What a company should look like before considering digital transformation

Reality: technology anchors and millions in losses

Four Signs Your Company Is Not Yet Ready for Digital Transformation

Lack of a process-based approach to management

Blurred areas of responsibility for IT systems

Undeveloped hiring and employee-development processes

Which Company Is Ready for Digital Transformation

A business enters transformation dreaming of a bright digital future, but without understanding exactly how — in numbers and processes — specific technologies will benefit it.

At KT.Team we have taken part in the digital transformation of many organizations. I have studied this process both through an IT lens and, as a business owner, through a management lens. In this article, I,

Andrey Putin, CEO of KT.Team. I will describe a set of criteria that help you tell whether your company is ready for digital transformation and what to fix to get the most value from the technologies you implement. Everything written in this article has been confirmed in practice many times, both by our own experience and by the observations of executives at large firms worldwide.

From a process-based perspective, a company is a set of interconnected business processes: from the core process down to execution-level processes ("pick up – sign – hand over").

If your company's processes are documented — in BPMN notation or mind maps — then you, as a manager, get a clear and transparent tool for management and control.

Employees, too, better understand their tasks and the sequence of actions within each process.

When processes are not documented, you run into the following bottlenecks.

Long, useless meetings and instructions.

Managers and staff cannot run work procedures in a common language and cannot reduce the small details of a project into simple, clear diagrams. Because of this, discussions on any issue drag on for days, and the total volume of instructions runs into thousands of pages. For example, take the task of checking that equipment works.

This is just one of hundreds of business processes in a company, but in an organization without process management it will be presented as a 15-page instruction.

The executive wants to speed up time to market but doesn't know where the bottleneck in the process is or how the process unfolds step by step.

So instead of a concrete improvement, the project team will pick some market-popular "mass-effect silver bullet" like a PIM system. In the end, the task "speed up time to market" gets replaced by the simpler, clearer "implement a PIM system."

For a year the executive will receive upbeat reports on the rollout and keep signing new invoices. And the time to market will, at best, stay the same.

With a process-based approach, launching a new product is a business process broken into specific stages with clear timelines and clearly defined areas of employee responsibility.

Such a business process makes it possible to make concrete decisions.

Companies without clear business processes and areas of responsibility have no transparent efficiency criteria available to all departments, no clear metrics and no collection methods.

Instead, there are overcomplicated BI or DWH systems: analytics is needed, and if it is hard to read, you collect even more data and group it in every possible way in search of patterns.

But because the data-collection process is complex and the methodology is opaque, these systems are not widely used.

They only give a false sense of control instead of real value.

Digital transformation can speed up data collection, but the organization must already have a habit of collecting and analyzing information with a clear purpose. The simpler and more transparent the collection and analysis methods are, the better.

To sum up, let's briefly list the signs of an organization able to benefit from the latest technologies without losing money.

Managers can reduce project details into simple diagrams and make decisions based on the real needs of the business.

Thoroughly designed hiring and employee-development processes steadily fill the staff with qualified people.

A transparent organizational structure.

Areas of responsibility are clearly divided between departments, raise no questions and provoke no conflicts.

Managers clearly understand what they are responsible for and carry out the matching tasks. For example, at KT.Team we use the Hubbard organizing board for this.

Simple, clear metrics for every department.

Every employee understands how their performance is measured and how to improve it.

Analytics is organized as simply as possible.

Leadership and managers fully understand why the business needs digital transformation and how it will help the company fulfill its mission. After reading this article, you may realize your firm is not yet ready for digital transformation. And that is a good thing.

Better to realize this before the slick websites of IT products and the generous promises of IT integrators make you trade your far-from-spare millions just so someone can put on an impressive conference talk about your case.

Take a pause to build out processes and develop metrics.

It will take a little over a year, but afterwards the level of micromanagement will drop noticeably.

It will be replaced by a clear understanding of which direction to move in, what results to achieve and how digital transformation will help.