Introduction

Achieving true operational excellence through digitalization involves ensuring that the organization is cohesive from top to bottom, encompassing its purpose, vision, and everyday work processes. Picture the organizational structure as a triangle divided into four parts, with a fifth part representing the IT systems. These parts must align before embarking on a digital transformation. If any part is misaligned, the results can be disastrous, so let’s explore the potential outcomes here. This article will guide you through the essential steps for alignment to achieve operational excellence. First, take a moment to identify the steps you’ve already taken and document them. For any missing steps, define, identify, and write them down systematically.

Model of how IT-systems must connect to each level of an organizations structure.

5-step guide to avoid budget overruns and frustration in digital transformation

Step 1: Identify or Define the Vision and Purpose

The top of the organization’s purpose is usually expressed through a vision statement. This statement explains why the organization exists and what it aims to achieve. Without a clear vision, the organization loses direction. For instance, Volvo Cars’ vision is ”No one should die or be seriously harmed in a Volvo.” This statement shows their goal and brand values. It should be everywhere in the organization, and managers should be able to explain it clearly. If the leaders can’t express the vision, it’s hard for lower-level employees to work towards it.

Step 2: Define Principles and Behaviors to Foster a Culture

The second part of the triangle focuses on how people should act to achieve the organization’s vision. For example, Volvo’s product development should follow the principle of making the safest cars possible, which is reflected in their marketing by prioritizing safety. Other principles might include continuous learning, often supported by HR strategies to provide ongoing education, or lean manufacturing principles aiming for constant improvement and eliminating waste. There’s only one vision, but multiple goals for principles and behaviors can exist, all designed to support the organization’s purpose. These principles can be articulated as clear statements like, ”People should always learn” or ”Our manufacturing team should always be able to suggest improvements and be taken seriously.”

Step 3: Establish Management Systems

The third step is to figure out or find management systems that match the company’s culture. These systems need to match the company’s values and actions to keep people trusting and doing what they want. For instance, if the company wants to cut down on things like delays and mistakes, the management system should help make those things happen. Make sure these support systems are found, written down, and shared with everyone in the company.

Step 4: Identify or Define Ways of Working

To make sure everyone in the company knows what we’re doing, let’s start by figuring out the main processes. These processes should help us achieve our goals and make sure we’re on the right track. One common mistake is to get too caught up in the details and miss the big picture. So, let’s set clear goals for each process that support our vision and align with our leadership values. This way, we can make processes that are easy to understand and follow, without being too complicated. Check out this blog post for more info on processes.

We should define processes at a high level so that management can understand them without getting bogged down in the details. The goal is to manage the organization efficiently, not to micromanage every little thing. So, let’s outline the main steps in routines that support the people who are doing the work. These routines should be detailed enough that a new person can understand and do their job well.

Sometimes, the perfect process we dream of might not be possible because of our current IT setup. In those cases, let’s still try to create that dream process, no matter what. One way to do this is to set a specific time frame, like six months or a year, for when the process should start being used. This helps us avoid ideas that might only work in a decade or so if technology changes. But it also gives us time to make big improvements.

Another common mistake is for management to create processes and then force them on everyone else. Instead, let’s involve different parts of the team in the process. This way, we can make sure the processes are accurate and actually work in real life. As we’re working on the process, keep an eye out for any improvements. The people who actually do the work often have great ideas for how things can be better. And don’t forget to involve managers to make small changes that we can do right away.

Testing the quality of a process

I’m not sure if your process is up to par. Here’s a way to test it using a real-life example:

1. Pick a Real Scenario: Choose a situation that actually happened and should go through the process.

2. Break it Down: Write out the scenario in as much detail as you would for a regular routine, including several steps for each thing you do.

3. Assign Tasks: Figure out who’s responsible for each step.

4. Make Sure it Fits: Make sure each activity in the process matches up with the detailed steps in the routine. One process step might cover several detailed steps.

5. Check it Out: Make sure all the steps fit within the process. If not, take a look and see where the problem is—often, it’s in the process design.

By following these steps, you can make sure your processes are thorough, practical, and in line with your organization’s goals.

Step 5: Using Processes to Create High-Level Requirements for Digitalization

When processes are top-notch, supporting the vision and in sync with leadership systems, it’s time to put them to use for gathering requirements for digitalization. Before we dive in, let’s make sure the improvements we’ve identified are in place and that they’re the best we can do. We want to create a ’dream process’ that’s aligned with our goals.

Here are some steps to gather requirements using processes:

1. Walk Through the Process: Take a step-by-step look at each process, maybe even adding detailed steps for each activity.

2. Identify IT Functionality Needs: Determine what IT functions are needed or wanted to complete each activity. Some activities might not need any IT support, while others might need a lot.

3. Document Requirements: Write down each requirement in relation to its activity. This documentation will be super helpful for testing and evaluating the new system.

4. Address Information Requirements by Identifying Data Needs: For each activity in the process, figure out what data or information you need. This info is crucial for creating data models and making sure the new IT system meets all your informational needs. Make sure the required info matches what the new IT system provides. Also, make sure your organization’s vocabulary matches the IT system’s terminology. For example, the word ’order’ might mean something different in your organization compared to the IT system, so it’s important to figure that out and address it.

Practical advice

Here are some key steps to creating a comprehensive set of high-level requirements for your digital transformation project:

1. **Identify and Document Future Needs:** Go beyond the immediate requirements and anticipate what your organization might need in the future. This foresight will help you design a system that stays relevant as your business evolves.

2. **Gather Feedback and Continuously Improve:** Collect feedback from stakeholders and continuously refine your processes and requirements. This ensures that your digital transformation stays aligned with your organization’s goals and adapts to changing needs.

By following these steps, you can create a clear roadmap for your digital transformation project. These requirements could take the form of user stories or any other format that works best for you. They can be used throughout the project to guide your team and ensure a smooth transition from concept to implementation.

Conclusion

Implementing new IT systems can be a costly and frustrating experience. The main reasons for this are often poor alignment in the early stages and unrealistic expectations. Usually, the problem is with the organizational structure, which should be addressed first. Adding IT on top of organizational improvements is what really creates operational excellence, making the business better.

Here are some common reasons why IT projects fail:

1. **Lack of a clear vision and purpose:** Without a clear idea of where you want to go, it’s hard to stay on track and make sure everyone is working towards the same goals.

2. **Inconsistent principles and behaviors:** If different parts of the organization have different rules and expectations, it’s hard to create a culture that supports the new systems.

3. **Weak leadership:** If the leaders don’t support the new culture and processes, it’s hard to get people to buy in.

4. **Confusing processes:** If the processes are too complicated or not clear enough, it can be hard to implement the new systems.

5. **Not gathering enough information:** If you don’t gather enough information about what people need and how they use the systems, you’re likely to end up with systems that don’t meet their needs.

Grasping these root causes is the key to building a solid foundation for your digital transformation.

Aligning IT systems with the organization holistically is key to a successful transformation. But just knowing the steps and their importance isn’t enough; executing them properly is the real challenge. But don’t worry, we are here to help.

Digitally transform your business - step by step