How to set up digitalization in a structured way, steer it in a targeted manner and implement it successfully (Part 3)

Digitalization experienced a significant boost due to the coronavirus pandemic. But how can companies successfully set up and steer digitalization and realize sustainable results?

These questions are the focus of our three-part series of articles. After explaining how to structure, as well as set up and steer digitalization in our first two episodes, we will now look at anchoring and dynamic further development.

Setting the course for digitalization – Where to start? And how to go on?

Often, the intention to intensively digitalize a company can be faced by a highly fragmented, unstructured initial situation: While some functional areas are still waiting for the kick-off, others have already started or even realized initial results. The first step is therefore to add structure, to then draw up a coordinated plan and launch appropriate initiatives (or, if applicable, "rope them in"). Appropriate steering needs to be set up when realization starts to achieve initial successes in a targeted way. Then, systematic set up, implementation and steering of corporate digitalization must be established permanently.

Digital case history: What is the status of digitalization in your company?

To systematically start or realign your corporate digitalization, the status quo and past development must be properly recorded. A framework should be used so that the analysis phase can be kept short and directly usable results can be produced. A split into Value Levers and Enablers has proven to be good practice (see part 1 of our series): Existing initiatives are allocated to the Value Lever or Enabler categories and evaluated. This provides transparency which can then be used to make initial statements on the consistency of the portfolio of initiatives regarding cohesiveness and fill any “developmental gaps”.

Planning the ostensibly unplannable: What will the road to the future look like?

The volatility of many environmental and corporate factors raises the question how to design a resilient plan for corporate digitalization. This consists of three aspects: compiling a roadmap based on the Minimum Viable Product (MVP), setting up and applying steering activities and “collecting” the results. These three aspects are mutually dependent: neither steering nor results are possible without planning; in the absence of steering, results are random; and where the results are not “cashed in", the economic benefits only exist on paper.

Start small and go big: Minimum Viable Product planning

An initial plan should first be drawn up traditionally, albeit on a much smaller scale: initiatives must be described down to the level of detail and their dependencies must be shown, while monetary and personnel expenses must be estimated and evaluated in relation to their affordability. This creates a type of "construction kit" for designing the initial plan.

In contrast to traditional processes, the persons responsible should however keep the MVP idea in mind: Initiatives and reasonable dependencies must be combined in such a way that a generally beneficial, stable result is achieved. On this basis, the plan should be gradually expanded to generate benefits by including additional initiatives and upgrade stages. If feasibility bottlenecks are identified during this process, alternative realization options can be reviewed – e.g. via the partner network.

This creates layered planning, with the MVP at its core. Additional upgrade stages should only be realized once the MVP has been successfully implemented. This procedure ensures that a usable result is generated at constant pace and you do not get bogged down in parallel initiatives – as often happens. At the same time, the results can be exploited early on, which also generates initial funds to secure financing for additional initiatives and upgrade stages.

Take control: Set the course for success and strike the initiatives to the finish line

At the same time as planning the MVP, the implementation and portfolio management must be set up. Modern portfolio approaches have proven to be suitable and at the same time lightweight strategies.

To begin with, all current and planned initiatives are collected, classified according to their features (Value Levers / Enablers; future-oriented, present-oriented) and evaluated (investment, person days, status). Once this basic transparency has been created, the main management processes commence, i.e. planning, regular reporting and preview processes. This must then be synchronized with financial management in order to track the investment calculation and the expected value flows. Lastly follows the "start of operations" which involves integration with the processes and occasions of traditional corporate performance management.

Cashing in on the results: How to profitably exhaust economic benefits

Once the steering of the corporate digitalization has been set up "administratively", it must be professionally applied while implementing the planned portfolio. Here, successful management is characterized by forcing ("collecting") the additional proceeds or cost savings promised in the business cases, i.e. “applying the instruments properly” does not by itself guarantee the economic success of corporate digitalization. To give an example, where extensive process transparency is created by automating suitable processes on a high-performance platform, this will only show in the result if the liberated capacities are rededicated or dismantled. This last step is often neglected – in the midst of enthusiasm for the project successes – so that no genuine digital transformation occurs.

From one-off action to routine: Continuous digital transformation

To conclude, it should be noted that the described procedure, the presented instruments, and the suggested behaviour are not one-off actions. Instead, they must be practised continually to break through the well-known "worst practice" pattern of "digitalization task forces" or other hectic catch-up measures.

The presented contents were developed during consultancy practice spanning different industries and have proven themselves in this context. If you are interested in more detailed case studies or sparring of your situation, please do not hesitate to contact us.

Dr. Burmester, L.