Organisations world all over, are implementing Digital Transformation programmes as an imperative critical for their survival and sustainability. Incumbent business models are becoming obsolete, and customers are increasingly demanding better customer experiences with a lot of options available to them. Organisations are faced with greater pressures on their margins, and one competitive advantage is leveraging technology to enhance efficiencies and reign in costs. Asset-intensive organisations are dealing with ageing facilities, mines are facing deepening pits. Other organisations such as telecoms using legacy technologies are facing existential threats.
How should functional organisations (organizations arranged along functions such as Mining, Finance, Supply Chain, IT etc) go about implementing this Digital Transformation program?
More so that some initiatives normally cut across functions (such as digital analytics initiatives), whereas others are functional specific such as automating a specific function like ore haulage in a mine operation.
Organisations the world all over are grappling with the most ideal structure to implement digital transformation. In some organisations, since information management technology is normally leveraged to implement Digital Transformation, it follows the program that gets implemented in the Information Management department/function. This has resulted in sub-optimal results because Digital Transformation is much more than Technology. In most cases, Digital Transformation is an organisational re-design involving new operating and business models that are created to replace incumbent ways of working.
In other instances, the digital transformation initiatives get implemented in respective functions in silos, such as the asset management function on its own implementing a predictive maintenance initiative, marketing and sales implementing their own automation or digitisation without a coordinating function across the business to leverage synergies and integration. With this approach, there is a lot of wastage, duplication of efforts and loss synergies that could have been harnessed by an integrated, cross-functional approach.
This article presents a distillation of good practice that author has curated on putting in place an optimum and effective organizational structure to successfully implement a digital transformation program.
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In organisations that we have worked with implementing digital transformation, an optimal organisational structure ⏤ the Digital Transformation Office has been designed to facilitate agility, collaboration, and innovation.
The digital transformation office takes the form of a fully-fledged department or function at the executive level, that reports directly to the CEO or a C-level executive. These offices/ units are responsible for overseeing and driving the digital transformation strategy/blueprint across the organisation. They facilitate the development of the digital transformation strategy on behalf of the CEO, in collaboration with the company’s Group ExCo, where one exists. For any digital transformation to be successful, it must be “sponsored” from the CEO’s office, with buy-in from his group ExCo or the board and then implemented by an empowered Digital Transformation Office across the organisation.
The Digital Transformation Office should be led by a Chief Digital Officer (CDO) who is part of the Group ExCO and reports directly to the CEO, or a C level suit who’s accountable for this program.The Chief Digital Officer will be responsible for leading the Digital Transformation program. The CDO should have a strategic vision for leveraging digital technologies to enhance business processes and customer experiences. He should be able to facilitate the integration of the various business functions. The Digital Transformation Office should;
- Form cross-functional teams comprising members from different functional areas (e.g., IT, Marketing, Operations, Finance). These teams will collaborate on specific digital projects, ensuring a holistic approach to transformation.
- Facilitate Digital Centres of Excellence (CoEs) which are focused on key digital domains such as Data Analytics, Artificial Intelligence, Cloud Computing, and Cybersecurity. These CoEs will provide expertise and guidance to project teams.
- Integrate IT functions closely with business units to break down silos and ensure alignment between technology and business objectives. The IT department should be an enabler for digital initiatives providing infrastructure such as upgrade of internet infrastructure to support digital transformation initiatives such as Big Data analytics, edge computing, cloud computing etc.
- Implement Agile methodologies throughout the organization to enhance flexibility and responsiveness. This includes adopting practices such as Scrum or Kanban to streamline project management
- And form a dedicated Change Management Team to address cultural shifts and employee resistance. Effective communication and training programs should be implemented to ensure smooth adoption of new technologies and processes.
- Establish innovation labs or incubators to encourage experimentation and the development of innovative solutions. These labs can act as a breeding ground for new ideas and technologies.
- Establish a Data Governance Committee responsible for overseeing data quality, security, and compliance. This committee ensures that data-driven initiatives align with organizational policies.
- Define key performance indicators (KPIs) aligned with digital transformation goals. Regularly measure and evaluate the success of digital initiatives, adjusting strategies based on performance metrics.
- Promote a culture of continuous learning and development. Provide training programs to upskill employees on digital technologies, ensuring they remain competent in the evolving digital landscape.
The CEO or the C Suite executive should establish a steering/ governance committee made up of the ExCo members/ Heads of Functions chaired by the CEO or the C Suite executive. The governance body is to provide guidance on the Digital Transformation program and interrogate its implementation progress, risks, issues, and progress towards the attainment of its objectives. This Steering Committee is ultimately responsible for the value that the Digital Transformation Program with CEO ultimately accountable. The Chief Digital Officer should have regular updates to the Steering Committee, and escalate any issues, risks, and decisions to this committee for overall guidance.
By adopting this organisational structure of a Digital Transformation Office, a functional organisation can create a dynamic and collaborative environment that supports the successful implementation of Digital Transformation Programs/ Blueprints.