Given all the attention that “digital” is getting at the moment, you would be forgiven for thinking that it is somehow new. In fact, the relentless drive to embrace digital technologies has been ongoing for many decades.
What also seems to have been forgotten are the lessons from these earlier attempts to leverage IT (remember that IT is a digital technology). Unfortunately, the history of IT investments in most organizations is far from stellar: Research over the years suggests that the overall failure rate of IT projects is around 70%. We know that when IT projects fail, it is usually not because the technology didn’t work (although this can sometimes be the case), but because the changes required at an organizational and employee level weren’t managed effectively. Quite simply, adding technology does not automatically confer expected benefits; these benefits have to be unlocked and this can only happen through achieving organizational changes.
Consequently, it is useful to think about investments in digital as essentially investments in change. It includes changes in how an organization interacts with its customers, citizens, or patients; in operational processes; in business models; in supply chain relationships; and in how employees use information to generate insight.
One tool that I have used to great effect to improve the likelihood of a successful result from digital investments is the benefits dependency network (BDN). This tool seeks to get managers to identify and map all the changes that they will be required to make if expected benefits and outcomes are going to be delivered. It also illustrates very clearly how this change will be enabled and shaped by digital technologies. The resultant network shows how each of the expected benefits will be delivered through a combination of technology and business changes and how these are related to each other.
To develop a BDN, you work backwards, or right to left, from the agreed investment objectives and the expected benefits, and map the required changes to structures, processes, work practices, and how staff would need to work through to the new technology necessary to enable and sustain those changes. To ensure the digital transformation initiative has momentum, the investment objectives should be closely aligned to critical business drivers.
Doing this ensures that digital investments are driven by business demand, shown on the right-hand side of the network, rather than technology on the left, which has traditionally steered many projects. The heads of the arrows between the network elements signify the direction of relationships. The technology, for example, enables the changes that must happen before other changes can occur or can shape the changes leading directed to achieving the expected benefits. If those linkages cannot be developed, then those investments should not be pursued.
Changes can typically be catesgorized into two types: sustaining change and enabling change.
Sustaining changes are permanent changes to working practices, processes, or relationships that will cause the benefits to be delivered. They cannot normally be made until the new IT system (e.g., devices, software, infrastructure) is available for use and other necessary enabling changes have been made. Enabling changes are typically one-off changes that are prerequisites for making the sustaining changes or bringing the new system into effective operation. Examples include defining and agreeing on new work practices, creating a blueprint for business processes, agreeing on changes to job roles and responsibilities, establishing new performance-management systems, training in new business skills as well as the more obvious training and education in using the new system, and so on. They often have to be made before the new digital system is introduced.