December 29, 2021
One of the chief responsibilities of today’s CIOs is to help to guide their company’s digital transformation journey: mapping out the strategy, aligning the stakeholders, setting achievable goals with concrete timetables, and delegating responsibilities to implement the nuts and bolts of that transformation. Most of all, the CIO must clearly articulate the “why” behind this transformation: What is the true motivation for why the company must digitally transformation and, likewise, what value and ROI the company can expect to get from it.
Below, I’ll outline what core skills a CIO needs to tackle this job effectively -- which potential digital transformation trouble spots a CIO must be on top of, the role of digital transformation champion they need to play for the CEO, and what “step 0” in any digital transformation project must be to succeed.
Trouble Spots to Keep on Your Radar
The four areas that can hinder your organization’s digital transformation are the same hurdles that frequently pose problems elsewhere.
1. Organizational change management (OCM) is ignored. This is always the first item that gets cut from a project budget, so unsurprisingly OCM ends up being the top cause for a project’s failure. Unless you can keep stakeholders, team members, and end users all engaged both throughout the transformation project and after it’s completed, you’ll never achieve your planned ROI.
2. Core definitions are misunderstood. “Digital transformation” is everyone’s favorite phrase now, but how often do you get a group of people in a room where they all actually agree on what it means? Some stakeholders will say it’s digitizing their products, services, and platforms. Others will say it’s strictly a technology play. And some will say it has to do with optimizing their back office. Without clearly defining what digital transformation means to your project and your organization, how you define, track, and realize success won’t be clear to anyone. Having these definitions in place allows everyone to be on the same page and create realistic benefits cases accordingly.
3. Innovation-killing corporate culture. The old mindset of “command and control” and prioritizing company and shareholder value over all else stifles innovation and puts you in your competitors’ rear-view mirror when it should be the other way around. Just take a look at the growth rates of digital giants and “digital upstarts” compared to the legacy businesses, and you’ll see this dynamic play out in real time before your eyes.
4. Hats on pigs. Simply bolting new, advanced technologies onto older legacy systems is like putting a Kentucky Derby hat on a pig: it’s a waste of time and money. There are too many companies that are trying to use AI, machine learning, and blockchain (so they can say they’re using AI, machine learning, and blocking) while at the same time running a slew of different ERP systems containing bad data.
Championing Transformation in the Face of ‘Horror Stories’
In the SAP world, there have been a few notable stories of S/4HANA implementation failures that have made the rounds over the last few years. Hershey’s SAP implementation failure is one that often gets pointed to as an example of software being the culprit and the systems integrator as its accomplice. The reality was more nuanced than that story, though: The Hershey incident resulted from a combination of unrealistic expectations and poor OCM. But CEOs read these horror stories and come away thinking they’re better off nixing any S/4HANA or digital transformation idea proposed to them. It makes sense why they’d have that gut reaction, but gut reactions about stories that have gone through a game of telephone shouldn’t dictate your business’ digital transformation efforts.
To get ahead of this, the CIO must become the internal “champion” for digital transformation. What does that entail?
Communicating that for every failure there are exponentially more successes. Be sure you can cite a handful of relevant industry success stories and point to why they were so successful.
Avoid “techspeak.” You’ll lose the CEO’s attention almost immediately. Talk to them in their language: the benefits of digital transformation in terms of EPS, lifetime customer value, market share, revenue and revenue growth rate, order fulfillment, and backlog. You have to make the value of transformation real to them.
Make it clear that digital transformation is not just an IT project and not just a back-office digital optimization plan. The CEO needs to be fully aware of digital transformation is a companywide initiative. It’s not something you silo off with one team; it requires dedication and real investment across multiple business units.
Step 0: What It Is and What It Isn’t
Implementing or migrating to SAP S/4HANA often gets defined as a digital transformation initiative. But this is not the transformation itself, it’s laying the foundation for which your digital transformation and optimization of back- and middle-office processes will be executed from.
This is the No. 1 thing I want to impart to all CIOs looking to guide their company’s digital transformation effort. Consider this “step 0.” If you think of digital transformation as scuba diving, this is the “make sure your air tank is full” step. It needs to be done first and foremost. When you’ve clearly defined what digital transformation is, and what it isn’t, you’re better positioned to reap real value from it in the end. But if you think of S/4HANA migration as the endgame in and of itself -- and if you wait until SAP’s 2027 deadline to start talking to your C-level leaders about it -- you risk your project becoming one of those horror stories you assured your CEO wouldn’t happen here.
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