We all know that the world is changing, that Amazon is coming to eat your business model, and some startup is going to Uberize your market.
Unfortunately, "digital transformation" has become a buzzword synonymous with large consultancies and not business results, and many businesses are jaded.
Nowhere is this more true than in the SAP industry, where customers were until recently mandated to move to the latest version of their Enterprise Resource Planning software, S/4HANA, by December 2025.
2025 sounds like a long time away, but many businesses do capital planning over three year periods and execute large programs of work over two.
2025 is now.
Thankfully under Christian Klein's leadership, SAP abated and delayed the End of Life of SAP's flagship Business Suite software until 2030. We are now in an era that I like to call the Judgment-Free era for Digital Transformation.
Research shows that 70% of digital transformation initiatives fail, and there are many reasons why; entire books have been written about IT project failures.
Consider the following factors when deciding how to embark on digital transformation.
CEOs have to focus ruthlessly on a small number of priorities. One customer in the rail industry went for approval of an SAP S/4HANA project, and the CFO saw the 8-figure budget and asked the CIO: "Would you like me to approve this project, or buy one more locomotive this year?"
You might be thinking "buy the train," but it's not that simple. What if this IT project improved rail network throughput by 2%, or decreased the chances of a derailment by 10%?
What if it provided efficiencies in cargo prioritization that meant two fewer locomotives needed to be in service?
What are your priorities?
How might they be achieved by IT investments?
The Future Workforce
Today's new hires are the Instagram generation. They primarily share images on social media, not diatribes about their personal life. Tomorrow's new hires will be the Snapchat and TikTok generation, and before we know it, there will be a generation of employees who have never used a laptop.
That might be an exaggeration, but the new generation of workers expect to have an excellent user experience for the tools they use in the workplace.
If you want to hire the best talent, you are going to need to think about their needs.
Diagnose Before You Cure
Many businesses drive priorities based on a belief, or the consensus of the leadership team. This isn't good enough anymore.
What if you are struggling to grow because you failed to understand that your complicated customer onboarding process was throttling your ability to get customers using your product quickly?
The Lean Six Sigma method looks to improve organizational culture change by looking at eight kinds of waste:
- Non-Utilized Talent
Whichever strategy you have in place, you need to ensure you have the right data to understand organizational challenges and opportunities before you invest in solving them.
Open Up Your Vendor Choices
There was a saying in the ERP industry: "The Suite Always Wins." And we believed this would always be true.
A tightly integrated suite of applications would always be better than best of breed because the integration challenges that came from multiple solutions would be too painful.
This is no longer the case, and integration technology has caught up so far now that you can, and should consider all your options when looking to solve the problems that you diagnosed.
Indeed, there are benefits to having a smaller number of strategic vendors: buying power increases, and it's possible to gain some additional control. However, Line of Business owners like the CMO rightly now have a say in what solutions get chosen.
Digital Transformation is a Journey, Not a Destination
Think about how your business life changed in the last 20 years. The copier room is gone, the desktop PC retired, data centers are gone. We are replacing first-line customer service with chatbots, pickers with robots, and the Rolodex is now in your phone.
The same will continue to be true over the next 20 years, and I won't try to be a futurist here. Understand, however, that digital transformation is a never-ending process of self-improvement, and it works like technical debt in software: you can delay modernizing your business, but it will catch up with you.
There is no right way and wrong way to approach digital transformation. Some organizations might see value in large-scale transformations of ERP environments like SAP, for example, consolidating business processes across hundreds of operating businesses and end markets. There can be big wins.
For other organizations, a more scalpel-like approach, weeding inefficiencies out of the supply chain and customer experience issues might be the right approach.
Some may prefer to leave legacy ERP systems in place and build delightful user experiences on top of those monoliths.
There isn't a right and a wrong, there's no judgment — only what's right for your business.