Equal Partnership between Business and IT is the Key
Among the multitude of factors that influence the outcome of a digital transformation initiative, one crucial element that can either make or break its objectives is the alignment between business and IT leadership. This alignment is critical because a digital transformation initiative, at its core, intends to leverage all the possibilities that the convergence of multiple technologies could bring for businesses and utilize these possibilities to refine or redefine the organization’s value proposition in the marketplace. It becomes even more important during execution when strategic objectives and shared vision are put into action.
The process of digital transformation is often a multi-stage approach, and the alignment between business and IT is a prerequisite for each stage, from vision and strategy creation to execution. While leaders in organizations realize this at a philosophical and conceptual level, the organization may lack the necessary organizational structure, processes, or culture that supports this partnership.
Drafting a Common Vision:
It must be absolutely clear and worth reinforcing that the goal of any digital transformation is to build capabilities for the organization to provide either supply-side or demand-side value propositions in the marketplace. The role of the IT department traditionally has been a supporting function, primarily focused on providing operational advantages. However, digital initiatives go beyond just operational imperatives. For many organizations, digital transformation is the business strategy itself. Therefore, a partnership between business and IT is essential to evaluate and share a common vision. Business leaders contribute their expertise to highlight the challenges in the competitive business landscape, while IT leadership, with their expertise in digital technologies, can present the possibilities that digital technologies can bring to improve competitiveness in the marketplace. The partnership must be equal in its nature so that each leader can actively participate in solving business problems.
Formulating a Digital Strategy:
With business and IT being partners in creating a shared vision, collaboration during execution becomes crucial. IT leadership leads in identifying the organizational capabilities in terms of its people, processes, and technological maturity to identify the gaps and provide approaches to address them, while business, with their understanding of critical success factors and functional interdependencies, provide feedback and help solidify the strategy.
Budgeting and Monitoring:
A strategy is only as good as its execution on the ground. No matter how well thought out a strategy may be, it won’t prove effective if poorly executed. A successful execution largely depends on the appropriate allocation of resources. Budgeting and monitoring are the most important elements of resource allocation. Leaders in many organizations may debate on who should fund the digital transformation initiative. Digital transformation, in principle, is about transforming business and is experimental in nature. Thus, the approach must differ from those used for run-of-the-mill IT projects. The budget allocation should be determined by top business leaders, such as the CEO, in collaboration with top leaders in IT organizations, preferably under the aegis of the Chief Digital Officer. The progress and monitoring of the initiative must be done jointly by IT and business leaders to evaluate the progress. The regular output-driven project milestones should be substituted with business outcome-driven progress or success metrics.
Collaboration during Execution:
Execution of digital transformation involves first building capabilities in people, processes, and technical core on which the digital technologies would be plugged in or built in to provide value. This is the most challenging phase of a digital transformation journey. It requires teams to be built that are adept at working at the intersection of technology and business, having a vision for the future. It will also require another set of people within the organization who would be moved out of their comfort zone to operate in a way very different from what they were comfortable with. These varying natures of digital transformation require collaboration between business and IT during the implementation and consumption of these initiatives.
Most of the digital initiatives are experimental in nature. Traditional project execution methodologies have their limitations in executing experimental initiatives. Iterative models such as Agile are proven to be more successful and less risky in managing experimental initiatives. Unlike a traditional waterfall model, an agile project fundamentally works on cross-functional teams consisting of both business and IT professionals.
