programme management - Henning Zeumer Projektmanagement

Transformation: 6 Deadly Pitfalls

Restructuring and Transformation: Companies must transform themselves in order to survive in a disruptive environment. But many transformations fail – not because of a lack of necessity, but because of recurring strategic and operational mistakes.

The market has changed and continues to change. Disruption is the keyword, in customer requirements, competition, sales markets, supply chains, regulation, politics, skilled workers, technologies and, last but not least, internal and external bureaucracy. Old business models no longer work properly, new ones want to be invented and implemented.

Restructuring and transformations are often that complex and far-reaching that failure would be unacceptable for companies and would even threaten their existence. From my experience, there are mainly 6 factors that are decisive for the success or failure of a corporate transformation, conversely, mortal sins that must be prevented when coming up:Transformation projects are essential for survival, but companies lack their own transformation expertise

1. Transformation as a strategic success factor

Companies that focus on transformation at an early stage – whether in digitalization, process optimization, organizational development or business model innovation – secure clear competitive advantages. First come, first served. It is crucial to understand this restructuring not as a reaction to crises, but as a strategic, continuous process. The prerequisite for success: The internal structures must be consistently adapted to the new requirements.

2. Top-Down Approach

Where a company should head is a decision that must be made in TOP management. While involving employees in decision-making should be a matter of course, the ultimate objectives must be decided at the top.

And then also driven from there. This means unconditional support of all initiatives and projects in the transformation by top management. Error and correction is possible, but always supported by the decision-makers. Especially when changing the basic values or the business model, consistency and authenticity are a must. If the management or the board of directors and supervisory board do not agree on this, a transformation will fail due to the conflicts that arise.

3. Holistic approach

This is then logically reflected in the transformation approach.

Strategy and goals are set by the company’s management. The goal definition(s) should be “SMART”: specific, measurable, attractive, realistic and time-bound. This allows the goals to be checked and tracked for their clear and concrete formulation, e.g. as goals for the transformation projects.

The plural “projects” already shows that transformations are never isolated measures. Many areas of the company will always be affected – a little pregnant is not possible. Therefore, a holistic planning and approach is indispensable:
Organization, responsibilities, decision-making paths, etc. are expected to change. New or changed tasks will create new job profiles for employees, release some of them or create new recruiting needs elsewhere.
New procedures and processes are used to create requirements for employee training and
the mapping in the company’s IT systems (ERP, CRM, SCM, etc.) that must be implemented there.

As you can see, an individual view or independent island transformations is unthinkable, or they would lead to very unfavorable breaks. This has often been done wrong in other major initiatives, such as the introduction of or the switch to new ERP or CRM systems, and has led to the well-known cost explosions, delays and often the complete failure of such projects.

4. Implementation competence

Most companies owe their market position to their product, process and technical production expertise. They know what they are doing, no one can fool them. But an ERP introduction or even a restructuring or transformation is probably not something you do every day: In addition to challenging economic conditions, companies have internal weaknesses in the strategic and operational implementation of restructuring processes.

Internal deficits increase external dependence

As a result, they often do not have sufficient internal transformation competence and therefore have to rely and make themselves dependent on external service providers. These often use the situation to their advantage, which can lead to projects getting out of hand in terms of content, time and budget. Dependence on external consultants also increases the risk of losing control of one’s own program.

5. Program management as the key to success

Traditional project management is not enough for complex programs with multiple interlocking initiatives. Even among service providers, the focus is often on professional advice, not on professional program management. Therefore, it is essential to establish an experienced program manager on the company side who manages the overall program, identifies risks at an early stage and effectively accompanies the implementation.

An experienced program manager may incur higher fee costs than a project manager – but this investment pays off: through savings in the overall program, higher implementation efficiency and better results, not least thanks to forward-looking, intensive change management in the company organization.

6. Business in the Driver Seat

Another important detail in the transformation, which was also not considered in many ERP projects, for example, is the role of business and IT in the implementation.

Especially when it comes to a change in business model, procedures and processes, those for whom the whole thing is done also belong in the leadership role. Simply throwing a few requirements over the fence to IT and waiting for results will not work and will lead to many, expensive loops. The business must provide the product owners and fill them with heart and soul. This is the only way to achieve effective and rationalizing process optimization away from old habits, organizational hierarchies and processes. And this is where you pick up the workforce, you lay the foundation for the transformed business to be accepted and effectively implemented. But don’t forget: Restructuring is not a wishful thinking and requires discipline and stringent requirements management !

After all, a new business model will usually include a (often overdue) departure from traditional product orientation to consistent customer orientation. Holistic marketing will have to accompany and support them, and there will certainly be a need for change, if not advice. Which brings us back to the holistic view on transformation initiatives.

Conclusion: Keep control – with strong leadership

Approach your transformation with determination, structure and an eye for the big picture (including the future). But stay in control with an experienced program manager on your side to guide your organization safely through change.

Read more about program management and strategic transformations here…

Digital Transformation: 7 strategic Success Factors

Successful digitalization is an ambitious transformation endeavor. It presupposes a comprehensive transformation of companies, both internally and externally, which requires much more than the implementation of new technologies. The following factors need to be considered: business model, the entire organization with its employees, all operational processes and customer relationships. Digital transformation means exploiting and exploiting the possibilities of digitalization “end-to-end”.

What worked in the first phase of upheaval – competing with digital products and services while leaving the organization largely analogue – will no longer be a viable option in the future. The era of digitalization asymmetries is coming to an end, because they mean inefficient media disruptions in the new, digital processes. The range of solutions and possible solutions differ depending on the industry. Following seven starting points are part of a goal-oriented approach:

1. Systematic review and adaptation of the business model.

It is promising to carry out a “digital due diligence” on one’s own behalf, so to speak – i.e. to check the digital value creation and growth potential in the same way that a buyer would check an envisaged target company. The focus should be on discovering and occupying digital fields of the future on the one hand, and developing a strategy to be a decisive step ahead of competitors in the digital race on the other.

2. Develop fundamental skills in data analysis and use.

Digits - Digital Transformation, Program Management

In increasingly digital markets, those companies that recognize and leverage the value of internal and external data at an early stage will have a head start. Anyone who thinks of sales alone when it comes to monetizing data falls far short of the point. In the broadest sense, companies must generate an economic benefit from it. This can also be to use data to accelerate product (further) development or to optimize processes along the value chain.

This also includes the revision of all previous regulations and rules that may have been necessary for analogous processing. Extensive process analysis and consequent optimization is the basis of digitizing transformation projects.

3. Expansion and further development of the IT and data architecture.

LAN - Digital Transformation, Program Management

The rapid implementation of the aforementioned digital future strategies and optimizations can only succeed on the basis of a suitable technical infrastructure and with capable and powerful teams. The head of a company’s IT department is not necessarily to be promoted the head of digital transformation but should be its powerhouse. Ideally, data, IT and digital transformation should be designed from a single source, but should not be implemented as large-scale projects, but in an agile manner and in manageable sprints, with an overarching, strategic thinking Program Management.

4. Use of software robots and intelligent automation.

To achieve rapid digitalization successes without complex and time-consuming changes to the existing IT infrastructure, robot-assisted process automation (RPA) and technologically more advanced intelligent automation are increasingly coming into focus.

Increasingly, classic RPA applications are being combined with AI solutions, which enables the automation of manual and repetitive activities such as invoice verification or reporting with potential savings of up to 30 percent especially in administration – with a payback period of just a few months. Intelligent automation represents an important lever for companies to enter the AI age and achieve direct and measurable benefits.

5. Seamless integration of new technologies.

Data Network - Digital Transformation, Program Management

Even though the use of artificial intelligence (AI) is currently on everyone’s lips, the portfolio of disruptive tools and applications has reached a much broader spectrum. Web 3.0 as decentralized information transmission, data economy via blockchain or peer-to-peer organizations are constantly conquering more industries and areas. With Metaverse, the internet is evolving into a three-dimensional space. Tokenization, i.e. the digital mapping of assets, is also rapidly gaining momentum beyond the insurance and financial sectors – after all, from a technological point of view, industrial plants, power plants and patents can also be virtually broken down and “tokenized”.

Tokenization and the evolution to Web 3.0 will rearrange the economic balance of power. The result is a market that the state should help to promote through regulation and incentive programs. The race for global hubs is currently entering its second round.

6. Breaking down departmental silos to increase digital innovation.

As much as the IT department may be driving the digital transformation in an excellent technical way, if the other departments remain in their usual hierarchies and processes, the company is going full throttle in neutral gear, so to speak. In order to leverage the organization’s inherent innovation potential, especially in the digitalization phase, the company absolutely needs cross-departmental processes and tools as well as explicit responsible persons who monitor, motivate and incentivize.

7. Initiating a cultural change in the workforce.

Finally, the transformation task also requires an adaptation in culture and leadership. This is important to get employees on board and get them excited about change.

A key success factor is the narrative, even if this sometimes seems overused. Management must explain to employees the advantages and benefits associated with a digital transformation, for the company, but specifically for the individual employee. It is important to build optimism, but also to address risks and challenges transparently and to take risks in a controlled manner.

AI Concerns - Digital Transformation, Program Management

The latter leads to the exciting and emotionally charged question of the macroeconomic effects on the labor market as a result of digitalization accelerated by AI tools. The first estimates are on the market and are attracting a great deal of attention – also in the media. Researchers at the start-up OpenAI, together with scientists from the University of Pennsylvania, have determined that AI applications affect up to 80 percent of all jobs in the United States. For them, at least some of the activities can be done by an AI tool. Almost one-fifth of employees work in jobs where up to half of their activities can be carried out by AI. In another study, investment bank Goldman Sachs estimates that approximately 300 million full-time jobs worldwide can be automated with generative AI.

The labor market debate can be classified with two basic points. First, the end of work and a new era of mass unemployment have been proclaimed by critics in previous periods of automation – but in fact they have never happened. Secondly, the boost in the wake of demographic change probably comes at just the right time for a location like Germany. In the end, with our labor shortage that has long since occurred, we will be happy if AI fills job gaps in the future. Germany also needs a welcoming culture when it comes to the introduction of digital technologies.

Qualifying and re-assignment instead of firing.

There is also a third aspect: Repetitive work is mostly found in administration, where fixed fact-to-consequence relationships and decision-making rules can be digitally automated very easily. It is even conceivable that processes will be further developed and optimized by self-learning AI. Here, human intervention will only be necessary in the form of plausibility and quality checks. An immense rationalization and increase in cost efficiency are possible. On the other hand, as the market becomes more transparent, it requires more customer-oriented services in sales, customer service and after-sales, depending on the business model. As a result, more skilled workers are needed here. Thus, further training and re-assignment of the existing, now released back-office staff, who are often already largely familiar with the processes “at the front” anyway, with job enrichment.

Source in excerpts: Handelsblatt Research Institute, Roland Berger, 2023: State of the Nation – Transformation as a Success Factor

Learn more about the topics Digital Transformation and Program Management …

Program Governance with cascading Meetings and Reports

In the realm of Program Management, as initiatives grow in size and complexity, so does the distribution of information and governance. While adept project managers can readily navigate the intricacies at the project level, scaling introduces a surge in stakeholders, communication channels, and the imperative to tailor information appropriately. To prevent meetings and reporting from devolving into burdensome overhead, but still serve their purpose adequately, structured and strategic communication becomes paramount for programs and large projects. In my experience, cascading structures have proven to be effective for this purpose.

Management Levels of an Organization

To understand this, let’s examine the distinct management levels within an organization, division, or department:

PPM-PgM-P - Program Management, Governance

Portfolio
Oversight of all programs and projects of a Business Unit.
Program
combination of 2 or more projects sharing the same customer, product, or cultural background.
Project
individual customer-oriented project to fulfil one (1) customer contract.

Communication and control within projects

Within the projects, coordination between the teams and sub-projects is essential. This occurs through internal meetings (e.g., daily stand-ups) and interdisciplinary gatherings (e.g., weekly meetings), supplemented by succinct reports to higher level. Project managers collate management information and project status reports for dissemination to steering committees, possibly alongside other relevant bodies such as the Program Management and Portfolio, and the executive Management.

This also follows the premise that the majority of operational decisions should be made at the work and project level, as this is where the technical expertise and granular insight is available. Higher levels are usually not as deeply involved in the subject matter and are chiefly concerned with more tactical and strategic decision-making. In addition, in the case of problems that cannot be solved within the project, they are the escalation level to be invoked.

Communication and Governance beyond projects

At this “superior” level, routine project reviews (e.g. monthly at the committee meetings) facilitate in-depth discussions on status, risks, issues, decisions, and any necessary, further escalations are discussed in detail.

Cascading Governance - Program Management, Governance

If the program or portfolio includes diverse projects, such as customer and product development initiatives, these are aligned and coordinated with each other at this level, complementing continuous efforts at the working level.

The higher-level management is stringently informed about its development and customer projects and can in turn make well informed decisions. Issues can also be escalated cascaded, and resolved.

Prerequisites for efficient communication and Governance

It is important for a functioning distribution of information that does not cause too much additional work

a lean, transparent, end-to-end reporting system.
short, fast escalation and decision-making paths.

At the working level, the number of participants and the lead should be streamlined, agenda and content should be prepared (offline) and results should be tracked.

The reporting is standardized and can be aggregated to the next level throughout. The focus is on control, overview, escalations, and decisions.

Additional communication and information

In addition, accompanying periodic (e.g. bi-monthly) leadership meetings can take place, in which an extended management team regularly informs about strategic development, finances, operational and organizational topics of the industrial business. These sessions may include focused presentations by a predetermined speaker. This is where it’s important to get feedback from the extended team with questions and answers. The results will then also be reflected, if necessary, in corresponding meetings at the Program Management and working level, in order to also take the employees in the teams along on the cross-functional and cross-regional as well as the strategic and operational topics.

Conclusion: Communication, information, and control are critical to success

Communication is repeatedly cited as a particularly critical factor for success in projects and programs. The structured governance approach outlined herein provides program managers with a blueprint to navigate these challenges adeptly, ensuring initiatives progress smoothly and achieve desired outcomes.

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Think Big: Strategic Program Management

Some time ago, I was called to work for a large electrical company to develop my expertise in program management for a business unit. I wasn’t surprised at first, because large companies also do large, complex projects for which normal project management is not sufficient. I had already experienced this in other engagements, actually even as a cause of project imbalances. The group had already cultivated extensive (multi-)project management, but the methodology for program management was still largely immature.

From Theory into Practice

We started with some workshops on the theory and how program management differs from project management. In essence, in addition to the sheer dimension of the initiatives, this is about all the strategic orientation of programs, often only based on a vision or mission, in the context of which the necessary “tactical” projects as well as operational components are then developed.

By assigning the division’s business activities to this point of view, the structures became recognizable as programs. We then developed suitable governance structures from the working level to the management level and subsequently implemented them in the business unit. Because we can already speak of the implementation of strategy into operational management at the divisional level, I would like to refer to this as “operational” program management in this context.

Program Management taken to the next level

Because in the further development we came across an objective that should go far beyond that. What if the internal objectives of the programs were extended “far beyond the borders” to include complete business relationships with key customers?! In other words, we broadened our strategic view on our customers. Growing our customers’ businesses became our mission – and we would grow with them as a supplier of important components “in tow”…

To illustrate: a plant manufacturer works closely with a petrochemical customer, developing oil and gas fields with them and supplying the equipment required for oil and gas extraction as an equipment partner, possibly even as a general contractor for several or even all of the customer’s sites.

Complete rethinking. This meant that we would think deeply into the business model of our customers, support their activities towards their goals and by the way cover their needs for equipment, systems, etc. for implementation from our production as a “preferred supplier”. At the same time, our expertise (not least in program management!) and closely intertwined support (and dependence of customers) would also grow into a strategic partnership that would be designed for the long term.

Strategic Program Management – The Result

An interesting thought, isn’t it? We have implemented it with two of our “top tiers” and thus multiplied sales and profits with them – compared to other customers for whom we have “only” remained a supplier. I’m not allowed to disclose more here 😉.

Of course, such a strategic partnership requires very deep, mutual trust. The client needs to understand the benefit that comes from our program management expertise and get involved in letting us do a lot of the governance. Not everyone is ready for such cross-company collaboration.

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Preparing for Crisis Scenarios

We live in difficult times: The Corona pandemic, the Ukraine war, supply chain bottlenecks, lack of skilled personnel, and some other unpredictable events are frame conditions that worry many managers and make them consider whether they should start, continue, or better put planned investments and projects on hold. Many companies currently set up contingency plans (you could also say Risk Management) for different scenarios to be prepared for eventual situations.

One of my latest mandates dealt with this challenge: A strategic important program had been started last year with ambitioned objectives and future-oriented benefit potential. The time-to-market was critical to exploit the advantages of technology leadership. But first problems already arose with staffing because the recruiting initiated didn’t cite the expected results necessary to meet the sportive progress targets. In addition, recrudescing Corona dropouts decimated the core teams. What to do if you don’t want to give up your business-critical objectives?!

My „gimmickry“ had a proven tool at hand: The good old “Magical Triangle”, this time built from time, scope and resources (instead of cost). You can change one component which influences both others. In this case time was the most critical, resources were the variables, and thus the achievable scope the result. This meant that we in the team with the management had to define a prioritization of the desired achievements, aligned with the expected business benefits of these components. We were guided by a value benefit analysis as simple as possible, but we could have practiced this even much more granular.

Risk Management accross the Portfolio

In the following we implemented our prioritization’s results by means of a modified portfolio methodology into a flexible program and resource planning fit for different scenarios. In less complex projects also a frequently revalidated backlog would do. With the resources available we then could start, drive, and with every new or recovered team member scale realization. When I left the program the realistic planning for realization was at ca. 80% of the initially prospected scope, enough to enter the market promising.

Forward-looking Risk Management for crisis scenarios

The example shows that it is feasible even in uncertain times to set up and plan important initiatives in such a structured way to be able to react on many scenarios quick and precisely fitting without having to bury the business goals. Other cases of risk to intercept are disturbed supply chains or material or energy lacks getting worse by external crises. The constraints may be different, but they can be tackled and watched the same way, may be multivariate.

But in each case, when budgets are under scrutiny, and cuts would force you to set your project on hold, it is considerable to continue with reduced scope or speed rather than to roll off a good team. Part-time resources continuing on low effort would also save expenses and may be preferable over a complete freeze and ramping up new resources when the project resumes.

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Mastery Matters !

Was it the Corona pandemic which forced us to re-think, or was it the increasingly faster turning market, VUCA, disruption etc., what made clear that we need to do something essential to also in future continue playing a role in the market? Whether we need to consolidate, concentrate on our key competences, or whether we need to grow, expand to not become a take-over candidate, or rather to “dress up the bride”? What is at stake – and what is top of the program agenda?

Reasons are multifold, but in consequence the situations are pretty similar for companies: It always takes big and critical Transformation and Change projects or even programs that must not fail because they afford big investments, show their results mid- and long-term, and are crucial for the future.

Critical for success: Project staff’s competence

And in only very few cases these changes come with internal key competence available. That is why there is an intensive search for new, skilled and experienced staff everywhere, but these are at least as rare as qualified practitioners. Some may do hard with externals because they are presumably expensive, and the know how should be built up internally, not taken away again after work is done.

To avoid the latter an interim (program) manager is recommended who sets up the program and later will hand over to an internal (potentially just hired) employee. But watch out: freelancers in this topic are rare as well and headhunted; the big consultancy firms are much more expensive and not necessarily better. However, this approach bears many advantages:

You will have more time to assess and chose a really qualified permanent candidate
You actually will receive the benefits from the function assigned ad interim immediately (time-to-market !)
The position will be prepared optimally for the internal colleague to come so that he/she can start most efficiently
The interim manager’s work will also be a benchmark for new colleagues
You receive a proven professional contact to cover future peaks and for “sparring” with your employees and organization

Misson critical: Patience and Project Management Excellence

I already filled this position successfully a few times, at corporate or business unit transformations, mergers, process optimizations and digitalization. Calculate a longer time for the change because changing – especially the minds – needs time and patience, and be focused on the support’s quality. It’s worth it: The Art of Project Management Excellence – Mastery matters !

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Life tells the best Stories

Actually it is easy to remedy projects in distress. Because the causes are usually as trivial as the resolutions for the Project Recovery.

The Classic

A project quarrels with the departments involved about resources. It needs skilled people with good knowledge on the topic, but the line needs these, too, and is not willing to dedicate them except (if at all) some who are on the bench anyway – a classic. In the end both are loosing because it will not work as planned that way. Sounds logical, doesn’t it? The solution: The departments do desire something from the project. So put them into the driver seat, make them “Product Owners”, take them into the responsibility !

Often the problems are at hand, but the customer is defending the resolution.

Burning Time - Project Recovery, Project Management

A project in Public Administration was about 6 weeks before it’s Go-live. That had been postponed several times already (total project duration 1 ½ years so far), and the budget was exceeded by far. Already at the first talks upfront in a video call I heard that project roles and responsibilities were not clear yet, the IT supplier did not deliver to whatever planning, and that the Go-live must happen now by any means. Well, I think I have an idea…

Ironically enough they played very budget sensible due to strict release processes etc., and they decided for a “cheaper” solution for the Project Recovery. If only it weren’t tax funds again, I wouldn’t have cared!

AllIn - Project Recovery, Project Management

Apropos budget – another example:

A big energy company planned a business critical project (I knew it would be a program for the Project Recovery) to implement very specific software. For that there are not too many project managers with an adequate experience available out there, but I had done that two times before successfully. However the daily rate budgeted for project management did fit for average skilled project managers without special knowhow, and they were not willing to “needlessly” increase the budget. At the moment of this decision they de facto increased the project budget needlessly and significantly…

Or the advised company does not see the point behind the proposed solutions. This is what happened after a revision of an SAP S/4HANA project that had already failed to see 3 planned go-lives in 3 1/2 years and had exceeded its planned budget by several million Euros. The audit revealed a total failure of the project management, also at the implementation service provider, because the customer refused to accept even the basic features of a structured approach (e.g. according to SAP Activate Best Practices). Project management would only have disrupted the daily routines, an added value of the “overhead” could not be conveyed.

That means I can’t rescue not every project or safeguard it from distress, in particular if I’m not allowed to. This category also applies to two more cases. Here however I had already some time to prepare recovery measures.

(Survival) critical measures cancelled due to resource bottlenecks

4 Bulbs - Project Recovery, Project Management

At the first one the management and a little group of engaged people compiled a huge catalogue of ideas how to establish our AfterSales with lots of customer benefits in a mature market to intensify this profitable business, and protect and increase market share. All were clear that this was, though technologically leading, without alternative to stay market relevant in a few years. I defined these ideas to initiatives and projects, and structured them sequenced and correlating as a program. Some of them we even started to execute.

Then some of the managing directors in some emerging markets considered that they were doing quite well as is, and that they had too few resources. Budgets were cut; the company was too “lean” to execute the projects. Project Recovery would mean here: You should sharpen the saw in summer to go to the woods before onset of winter, or you will have to leave chances at hand.

Being not able (or willing) to understand, and desiring too much in one chunk

In the second case we talked about a engineering company’s business unit running out of rudder (organizational as well as financial). They wanted to place new and future promising products in the market based on a few contracts with pilot customers. But R+D and customer projects went quite unsynchronized, followed by long delays on committed milestones, and the risk of high liquidate damages, cancelled series orders, and the loss of market advantages. We simply had too few resources for increasing (on top of the pilots) customer projects, and development projects did not keep pace – using the same resources – with their delivery. The cause-effect-mechanism is clear, isn’t it?!

So I started for Project Recovery as the business unit’s programme manager to establish structure, tools, and processes to control resources, interdependencies, joint risk, and communication between the involved parties and stakeholders – following the motto “to build a fence before catching the chickens”. Also we implemented some circles with my moderation to better coordinate the customer and R&D projects. Recruiting was getting up to speed, and for software development which repeatedly trashed our milestones I was planning project reviews.

Checkmate - Project Recovery, Project Management

Then my contract wasn’t renewed. The unit lead had not understood, what I did, what programme management meant, and what was necessary to do, rather was focused on the external picture towards the C-level than to the program’s content, and may be saw a competition in my activity which I could not dispel. Despite we already were completely overloaded, she accepted, while complaining the resource situation to the management, three more customer projects she “could not let go”, hoping she could generate nicer figures for the business unit. I cross my fingers for my colleagues…

Each consultation only can be as good as the consultee is allowing

Sometimes it just comes with too much transparency, uncomfortable truths and or unpleasant Must Dos – especially if things are that obvious and trivial. Life definitely writes the best stories to tell. But there are also the good examples without resistance to take advice and learn. And these are the cases that take companies and employees further without any feeling to throw good money after bad.

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Digital Transformation – a Promise and a Mammoth Task

Improving the customer experience with digital solutions, increasing operational excellence by adapting to changing markets and digital transformation and automation of operational processes, improving administrative efficiency – a wonderful new world through digitalization.

This is THE opportunity for IT managers and CIOs to step out of the shadow of the board of directors and to no longer just be “enabler” but rather “driver” of the new business! After all, we digitize with modern IT technology, because our processes are supposed to be faster, more automated, more customer-friendly and cost-effective and are supposed to unleash additional potential – sometimes not explicitly even called for by business. But beware: of the last 5 projects that needed my help and refurbishment, 3 were digitalization and transformation projects. So it seems they do have their pitfalls…

Why many digitalization initiatives are getting into trouble

Complexity - digitalization, transformation, program management

First of all, it is probably the complexity of the dependencies in which such a change (= transformation) is taking place. It’s not just about digitizing individual areas or processes. With each building block you come across others which, if you do not include them immediately, will cause a breach of media or logic and thus threaten to undo the whole positive effect.

A holistic digitalization strategy must therefore be first and foremost. The development of a “Digital Ecosystem” includes both technical and organizational components. So first we have to analyze exactly how digitization is defined, which (specialist) areas will be affected, which processes and interfaces need to be considered, how is such a project or program with resources, knowhow (incl. Program Management !), and budget, etc. set up. Last but not least, this most important initiative of recent years will have to be measured by its contribution to the company’s goals as well as the corporate strategy resulting from it. This means the ball for the sponsorship role is in the court of the entire board and the CEO!

All beginnings are difficult – how to start?

Probably every company will start such a complex project with a lot of question marks and uncertainties. You can’t have everything pre-predicted on your Radar. You have to develop that from the rough ideas into the subtleties. An “agile” approach will be necessary to focus on the important things and to be flexible enough to react quickly and efficiently to mistakes or wrong developments before major losses arise. However, the complexity of the interfaces between the components to be developed requires, in my experience and conviction, a single, unifying “hybrid” program management that brings the individual threads together, coordinates them and at the same time keeps an eye on the maximum possible overall benefit.

Where are the problems?

There is no one-size-fits-all or “proven roadmap” for a digitalization programme. Every company is different, and thus every strategy and every implementation concept is unique. At this point, however, I would like to draw attention to the many pitfalls, hurdles, and limitations that I have experienced in my “healed” projects and programmes, and which any digitalization initiative will experience and how they overcome or resolve them will ultimately decide between success or failure:

Limits in corporate culture: Digitalization is present in many, if not almost all, areas of corporate organization, especially in “mature” companies. The Board of Directors and departments must relinquish responsibility and redefine their roles in the future digital world. This will not be done without friction.
Limitations in the organization of companies: It is not uncommon for the accents of the products and services to be redefined in this phase. A completely new, perhaps even project-driven business model is emerging. Digitalization is always associated with a ruthless revision and unification of workflows and processes, so that they can be streamlined, digitized and automated. Here, too, beloved habits and competences will be put to the test on a massive scale.
Limits in technical competencies: Digitalization comes with new operating concepts such as scalable, cloud-based and/or mobile solutions. They often come with in-memory technologies and big data (e.g. based on SAP S/4 HANA or similar), Unified Communications & Collaboration (UCC), a digital identity for every employee, digital work places and O365 for efficient access to information, etc. Are we already prepared for this and properly set up? Do we have the process and technical knowhow in our own ranks? Do we need external help – service providers for implementation, and experienced project and program managers on our site who can stick to the plan and avoid creep?
Limits in data quality and data management: The digital processing of large amounts of data will lead to the merciless disclosure of poorly maintained or incorrectly generated data. The effort required for data cleansing in legacy systems and the definition and planning of future data to be collected or generated should not be underestimated. And once you get a taste of it, you will want more!

How to make better progress

Lighthouse - digitalization, transformation, program management

The “natural limits” at the start of the digital transformation certainly seem gigantic at first, but they can be dealt with using caution and realism, but not under unrealistic time constraints. The initiative’s complexity requires competent Program Management for governance. And it must be clear that all this will cost a lot of money. However, the pay-offs of a sucessful transformation are at least as large. Last but not least, for most companies, their remaining in the market in the medium to long term will depend on it.

If you want to do it well, you should also consider:

Measures to secure the Digital Trust and data security. The new cloud and mobile components open points of attack.
A digital laboratory for building and testing prototypes. This includes a well-thought-out test strategy and concept, such as regressive, automated testing, as well as the capacity of one or more good test managers.
Digital Reverse Mentoring, a multiplier network, digitalization training, a Corporate Digital Committee to initiate company-wide digitalization initiatives, annual digitalization reports, a digital core team and digitalization partnerships. The transformation will bring a lot of corporate change. Neglecting this would greatly reduce, if not thwart, the main players in the game, who do onboard users sufficiently, thereby severely limiting, if not thwarting, the effectiveness and success of the investment.
Use Cases to AR/VR/MR, IoT, process digitalization, RPA, block chain, smart services, electronic access control and voice assistance including Proof of Concepts (PoCs) with Minimum Viable Products (MVPs), et.al. There is no limit to the entrepreneurial creativity of opportunities here, and in some innovation, there may also be an market advantage that should not be underestimated.

Result:

Digitalization is certainly not just a short term, modern hype, but a necessity for future competitiveness.

The digitalization initiative is not just a few digitalization projects, but a complex transformation program that is coordinated with the corporate strategy and strictly aligned with business benefit. Even done as agile.

You have to have the appropriate knowhow (process, technology, program management) in-house or at least on the side of the CIO at the conference table with external IT service providers, otherwise it can become expensive and ugly.

The reward is a self-organizing, sustainable and scalable digital ecosystem, a wide range of possible customer initiatives, up- and cross-selling, new customer orders, tried-and-tested use cases and smart services with improved customer experience and operational excellence. And last but not least, the ability to adapt more flexibly to changing markets – as a future perspective for the entire company.