What is the value of digital transformation?
Let’s face it: we can say whatever we want about digital transformation, when it comes time to commit to the necessary means, the question of “what’s in it for?” Always arises. And it is not easy to deal with as the value of digital transformation is a subject that is still largely unconscious in many organizations.
• The question of ROI is totally illusory as regards the cultural dimension of the company. Simpler on a business, operational, industrial approach, but that’s rarely where you start.
• Sometimes I want to say that digital transformation will just give you the right to live on, to play against your competitors.
• Which brings me to a dimension too often neglected by companies which instead of asking themselves “how much will it earn if I do” should also ask themselves “what am I risking if I don’t do”. The ROI is good but the RONI (return on non investment) can also help to open the eyes.
A serious and structured study on the subject has finally seen the light of day and is the work of CIGREF which set up a working group on the subject.
What is digital transformation again?
The study begins by asking a question that is too often overlooked: how to qualify a digital transformation project? Because if everyone is talking and doing digital transformation, it is true that the scope and depth of projects varies radically depending on the person and the company.
For CIGREF, a digital transformation project is first of all a business strategy (a business strategy) and then its translation into digital projects. Halleluia. Not only do they deserve to recognize the secondary nature of technology (great lucidity for an organization with the IT DNA at the base) but in addition they pose the primacy of the business strategy. We still see too often the time for transformation projects having to adapt to the business strategy, cohabit with it or even have to support a strategy put in place beforehand. Transformation is strategy, digital is its execution and it is finally said with rare relevance.
Transformation is business strategy, digital is its variation.
CIGREF also introduces a new but not useless discussion on the very notion of a project. Digital technology is most often accompanied by the abandonment of traditional project approaches (V-cycle) for continuous delivery approaches (agility) which undermines the idea of the project as we are used to it. , especially in IT departments. In my opinion, this is similar to the above: if transformation is strategy then it is no longer a project but the standard and is therefore a permanent activity.
For CIGREF, 7 criteria are used to qualify a digital project:
1 °) The vision: necessarily strategic and carried by the Comex
2 °) The transformation of the profession: with an approach by the processes of the company and by taking into account the relations with the ecosystem. I see so many transformation projects where processes come last or even where it is strictly forbidden to touch them that I can only applaud.
3 °) The methods: test and learn, the right to fail, disposable initiatives, experimentation, agility, collaboration between projects.
4 °) Steering: with in particular the implementation of an adapted risk management. Here again, I have too often seen ambitious speeches with zero risk management similar to that implemented for “traditional business” operations. But here we are talking about innovation and risk acceptance so ..
5 °) Data: they must be valued by the project
6 °) Technologies: CIGREF clearly states that they are only a catalyst for the project. The main axes are unsurprising: social, mobile, cloud, analytics.
7 °) Appropriation by users: intuitiveness of technologies and change management must be on the program.
And as often with a beautiful diagram we understand better.
Finally, the digital transformation is characterized by alternative operating modes:
• at the cycle level with continuous development cycles.
• at the level of economic management: we think of the overall envelope and we deduce the intermediate stages according to the desired “burn rate” instead of quantifying by stage.
• at the level of focus, now on the end user.
• at the HR level with new needs in terms of skills and skill sets, in particular in terms of cross-functionality.
• at the level of the project approaches themselves with the agility set up as a standard.
I deliberately went a little long on this part but before wanting to talk about the value of digital transformation, it is still necessary to qualify it and know the levers, otherwise we would be hard pressed to know where to act to increase the said value.
The value of digital transformation: a question for stakeholders
Until now, the value of an IT project was measured by the benefits observed in the execution of a process. It was up to end users to get into the mold: like the machine or the software, they were there to serve the process and adapt.
Here things change radically with a new user orientation (internal or external) and the need to create value for him and not just for the organization. In the end, behind the notion of user experience, we come back to the need to create value for the organization, the employee, the customer and, if applicable, the partners.
Cigref arrives at this conclusion at the end of an essentially economic analysis to which I will add a dimension of change management and common sense. This only reflects something widely observed for ages: when, for a given stakeholder, the change does not have a meaningful and clear value proposition, or even destroys it for the benefit of other stakeholders, that is, change is refused or we try to bypass, cheat. In the end it does not work and it is not a matter of technology but of simple common sense. A problem at the heart of the transformation of business tools and processes within the framework of the employee experience that I have already had the opportunity to discuss in other posts.
Another note: Cigref compares digital transformation projects to traditional IT projects which is a bias that may not be dangerous but should be taken into account. To say this means that we are talking about “unconventional” IT projects, which is a mistake: they are business projects “powered” by IT. Ultimately this goes against what this same study said earlier. But it is understandable: Cigref cannot deny its IT DNA, historically speaks mainly to IT and to take its target readership into a paradigm shift, it still has to start from a starting point known and shared by all. This is confirmed a few lines below by a sentence to be displayed not only in many CIOs but also in general management too inclined to pass the hot potato to IT, hoping that technology saves the world (what never happens).
“Note that value is not created by technology, which only plays the role of“ value catalyst ”.
The value of digital transformation is measured by uses and business cases
Cigref believes that the value of digital transformation can be measured by:
- Offer a customer journey allowing loyalty by creating a bond of trust
- Better understand and personalize the customer experience
- Offer related services beyond the core business offer
- Improve the speed at which offers are made available.
We can clearly see the primacy given to uses and business cases over technology. But allow me to make a big major reservation: I find the collaborator completely absent from the equation. So for once an IT approach thinks of the customer, I say bravo, but we must not forget to serve the internal customer who serves the external customer. When we say that there is no customer experience without employee experience, these are not empty words but a truth that is imposed hard every day on those who forget it. We understand that Cigref is interested here in the finality, the internal being only a means (see below), but to mention the alignment of the internal here would have made sense.
While it is also reflecting on a new way of managing costs adapted to digital transformation projects, Cigref also insists on the fact that the value of the latter is also measured through non-economic indicators.
The value of digital transformation can be non-financial
It therefore offers a series of indicators organized around four major themes (data, marketing, operations, human resources), broken down into promising sub-themes and illustrated in a concrete manner.
Who says value says return on investment and who says investment says risk. The report also proposes a grid for reading and assessing the risks associated with digital transformation with, and welcome this approach, the taking into account of the “risk not to be done”.
This is followed by the proposal for an analytical framework taking into account the non-financial value of projects and the associated risks.
Those who expected a purely economic approach may be disappointed. But it seems to me that the approach of Cigref which, if it does not elude the question of costs and financial capitalization, allows by focusing on the intrinsic value of the project and to equip itself with a decision and more reliable management than that of pure financial ROI. Because since technology only serves to motorize projects where the most important dimension is the change of business model, organization, and people, we all know that ROIst projections, as reassuring as they are, do not are rarely verified in practice.
A digestible, well-designed, educational report, the reading of which is therefore strongly recommended.
Bertrand Duperrin is Digital Transformation Practice Leader in Emakina. He was previously Consulting Director at Nextmodernity, a firm in the field of business transformation and management through social business and the use of social technologies.