A business-led approach to maximise value of digital transformations

Contributors: Maria Aunsholt Storgaard, Maya Kousholt Schmitt, and Annie Gisslen

In our experience, transformation is a critical enterprise capability for organisations to be able to navigate in their industries. However, many are failing to realise the expected value from transformations, especially when they are enabled by technology. In this series of six articles, we will address the fundamental themes to promote a lasting, positive impact when pursuing a business-led digital transformation. 
 

KEY TAKEAWAYS

• As IT departments have increased their ability to deliver digital solutions at speed, the wider organisation has struggled to keep up. As a result, organisations end up with a graveyard of different digital solutions that do not necessarily deliver on business needs and which business users have struggled to adopt
  
• A business-led digital transformation requires a balance between technology and business perspectives to ensure organisations can realise expected business value from new digital solutions
  
• A business-led digital transformation considers how the technology must work to support the business and what processes, organisational structures, and capabilities must work in alignment with the technology to achieve business goals

BUSINESS-LED DIGITAL TRANSFORMATION REQUIRES A BALANCE BETWEEN A TECHNOLOGY- AND BUSINESS-LED PERSPECTIVE

A Deloitte survey from 2022 (Survey: Chief Transformation Officers | Deloitte US) show that organisations transform for a multitude of reasons including expanding, re-imagining, and/or optimising their business.

Figure 1: Reasons why organisations transform (Survey: Chief Transformation Officers | Deloitte US)

Common to most transformations, irrespective of the reason, is that technology and digitalisation are core enablers. However, many of these transformations are unable to realise the expected business value. Over the past several years we have observed an increasing maturity of IT departments and their ability to deliver digital solutions to the business at speed. However, the wider organisation has not been able to keep pace and consequently the business-led agenda has been lost in IT implementations. The result being that organisations end up with a graveyard of different digital solutions that do not necessarily deliver on business needs and which the wider business has been unable to adopt. 

We continue to observe several fundamental challenges across organisations’ digital transformation journeys, which hinder the realisation of the full potential of business benefits from technology investments:

• Transformations lacking an aligned vision and ambition across Business and IT
• Transformations lacking joint ownership by Business and IT of significant business decisions
• Transformations lacking investments in end-to-end business and operating model design in addition to the digital solution design (including the business processes, organisation design, governance, and data)
• Transformations lacking change management efforts required to support stakeholders in buying into the benefits of simplification, automation and harmonisation which comes with new technologies
• Transformation programs lacking the multi-disciplinary competencies required to deliver a digital solution fit for business purpose
  
  "A business-led digital transformation does not just consider how the technology must work to support the business but also what processes, organisational structure, and capabilities must work in alignment with the technology to achieve business goals.”

As such, a digital transformation requires more than an A-to-B roadmap. It requires an integrated approach to linking strategy with executional discipline to unlock the full potential, and it requires a balance between a technology- and business-led perspective. A business-led digital transformation does not just consider how the technology must work to support the business but also what processes, organisational structure, and capabilities must work in alignment with the technology to achieve business goals. Furthermore, the business perspective is embedded alongside the digital perspective in operational decision making on where to invest in customised digital solutions (best-in-class) versus where to invest in out-of-the-box standard digital solutions (best-in-cost). Hence it ensures that investment decisions are channelled to high-value transformation components.

BUILDING BLOCKS OF THE BUSINESS-LED DIGITAL TRANSFORMATION

The Business Architecture Pyramid showcased in Figure 2 depicts the different architectural layers of an organisation including its strategy, business model, operating model, and enabling technologies.

Business-led digital transformation has both the operating model as well as the enabling technology and infrastructure as its primary focus. The operating model is inextricably linked to the business model and bridges the gap between strategy and execution. Consequently, when delivering a digital transformation, it is important for organisations to consider all key building blocks of the operating model beyond just the technology and applications, including Governance, Processes, Talent, and Data. Considering all the building blocks from the beginning, and throughout, ensures digital solutions ultimately deliver on the overall strategy and will help maximise value delivered.

Figure 2: Business Architecture Pyramid

BENEFITS OF TAKING A BUSINESS-LED APPROACH TO DIGITAL TRANSFORMATION

From observations and experiences with small and large clients across industries, taking a business-led approach to digital transformation provides the following benefits:

• De-risking the investment – Ensuring that investment decisions are channeled to high-value transformation components
  
• De-risking business performance gaps – Creating a clear, operationally anchored transformation roadmap that ensures operational impact is well understood and aligned across the organisation
  
• De-risking the transformation – Delivered by an end-to-end understanding of the operations that the technology must support and help transform

THE KEY TOPICS COVERED IN THE ARTICLE SERIES
To realise the full potential of a digital transformation, and bring the Business agenda back into IT implementations, fundamental themes must be considered before initiating the transformation. In this series of articles, we will present and discuss five key topics, which combined give organisations pursuing a business-led digital transformation, the best chance of a successful transformation with lasting impact:

• Setting the direction for a business-led digital transformation
• Configuring the transformation roadmap using the capability model
• Designing fit-for-purpose solutions that deliver on customer and business needs
• Orchestrating complex transformations
• Maximising value from the transformation

Read the remaining articles in our series on business-led digital transformation:

• Article 2: https://www2.deloitte.com/dk/da/pages/strategy-operations/articles/Setting-the-direction-for-a-business-led-digital-transformation.html
• Article 3: https://www2.deloitte.com/dk/da/pages/strategy-operations/articles/Configuring-the-transformation-roadmap-using-the-capability-model.html
• Article 4: https://www2.deloitte.com/dk/da/pages/strategy-operations/articles/Designing-end-to-end-solutions-that-are-fit-for-purpose.html
• Article 5: https://www2.deloitte.com/dk/da/pages/strategy-operations/articles/Orchestrating-complex-transformations.html
• Article 6: https://www2.deloitte.com/dk/da/pages/strategy-operations/articles/Maximising-value-from-transformations.html