By Arvin Temkar
Whether you’re digitizing your company’s operating model or launching a new online service, let’s face it: Digital transformation is tough. Research shows that companies tackling these changes are less than 30% likely to succeed. That’s an overwhelming amount of failure.
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Digital transformations require too much time, energy and resources for a fly-by-the-seat-of-your-pants approach. Imagine implementing a massive overhaul of your content management system, for example, just to find out that it doesn’t interact well with other essential programs you use.
Fortunately, there are ways to make smart moves and mitigate risks when it comes to digital transformation. Risk and privacy professionals at the accounting, consulting and technology firm Crowe shared their expertise.
Beware Of Sparkle
To start, companies should be wary of embracing every new idea put forth by leaders.
“When someone brings an innovative idea forward in a company, I think it's generally frowned upon to challenge the idea,” said Jill Czerwinski, principal and third-party risk services leader at Crowe. “There’s a fixation on the idea that it’s bright and shiny.”
But is every bright and shiny idea viable? Does it fit with the company’s mission or reflect an appropriate use of resources?
One way to make sure you don’t tumble too far down the rabbit hole is to establish a process to vet potential initiatives. At Crowe, when clients want to talk about an idea for innovation, Czerwinski uses a structured intake process to examine all the ins and outs.
“When we review the risk of a proposed project or initiative, we ask many questions, including questions about the types of data, systems and controls. The goal is to identify the key value the digital transformation is seeking to provide, along with risks associated with the idea,” she said.
Strategy Wins The Day
When a new idea meets the initial criteria, what’s next? Charting and communicating a clear path forward.
The business mantra “culture eats strategy for breakfast” applies differently when you’re talking about digital transformation, said Pam Hrubey, managing director in consulting services at Crowe. For example, an American-headquartered durable goods company acquired businesses across the globe. The company needed to upgrade equipment and streamline IT processes, but it chose to begin the transformation by attempting to align cultures between the parent company and the businesses abroad. Its initial process led to discontent among international workers who ended up feeling like outsiders because they were not made aware that the goal was to sync technology and processes.
“To transform a business practice or to change a business model, you have to have a robust plan,” Hrubey said. “When you start with culture you often confuse people if you don’t have a plan in place, if people don’t understand what change is planned or why a change is necessary.”
Companies also need to understand that a transformation affects the entire organization and might include stakeholders across departments.
“So many different people in the company need to come together to do it right,” said Czerwinski.
That’s why she suggests appointing an orchestrator—a person in charge of coordinating the digital transformation efforts. The orchestrator doesn’t need to be an insider. Crowe is often brought on board to bring perspective when companies are building such programs as well as to provide day-to-day support.
“The biggest part of our job is to advise our clients about where others have failed or succeeded,” Czerwinski said.
Risk Mitigation
One common issue businesses face when undergoing digital transformation is that the new technology fails to integrate with existing technology.
Czerwinski recalled one financial services client that had just rolled out a new technology it believed would transform its business. The technology had a shiny interface and a lot of promises. But it turned out to be “like a process of a million paper cuts,” because it required far more manual intervention and behind-the-scenes manipulation than anticipated.
That’s why many businesses are now hiring IT specialists called enterprise architects who make sure systems talk and work with each other.
Another risk is cybersecurity. No company wants to send that email to consumers that reveals their data has been compromised. Nor do they want to use consumers’ personal data improperly.
The first step is taking an inventory of where personal data resides across the organization, said Hrubey. Next, it’s critical to examine consent documents to understand what personal data can and cannot be used for various purposes, such as marketing.
Hrubey cited an example of a generic drug company that had grown tremendously through a series of acquisitions. Data was floating around everywhere. The company underwent an initiative to collect all its sensitive data into two “data lakes”—one containing data consumers had given permission to use for marketing purposes and one containing data that the company anonymized.
The company soon found that it didn’t need identifiable personal data for its marketing strategies, so it started anonymizing all its data. That led to universal cost savings, better protections for the consumer and ultimately a more efficient and effective marketing department.
Often, too, said Czerwinski, large companies outsource their digital transformation efforts to smaller companies, putting sensitive data in the hands of an external vendor. Companies should make sure their vendors can meet their internal expectations for data security despite their size, she warned.
“You inevitably need to partner with other companies to achieve true digital transformation quickly. Just make sure those companies share your standards for quality and control, even if they are very small,” she said.
It’s clear that any digital transformation effort comes with inherent risk. But by strategizing, securing the right people for the job and being open to discovery, you can make that risk feel like just another step in the process.
Need guidance and tips on navigating digital transformation? Find the latest insights from Crowe on all stages of your digital transformation journey.
