Why Digital Transformation is on top of the CFO’s mind today?
By: Dipesh Pattni
Tags: Digital Transformation, Digital Strategy, Change Management, Digital Marketing

OpenText CEO Mark Barrenechea

Businesses today, more than ever, expect a blueprint to success. By asking the right questions, helping with planning and offering advice along the way is the way to go.

Technology adoption is critical for an organization to evolve and increase value to customers. More than 90% acknowledge that their existing processes and systems are redundant, inefficient or lack capabilities.

Technology costs and enhancing productivity are key performance indicators on your CFO’s radar.

According to McKinsey article, the 3 most noted barriers are culture, organizational structure and governance. In my experience, culture is the most important and can make or break any transformation.

Let’s begin with an easier explanation of your organization’s digital transformation. It is simplification of back-end processes allowing for low complexity and faster adoption by the team. Leaders need to get their version of digital nailed down. What exactly do you want digital to include? Is it going paperless, analytics, business intelligence, AI tools or omni-channel to your customers? Only when the proper definition has been established, can the team rally behind the objective.

“COVID-19 has wiped off almost $500 billion of worldwide DX technology investment between 2020–2023 from pre-COVID forecast.” Eileen Smith, Program Vice President at IDC.

The silver lining is that DX transformation spending forecasts global spend to grow 10.4% in 2020 to $1.3 trillion.

Tangible benefits are operational efficiencies, improved collaboration and customer engagement. I prioritize all digital initiatives on a value/competency matrix. While it is a challenging exercise there is clear benefit of having one strategic priority. Based on my experience, set aside other initiatives that don’t directly benefit the one priority.

Value matrix measures on an X-Y basis (low to high) — external vs. internal. External value measures how important is an initiative to customers. Internal value measures how critical is an initiative to the team and partners.

Competency Matrix measures on an X-Y basis (low to high) — capacity vs capability. Capacity measures whether the team has bandwidth to see-through the initiative to the finish line. Capability measures the team’s technical knowledge to understand total risks and effectively mitigate them.

Finally, once I overlay both matrices, there will be 4 quadrants of initiatives. Quadrant 1 (top right and moving counterclockwise) is for strategic initiatives. These are actions taken for long term benefits and building a moat around the business. Quadrant 2 and 3 are for parking lot where initiatives are placed on hold or to reconsider. When there isn’t a direct connection to the strategic priority, actions should be parked here. Quadrant 4 is for those initiatives with internal and external value, that can be tackled immediately. These are sometimes called the low-hanging fruit with a quicker risk-reward.

The bottom-line here is to evaluate your priorities before embarking on this journey. Digital transformation is breaking down old habits and forming newer methods — it is not for the faint of heart.

Most companies have been working on a digital transformation strategy or are already in the middle of one. This is first of three articles to help executives with creating a blueprint for digital transformation and execute it if one is already in place. Here is a link to my next article https://lnkd.in/g3Bx_vj