Digital transformation is now a fundamental part of continuous business transformation and has become an essential part of delivering better outcomes across all functions.
Perhaps your organization has already been through a program to digitize the customer experience but might not have yet modernized other key business functions? The potential complexity may be holding you back. If you are ‘daunted by digital,’ here are my four recommendations to help you adopt it as a natural part of what you do.
1) RIP OFF THE BAND-AID
For companies managing their business functions on ‘legacy technology,’ the era of incremental business improvements and organic technology evolution has passed. New ways of working and updated operating models are required. Real transformation begins by looking at business modernization from a new vantage point – adopting industry best practice in every function and to then continuously adapt in an ever-shifting environment. This is rarely achieved by patching up what you already have. Instead, look for transformation solutions that can show you a clear route to modern functional operating models enabled by modern digital technology platforms.
2) VISION FIRST, TECH SECOND
With creaking processes, legacy platforms, siloed data that lacks insight and a shortage of skilled talent, transformation can seem overwhelming. Surely this can easily be solved by implementing a new tech platform? Partly, at best. While a new tech platform is likely to be part of the answer, if you don’t take the opportunity to adopt new processes and ways of working, what you get out of it could just be a faster version of what you had before. By taking a business-led future focus you can deliver much more value – realizing process efficiencies (e.g., cost reduction), business effectiveness (e.g., supporting growth opportunities) and improved controls.
3) LOOK INWARDS TO LOOK OUTWARDS
89 percent* of CEOs believe digitization of operations and the creation of next-generation operating models has accelerated by months or years. This is because they recognize the importance of digital transformation.
Not all operating models are the same. As a rule, the broader and deeper the reach of that operating model, the better the potential outcomes. For functional transformation an efficient target operating model should extend beyond the traditional people-process-technology to have a lasting impact:
- Functional process: Predefined, leading-practice processes across different business divisions, fast-tracking your transformation with proven ways of working.
- People: Who does what, why, and how. Identifying the skills, roles, and responsibilities your business requires.
- Service delivery model: Where the work gets done, shared service center, centers of excellence, and outsourcing operating models to optimize service delivery.
- Technology: The applications and integrations to enable and automate your processes.
- Performance insights and data: Identifying what data and insights are needed to support decisions. Enhanced analytics from which to make confident and effective real-time decisions.
- Governance: Risk and internal controls for every process – who’s responsible for what and defining the controls environment and frameworks.
Used in the right way, an effective target operating model can allow you to explore what the optimized function could look like for you, and how to get you there. This may seem inwardly focused, but it’s essential to use it to build a digital future model that can face the outside world across your entire business value chain.
4) ACCEPTING A NEW WAY OF OPERATING
If you’ve read this far, it's likely that you have a problem to solve. Digital is likely to be some part of the answer, but a holistic transformation is likely to lead to the best outcomes, supported by digital technologies. You may have tried before and failed. Or you might be a part of an organization that typically just patches things up but know in your heart that you need to do something different now. We believe that transformation shouldn’t be a ‘one and done’ exercise. Instead, it should become as much a way of life in business as launching new products or services.
To get there, however, look at transformation from a different vantage point. Learn more about functional transformation with KPMG by downloading our eBook.
* KPMG 2020 CEO Outlook COVID-19 Special Edition
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