In Part 4, we looked at the elements required to actualize the transformation plan, beginning with building a pragmatic roadmap and defensible business case that garner senior leadership’s support and incremental funding. We also discussed determining value metrics that help keep the transformation journey on track. Now let’s look at what’s needed to keep the plans on track.
How do we know that our transformation journey is heading in the right direction and progressing as planned? In other words, how do we measure success in digitally transforming business?
As mentioned earlier, each industry and each business charts its own course and uses a different approach. Transforming a traditional banking operation or an insurance company differs from transforming a retailer. And transforming grocery retailing takes a different path than a department store or luxury goods. Customer expectations, competitive landscape, value of merchandise, profit margins, existing systems, and organizational appetite for change all play a critical part in shaping the journey.
Regardless of the actual direction, path and timing, there are a number of progress indicators that organizations could choose to monitor:
By design, many of these are soft indicators, given that many transformation journeys take an evolving path as the organization experiments, learns what works, and responds accordingly.
Executive buy-in and involvement is a strong indicator especially in the early days:
For the program to proceed and succeed, there needs to be a roadmap of key change initiatives and appropriate supporting budgets. It is rarely practical or feasible to allocate the total budget up-front for a multi-year transformation journey. However, strong commitment to multiple rapid delivery initiatives over the first six months or so is essential. With that short-term goal in sight, mobilize resources and project management to start delivering on the selected initiatives and create energy and early momentum for the long journey. Invariably, early deliverables create the platform for more significant change initiatives in later phases. Commencing and successfully completing early objectives is a powerful measure of progress.
Different from typical project management reporting, Agile digital delivery teams usually show progress with story point burndown, iteration reviews, and actual software releases into production. Solution showcases are also a key way to demonstrate progress especially for senior executives who may be uncomfortable with the perceived lack of rigor sometimes associated with Agile delivery projects.
CUSTOMER FEEDBACK
What customers are saying about new digital experiences is a reflection of how well their expectations are being met. While digital transformation is all about being tuned in to changing customer needs and being responsive to their desires, there should also be a large element of innovation and proactively offering new experiences. It makes sense therefore to have a range of customer-related measures of progress and satisfaction.
For most retail businesses attracting and retaining customers and winning their repeat business is the primary factor in determining business success. Here are some specific considerations: How often are customers coming to your stores and website ? How long are they spending during each visit? Are visits translating into completed purchases? What uptake are you getting for innovative new shopping experiences such as Click & Collect or curbside pickup?
Surveying customers provides direct feedback, such as Net Promoter Score (NPS) and comments. What are they saying in focus groups and on social media? What comments and complaints are store personnel sharing? What about customer care channels?
Finally, the ultimate endgame for digital transformation is maintaining and hopefully increasing market share, revenue, and profitable sales. Financial measures become the true measure of success in the long run. However, an uptick in financial indicators takes some time to register as the team develops solutions and discovers what really appeals to and works for customers.
There is no question that large-scale change comes at a significant cost, and investments have to be recouped. While it takes time for profits to flow to the bottom line, deciding on relevant financial measures and putting appropriate metrics in place is important for assessing transformation progress.
In the fast-moving digital world, retailers need to stay abreast of changes and make course corrections to transformation journeys. Continual monitoring of customer responses to new initiatives and shifts in the broader external environment is critical, followed by periodic adjustment of plans.
There are three main elements to this:
Balance is required between staying with current tools and gaining the benefits of new tools. A change of tooling will involve investment in licenses and developer training, but the benefits of creating new experiences that can be efficiently and rapidly delivered with independence often make the transition worthwhile–something enterprise architects can shed light on.
There has already been much discussion about the important role played by enterprise architects. However, no matter how good a job they do, they cannot make transformation successful without strong business leadership to provide the vision and establish a new “digital culture”.
Speed of delivery, fast iteration, innovation, continual feedback, adaptability, and an enlightened attitude toward uncertainty and “failure” are critical attributes in this new digital world. This is not purely about going faster; it involves a change of mindset woven in every fiber throughout the organization. It also involves embracing a test-and-learn approach, continual monitoring of progress, measurement of outcomes, and assessment of customer feedback.
The CFO, too, will need to adjust how business cases are viewed without a neatly quantified ROI upfront. Digital transformation requires organizations to broaden their perspective about risk management – viewed as a calculated approach to an uncertain journey that responds to the dynamic nature of digital disruption.
The first step toward successful digital transformation is starting. Like all journeys, successful transformation depends on a range of factors, not least of all having a goal in mind, developing a broad plan, and simply starting.
Digital disruption is forcing retailers to transform their businesses to quickly address competitive pressures and meet changing customer expectations. In an increasingly complex and fluid environment spawned by disruption, mapping out an achievable transformation journey is a daunting challenge. However, retailers must overcome the urge to over-think the challenge and instead plan, mobilize, and begin.
The organization must embrace uncertainty and display a commitment to stay the course, yet at the same time flex and adapt as necessary based on learnings, customer feedback, and shifts in the competitive marketplace. This mindset requires a willingness to experiment – test and learn – enabled by a new digital culture spearheaded by senior executive leadership and an enlightened culture.
Alongside leadership, modern enterprise architecture is a valuable resource helping retail organizations chart a transformation course and navigate this complexity to achieve significant positive business change leveraging new digital technologies. Your enterprise architecture team can advise on practical ways to progress that will see you start sooner and rapidly achieve real success on your digital transformation journey.