodity functions from scratch when they can take advantage of third-party platforms and solutions that will help speed up the implementation timeline and also the realization of benefits.

For example, tools utilized for risk and compliance, like tax reporting, should be prioritized since the business need for it will not drastically change. Compliance can be a complex issue, and it is difficult to keep up the ever-changing rules that differ by size of the company as well as where it operates. Consider multinational organizations that must contend with value-added tax (VAT) compliance and reporting rules that are different in each of the 165 countries where this indirect tax mechanism is applied. In this case, finding a partner with a global presence and tax expertise will help simplify the compliance aspect of the digital transformation, enabling the internal team to focus on changes that will differentiate the company's value and reduce time to market.

Even though a digital transformation project can seem like a formidable task, companies should not be paralyzed with fear. Aligning projects with business goals, getting buy-in and participation from key stakeholders, setting a realistic timeline with bite-sized implementation goals, and knowing when to buy off-the-shelf solutions instead of re-creating the wheel internally are key to digital transformation success. Done right, organizations can realize increased efficiency and greater business agility, and, ultimately, unlock new value for employees, customers, and shareholders.

Eric Lefebvre is Chief Technology Officer at Sovos. As CTO, Eric sets and oversees technology strategy for Sovos. With more than 25 years' experience leading technology teams, he is a strong proponent for establishing a corporate vision and then providing his teams with the room to work, ensuring they have the freedom to tap into their full potential.

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