The boardroom of a successful organisation continuously deals with one complex challenge: which levers to pull in order to achieve various business goals? KPMG's Target Operating Model (TOM) reveals where major opportunities lie in the digital transformation of organisations. Those who implement as many market-standard cloud solutions as possible will have time left over to make themselves exceptional.
At KPMG, we see that for the majority of Dutch companies there is still a lot of ground to be gained in digital transformation. Therefore, they cannot avoid transforming their organisation to become as agile as possible. KPMG refers to organisations that achieve this state as 'Powered Enterprises'. These are organisations that constantly undergo mini transformations in all their products and processes to become more agile, faster and more efficient every day.
Target Operating Model as a filter
Being agile is the goal; becoming agile is the challenge. Being agile requires a digital foundation of an organisation that the company can build on. The core parts of the organisation are therefore best implemented according to a market standard with proven cloud solutions, because in doing so you are ready quickly and can then focus on specific, personalised processes that make your organisation unique. By doing as much 'standard' as possible, you can therefore become as exceptional as possible.
To become agile, you need a filter through which you look at the organisation. This is an 'operating model': a model of your organisation that shows you exactly which elements determine the success of your efforts. Traditional models often look at three pillars: 'Technology', 'Functional Processes' and 'People'. KPMG adds a further three in its Target Operating Model: 'Governance', 'Insights into Performance & Data' and 'Service Delivery Model'. These six all affect each other, but too often we see organisations ignoring the relationship between all aspects of the model.
Driverless racing car
We once observed an organisation that had just completed a successful implementation of a new ERP system. Or so they thought. It was as if they had bought a racing car that the driver wasn’t able to drive. This organisation's governance model had not yet been adapted to suit the new ERP, and the reports and analyses were also no longer accurate. As a result, the most important link in the chain, people, could not cope with the new system and the implementation failed completely.
A transformation has the greatest chance of succeeding if it works in as standardised a manner as possible. After all, most solutions have already been designed at some point, and KPMG is familiar with the examples. We believe in the 80/20 guideline. For most organisations, 80 percent of the tech and tools they need are available as standard cloud solutions. The remaining 20 percent? Those are the parts of the organisations that want to be different and therefore need customisation. The 80 percent market-standard solutions are crucial because they ensure that you know the implementation time in advance, and that you know what processes will look like so you can prepare your staff accordingly.
Proof of Concept
Results are more persuasive than any PowerPoint presentation a CEO can show his or her staff. To get staff on board with a transformation, it is therefore important to show them early what the new technology or processes can mean for their work and results. 'Demo early, demo often' is therefore one of our mottos when building a Powered Enterprise. Using the Target Operating Model as a framework, we show a future that is realistically designed in the new digital environment. We then run a Proof of Concept in different departments that proves that what we preach works. The organisation is lit up by enthusiasm as support for the transformation spreads and grows.
For us, a digital transformation is successful when people within the organisation say: "it was an effective process, I am well informed and can use my talents even better in this new working environment". That is always the end goal: setting up processes that people can use effectively and quickly. An agile, efficient and more simple working environment may require a big change, but that change is a one-off event. Digital transformation takes organisations where they need to be to be relevant tomorrow. That is a complex job, but it is precisely standard, off-the-shelf cloud applications that offer organisations the chance to be unique more than ever before.
For a 'Powered Enterprise', a digital transformation is not a one-off facelift, but a continuous adjustment through updated technology
For a 'Powered Enterprise', a digital transformation is not a one-off facelift