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The essential digital strategy guide for businesses

How to succeed with digital transformation

Published: June 24, 2024
Updated: June 24, 2024
Guide

Change is constant; disruption is inevitable. 

What success looked like for a business just five years ago is very different from what is required to be front of the pack today. Employees want to work at an organization that enables innovation, while customers want seamless, leading-edge user experiences and satisfaction. Similarly, shareholders and board members want organizations to discover new value creation opportunities, beating competitors to the Next Big Thing.

It’s simply no longer feasible to use manual processes and out-of-date technologies. To meet the demands of stakeholders and maintain their position in the market, businesses need to make digital transformation a priority. Without it, they will begin to lag behind their competitors, and risk negatively impacting their employees, customers, shareholders, and boards alike.

What is digital transformation, exactly? 

To fully understand digital transformation, it’s important to first distinguish between digitization and digitalization. While these two terms are often used interchangeably, there are key differences between the two which both play a part in the larger concept of digital transformation. 

  • Digitization involves converting analog or paper-based data and processes into digital formats. 
  • Digitalization uses digitized information to evolve the business via new value creation opportunities. 

So, where does digital transformation come in? 

Digital transformation builds on both digitization and digitalization, and is the integration of technology throughout the organization to fundamentally transform the way the business operates and delivers value to customers. However, digital transformation is not solely a technological initiative – it also involves a cultural shift. Successful digital transformation at scale requires the people within an organization to be open to change and disruption, and learn new ways of providing value and finding efficiencies to move the business forward.

Digital transformation or digital journey?

For many organizations, digital transformation is an ongoing digital journey. Transformation isn’t a one-and-done process. It can take years, involve multiple smaller digital initiatives, and keep evolving as the needs of the organization change.

The digital journey looks different in every organization based on their current digital posture, future goals, and value creation opportunities. While some organizations are still embarking on larger, holistic transformations, others are looking to use technology to optimize their processes and create efficiencies.

For example, switching to a cloud environment from an on-premise one is a major transformation many organizations have taken over the last decade. Going forward, one of the most common digital initiatives we expect to see is the integration of generative artificial intelligence (GenAI) within business systems.

Regardless of what your organization’s digital journey looks like, it’s imperative to begin with a digital strategy. Without one, businesses are doing the equivalent of driving a race car full tilt while blindfolded, without a map or a destination – never having taken any driving lessons.

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Why do digital journeys fail?

Digital strategies are a necessity because the vast majority of digital initiatives fail to reach their stated goals. Before investing in a digital journey, it’s worthwhile from a risk perspective to understand the major reasons why failure occurs. While it almost certainly results in a loss of capital or revenue, failure can also mean a loss of time, talent, creativity, and reputation. When a digital initiative doesn’t go as planned, your organization ultimately loses its competitive edge. 

Why is there often a disconnect between IT teams and those who run the business?

One of the most common digital transformation pitfalls is a lack of alignment between the IT team and the operations team. The source for this issue is likely a historical one. Decades ago, when IT first emerged as a field, it was a purely tactical role. IT professionals managed servers, dealt with hardware, and managed software. Today, IT leaders are strategic enablers who initiate and drive technology choices, focus on the long-term goals of the business, and manage the critical ecosystems that support their organization.

IT teams need to have a seat at the strategic decision-making table and be present for all major business decisions. Why? All major business decisions have IT implications. 

IT professionals have long since moved past the role of keeping the lights on and the servers running. Their role has an impact on the strategy, processes, and people of the business.

Digital transformation pitfalls to avoid

Here are some of the common digital transformation mistakes to avoid. What you’ll find in common with all of them is that they all veer away from a digital strategy – thereby negatively affecting a successful digital journey.

This is a problem every industry experiences. Organizations decide to embark on a digital journey because they are impressed by a new technology. (How many businesses can you think of that implemented artificial intelligence without thinking of the bigger picture?) These types of initiatives fail to tie the use of that technology to the company’s business objectives. As a result, the investments into the technology don’t yield the desired return.

Having a clear vision of the future state for your organization and the guiding principles to get there is a fundamental part of building a digital strategy. However, when there is no consensus among the central leadership of the business for what the future state should look like, there is no final destination for the digital journey. In cases like these, organizations have no way to determine whether the project is successful because they don’t know what they are aiming for.

It’s one thing to successfully implement a digital initiative; it’s another to ensure your people adopt it. Many organizations struggle to understand the importance of change management and assessing the people-related risks within a digital journey. It’s important to address whether your people are receptive to change and whether they understand why it’s happening.

Does the organization have a way to make decisions regarding competing priorities through the lifetime of its digital journey? Some digital initiatives take years to complete. However, when organizations don’t have a decision-making framework, the journey can easily go off schedule and off budget, and fail to reach its goals. 

Measuring success is necessary to recognizing it. If your organization hasn’t identified key performance indicators, it will be impossible to know whether your digital initiative has reached its goals. KPIs can vary from organization to organization and depend on the key objectives the business is trying to achieve.

The high rate of failure in digital transformation projects could cost your business in the tens or hundreds of millions of dollars, not to mention halt your progress amongst your competitors. Minimizing the chances of failure begins with developing a clear and focused digital strategy.

What is digital strategy? The essential elements

A digital strategy is the method by which organizations determine goals, evaluate risk, assess limitations, identify needs, and pave the way for a successful digital journey. 

Consider your strategy like a digital transformation roadmap – a resource that tells you where you need to go, which turns you need to make, and which traffic jams you need to avoid. A digital strategy enables a successful digital journey because it provides a framework that prioritizes your organization’s key business objectives above all else, ensuring you don’t get distracted by the next new technology innovation and instead focus on using technology as an enabler of your business goals. 

Having a clear digital strategy as a starting point for your business transformation is critical—it’s the blueprint that ensures your tech investments are in sync with your business objectives.
Darryl Stock
Sr. Manager, Digital Strategies Lead, BDO

At BDO, our team guides organizations through their digital journey by developing a digital strategy comprised of five key stages: Discover, Assess, Art of the Possible, Validate, and Plan. Designed to maximize your return on your investments, we begin with a focus on big-picture thinking, and end with highly tactical action items.

The first step in a digital strategy is to align the vision of the organization’s leadership team and understand the ideal future state. This is where your business puts a flag into the ground and declares where it wants to go. It’s also during this stage that the organization develops its guiding principles, which are the criteria for decision-making throughout your digital journey.

Once your organization has decided where it wants to go, it’s time to figure out where it is today. This stage involves both the functional and technical leaders of the business. Together, they assess two key areas:

  • Functional state: How do the functional departments of the business, such as sales, marketing, and customer service, leverage technology today? What processes are supported by that technology? What data is required to make decisions? What opportunities do we have for improvement? These are the questions we help organizations answer during this stage.
  • Technical state: How does the technology in the organization support the functional needs of the business? In this assessment, we look at the integrations, data, and reporting as it relates to systems and resources within the organization.
The outcome of this stage is a digital maturity evaluation, which includes five possible stages in relation to different areas of the business, such as strategy, people, processes, data, technology, and governance: 
  1. Initial
  2. Improving 
  3. Developed 
  4. Defined
  5. Mature 

Throughout the Assess stage, organizations learn more about their current state in order to determine how far they have to go to reach their ideal future state. 

In this stage of your digital strategy, it’s time to identify the key focus areas of the organization based on its needs, current state, and future goals. 

When defining the art of the possible, it’s critical to think collaboratively – combining leadership, functional, and technical expertise – and determine which areas should be prioritized in the digital journey. The organization’s thinking will be pushed to explore different ways it can best use new technology to speed up operations, find efficiencies, enable innovation, and achieve other objectives. 

While the previous three stages of the digital strategy are highly strategic, the following two are more tactical in nature. 

In the Validate stage, the organization clearly defines the business cases for the key focus areas it has chosen. Our team works with you to validate the potential return on investment (ROI) for each specific initiative, determine the time it will take to realize those benefits, and develop the benchmarks for success. 

At the end of this stage, your organization will have further prioritized what it wants to do first by looking at the potential impact and ease of implementation of each initiative. 

The last stage of the digital strategy offers a highly tactical, actionable plan to move forward with. Together, we develop project charters for priority initiatives, which include six key areas for implementation:

  • Who is responsible for the initiative
  • The investment required
  • The expected timeline associated with the priority initiative  
  • Key activities and milestones 
  • Associated risks
  • Measures of success
As a result, your business can prioritize resources for each digital initiative. The final result is a detailed digital transformation roadmap with practical elements to begin implementation.

A business-first approach to digital strategy

BDO’s Digital Strategy team takes a business-first approach that uses technology to enable what an organization is trying to achieve. All too often, organizations start by looking at the technology available without considering their business objectives – which inevitably leads to failure. By bridging the strategic divide between technology investment and corporate objectives, your business can create value in new ways while remaining ahead in your industry.

Case Study

Canadian mining company increases ROI by 10x through their digital journey

Our Digital Advisory team developed an IT roadmap for a Canadian mining company with 4x growth aspirations over the next three to five years. This organization had seen double-digit year-over-year growth for two consecutive years, but their industry and sustainable growth future was in a state of flux. Manual processes, fragmentated and underutilized systems, and a lack of standardization were some of the internal challenges they faced. 

We established the blueprint to enable the standardized, scalable growth of their business, with 13 key priorities. Over a period of 26-38 months, we helped this Canadian mining company increase their ROI by 10x, with a net impact of between $50 -$66 million.

The impact of a successful digital strategy

According to research conducted by BDO Digital in our recent Techtonic States report:

81% of business leaders identify technology as the critical enabler of organizational strategy.
84% assert that their survival hinges on accelerating technological innovation.
For every $1 invested in technology, organizations could increase revenue by over $18.

How to enable a digital strategy: digital transformation success factors

Establishing your roadmap for the digital journey ahead helps ensure the organization’s business objectives are aligned with its technology spend. In order to get the full benefits of your digital strategy and maximize its potential, there are several best practices your organization should take into account.

Develop a strong governance model for decision-making

In most organizations, digital transformation projects can take between one to three years. Inevitably, conflicting priorities and new ideas will emerge during this time period, and it’s vital to find a way to manage those issues. Without a governance framework in place, an organization’s decision-making becomes inconsistent and unreliable, causing the digital journey to veer off the roadmap. 

A governance model enables the progression of digital projects from initial idea generation, through assessment and prioritization, and on to implementation and performance management. It needs to be in place in the earliest stages of your digital journey.

While governance models can differ from business to business, the following elements can help enable effective decision-making and prioritization:

Governance begins with an idea for a digital project or initiative that aligns with business goals.

The role of the sponsor is to pressure-test the idea and provide executive support throughout the process.

This group helps the organization work through the priority scorecard and business case development to determine if the idea has merit.

It’s vital for executive leadership, including functional executive leaders, to provide buy-in.

The organization must ensure from the start that it’s addressing people-related risks with regard to awareness and desirability for change. 

This element is about how an organization manages its resources, according to the established metrics, throughout the life of the project.

After passing each step, the digital initiative can be scaled across the organization.

Manage organizational risks with an effective business operating model

When discussing the post-transformation state of your organization, it’s vital to have an operating model that will ensure all needs are met. A common mistake is developing a new organizational structure without fully considering what the company will require in its future state. 

Designing the future-state operating model for your organization is one of the most important digital strategy success factors. Each of these components needs to be considered:

clipboard checklist
Services
What are the new or existing services to be provided and to whom/where will they be provided?
hand and check boxes
Capabilities
What skills and activities are required in offering these services?
gear and lines
Technology and sourcing
What technologies or tools are required to enable these skills and activities, and how are they sourced?
phone with tools
Organization structure
What are the functions required to effectively deliver the service?
gears and arrows pointing up
Governance and metrics
What are the parameters of making decisions, and how is success measured?

By answering these questions, organizations can effectively develop the right structure for their future state.

Our approach to change management is relatively simple—the focus is always on adoption, driven by understanding awareness and desirability and developing the plan from there.
Darryl Stock
Sr. Manager, Digital Strategies Lead, BDO

Mitigate people-related risks with a strong change management plan

A recent Gartner study shows that a mere 34% of change initiatives are successful, with the rest failing for a number of reasons. While digital initiatives can support employees by enabling automation, improved efficiencies, and innovation, your business cannot guarantee success without a strong change management plan in place.

Throughout a digital transformation, adoption is one of the most critical goals. Achieving this starts with understanding two key areas:

  • Awareness: How much do your employees know about the digital initiative?
  • Desirability: How much do they want the digital initiative to happen?

Based on the answers to these two questions, your organization can develop and adjust change management practices related to communication and training.

Learn more about our tried-and-tested approach to change management
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How BDO can help

The Digital Strategy team at BDO bridges the gap between business and technology, providing guidance on when and where to invest in digital initiatives that will help you achieve your business objectives. 

We bring a breadth of expertise in areas such as data, systems, cybersecurity, automation, and processes, as well as in-depth knowledge and experience with a wide variety of solutions, including Microsoft, AWS, Oracle, and more. Having worked with hundreds of clients in technology, consumer business, manufacturing, not-for-profit, and other industries across Canada, we have extensive experience providing businesses with a pragmatic approach that delivers results.

Whether you want to make a holistic digital transformation or undertake a digital jumpstart in one area of the business, we begin by taking a practical approach to understanding your needs, before developing a roadmap that focuses on driving ROI for your investments. We understand our clients have unique and complex challenges, and work to make them feel heard and respected.

Here’s how our Digital Strategy consultants work:

Align
We align your company’s investments in technology and automation to your overall business objectives.
Prioritize
We assist with the prioritization of your company’s technology investments to ensure financial budgets are met.
Maximize the return
We enable you to extract the expected ROI from all technology solutions.

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Reach out for a free consultation

Our Digital Strategy consultants can help set your organization on the right path to digital transformation. Contact us for a free initial consultation.

Sam Abdulrrazek, Partner, Digital Advisory 

Darryl Stock, Senior Manager, Digital Advisory

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