How can I guarantee a ROI after a digital transformation?
First things first, let’s cease use of the term digital transformation. I prefer a much more appropriate term: digital evolution. The word transformation implies a beginning and an end. In today’s break-neck pace of technological growth, you need to be able to evolve your plan even as you are executing against it. Failure to embrace this discipline is one of the many reasons for the perception of failure in digital transformation. To guarantee ROI, you must break things down into meaningful, digestible phases that can be delivered more frequently than once a year. You must also take the time to carefully define the KPIs you will use to measure progress over time. Failure to do this important step is the equivalent to taking a cross-country journey with no GPS or a compass. You can’t predict what will impact your journey, but you can be damn certain that something will disrupt the team. Without a compass to keep you on track, it’s easy to lose control of the entire program.
Second, to ensure your program delivers ROI, you must be willing to let go of your preconceived notion of how things are going to happen. Traditional delivery managers, project managers and the like, love to stake down a plan and then stick to the requirements as if their life depended on it. Modern delivery teams MUST remain flexible in HOW things are achieved and even WHAT things look like in the end. What matters most is the outcome(s). Did the new product bring in new customers? Was the company able to shed overhead while growing? Did a new product enhancement address your customer’s concerns in a measurable way that benefited the business?
This may sound obvious, but think carefully about how you are defining the term investment when calculating a Return on Investment (ROI). If you are truly planning an enterprise-wide digital transformation, then it’s going to look more like a portfolio of investments than a single investment. This is often the biggest mistake people make. Like an investment portfolio, an operational portfolio of projects and their respective investments need to be managed. Ideally, this is a centralized function. The key to guaranteeing ROI in digital transformation is through a matrix delivery structure combined with centralized governance. Through this framework, each sub-set of your program (or portfolio) will have a projected and actual ROI. By managing the components of your program and not just the whole, you are able to deprioritize, abandon or modify in order to keep the financial health of the overall effort healthy.
Change management is still important. Sticking to a budget and managing scope creep is still expected, but tradeoffs are allowed. Regular prioritization and re-prioritization is encouraged. The best delivery managers in digital transformation initiatives will continuously challenge their team’s beliefs as well as their own in an effort to find the best way forward.
Finally, make sure you are measuring as you go. Every incremental step of the way should be measurable. If what your team is doing doesn’t provide measurable benefit to the business then it should directly enable something that does.