The following is a guest post from Brian May, chief financial officer at food service company Nicholas and Company. Opinions are the author’s own.
The early days of a company’s digital transformation project are exciting. They’re filled with visions of how much easier things will be for everyone after replacing years-old technologies and processes with more efficient, modern systems. Who wouldn’t be on board with that prospect?
After helping our generations-old food service company through a recent digital transformation, I can tell you the way the project appeared at the beginning — we’re updating, and every aspect of everyone’s job will get better — wasn’t entirely true. Many of our systems were built on 20-year-old technology but were highly customized to our particular needs, so any changes would likely make those processes less efficient.
CFOs should expect a digital transformation to be more complex than initially appears. Now that we’re deep into the process, we’ve seen the benefits while learning some important lessons. Here are five of the more important things I wish I had known before we started.
1. Clearly define goals and expectations upfront
One of our biggest missteps was not thoroughly defining what we intended to achieve from different perspectives — IT, employees, customers and the executive team. We knew having to use something new would have pain points, but we didn’t understand the impact of going from a customized environment to a more standard platform. The business didn’t understand the advantages either — their work might be slightly less efficient or different, but the processes would now be scalable, more stable and completely standardized across the different business units.
To get a better sense of the areas that need the most attention (and money), I’d recommend conducting a thorough gap analysis to understand the limitations of new software and be transparent about potential challenges. You won’t get the same perspective from talking to software salespeople; they’ll tell you that a product does something (and it very well might), but it might not be a good fit for your particular business. There will definitely be areas where additional bolt-on software or customizations will be necessary. Plan for it and budget for it.
For example, we didn’t consider revamping our approach to pricing as one of the original aspects of digital transformation. However, as we examined the overall project, our scope expanded to include ways to modernize our pricing. I’m thankful we added this to our scope and I’d recommend reimagining pricing processes to anyone starting a digital transformation project.
2. Don’t underestimate data cleansing and preparation
In hindsight, we greatly underestimated the effort to cleanse and prepare our data for migration. Now that the project is well on its way, I always hear about the importance of data cleansing and preparation. But I never heard it from anyone upfront. We could have spent a year restructuring data hierarchies to align with the new system before even starting implementation. Instead, we did data work after already paying for and delaying the project.
There’s a lot of excitement about getting started with digital transformations, but you’ve got to invest time and resources into the upfront work that will save significant time and money down the line. It’s key to take time to understand the standard system hierarchies (customer, supplier, item, etc.) upfront and allow team members the time to conform to these structures.
3. Get employee buy-in and involve key stakeholders
Many employees felt left out of the decision-making process and believed the executive team was disconnected from day-to-day operations. While involving everyone is challenging, we should have better framed the process and clearly communicated when and how employees could provide input.
I wish we had created a structured feedback process that allowed employee input without overwhelming the project. That would have helped with communications and ensured key executives (CEO, COO, CFO, VPs) were fully bought in and understood the implications of the transformation, as well as the expectations placed on each of them. That active participation from the executive team will go a long way toward success.
4. Address cultural change management early
About six months into the project, we realized we should focus on cultural change efforts first. We also needed to explain the “why” behind the transformation — our aspirations for growth, scalability and long-term success.
Closing the gap between the vision of what’s to come and how work is currently done isn’t easy. But it’s critical to convey that the goal isn’t digital transformation but growth. Digital transformation is just a tool to accomplish broader company aspirations.
5. Lean on the improvements and success stories
Not every part of the project will be a success or an upgrade. But there will be incredible success stories, efficiencies, new capabilities or insights.
Often, they’re unexpected, like the impact that pricing changes had on our business, even though they weren’t in our original scope. In fact, changes to our pricing process unlocked value that allowed us to accelerate the other investments.
If you pay attention, there will be more excitement around some departments, processes or software. Lean on these wins and share them. Encourage others to find their own “wins.” If done properly, the excitement around the project will grow and can even overshadow the additional work or frustration of the project. Without adequate focus on the good, team members can become consumed by the frustration or fear of the unknown. Avoid this potential trough of despair!
Digital transformations are complex, challenging endeavors that impact every aspect of your organization. By learning from these lessons and being aware of potential pitfalls, you can better prepare your company for the journey ahead. With careful planning, clear communication and a focus on both technical and cultural change, you can navigate the challenges and emerge with a more agile, efficient organization
