CEO's Role in the Digital Transformation

CEO's Role in the Digital Transformation

29-Nov-2021 11:36:39

As organisations launch more and more digital initiatives, many of which have been hastened by the disruptions wrought by the COVID-19 pandemic, it’s up to CEOs to monitor whether these initiatives are delivering the anticipated value and business benefits.

That’s the view of FlowCentric Technologies CEO Jacques Wessels, who dismisses the notion that monitoring and driving digital projects is only the responsibility of functional leaders.

“While some metrics clearly have to be captured at a functional level, CEOs are ideally placed to evaluate performance across functions and regions, and to ensure that digital transformation projects remain on track,” he says.

“COVID has proved that to stay alive in business, you need to be more effective and efficient, while driving down costs to strengthen margins. Ultimately, it’s the CEO’s responsibility to achieve this. It entails not only defining the digital strategy in line with organisational goals and ensuring that all key role players are involved, but also that the strategy is actually executed.

“What gets measured gets done,” he adds.

The importance of active CEO involvement in digital transformation has long been acknowledged. In its 2018 Global CEO Outlook survey, KPMG found that seven in 10 of the 1 300 participating CEOs claimed to be taking personal responsibility for leading digital transformation within their organisations. They were “making digital a personal crusade”.

Fast forward to 2021, and one of the key themes to emerge from KPMG’s 2021 edition of the survey was the determination of the participating 1 325 CEOs from across 11 major markets to instil new levels of digital agility in their organisations.

According to KPMG, today’s CEOs – now battle-hardened COVID veterans – recognise that digital lies at the heart of how companies can create new sources of value. While emerging tech was ranked by UK CEOs as the biggest risk to growth, 77% see technological disruption as more of an opportunity than a threat. Seventy-three percent say they intend to invest in disruption detection and innovation processes, as they believe it is an essential step to enable teams to think disruptively, questioning historical assumptions and traditional mindsets, and brainstorming new ideas for a vastly different market environment.

But while the need to embrace digital disruption is well understood, McKinsey & Co senior partners Matt Fitzpatrick and Kurt Strovink maintain that its link to business value is not. Many – if not most – CEOs tend to evaluate the success of their digital transformation project by the number of individual initiatives completed or under way.

However, simply getting projects off the drawing board doesn’t guarantee that the organisation is increasing revenue, market share, efficiency, or competitiveness; yet most CEOs are unable to quantify the impact of their digital efforts on their bottom line.

They maintain that the only way to do this is to continuously measure and track the impact and value creation of all digital initiatives.

Wessels agrees, but emphasises that before CEOs start to measure, they need to know what they are measuring for.

“Before embarking on a digitisation transformation exercise, ensure that your strategy is in place. Then map your processes and existing technology infrastructure properly and prioritise what must be done to reduce the risk of focusing on the wrong areas. Then take gradual steps until your base is correct, before investing in additional technology,” he says.

Wessels also believes digital projects should be undertaken in incremental steps until the overall strategy has been digitised.

“We’ve seen the ‘big bang’ approach failing time and again, particularly with million-dollar ERP implementation projects that go over budget and over time, costing the organisation far more than just the cost of the project itself in terms of lost productivity and failure to deliver anticipated value,” he says.

When it comes to evaluating the value delivered by a project, Wessels believes that CEOs should consider the following eight metrics:

Has corporate performance relating to factors such as employees, customer onboarding, supplier performance and so on, improved?

This can be measured easily by, for example, using simple digital daily dairies that enable tracking what individual employees do and where they spend their time. This will quickly highlight whether teams or individuals are spending more time on non-essential, or non-profitable, tasks. Because this is measured, it can be corrected.

What is the level of adoption and usability?

Even the most innovative solution will fail to deliver value if it isn’t used by the people whose lives it is supposed to enhance. Businesses large and small around the world are littered by quietly forgotten – often expensive – projects.

Time required to build a digital application

Time waits for no man – particularly in today’s rapidly evolving digital world. Delay in rolling out digital initiatives could result in being left behind by the competition, or producing a solution that is obsolete before it’s even been implemented. It’s therefore vital to set timelines for project implementation, and measure how well these are adhered to.

Has your rate of innovation improved?

If you are among the two-thirds of CEOs for whom disruption is a goal, measuring the speed at which innovation takes place within your organisation is a no-brainer. If innovation takes too long, stagnation rather than disruption will be the result.

Has the company received a return on its digital investments?

This is one of the most important metrics to consider, with value being determined by the impact of the individual and collective initiatives on the attainment of strategic organisational goals.

Percentage of annual technology budget spent on digital initiatives

Bold, disruptive digital initiatives require bold investments. Businesses that hold back on spending on strategic initiatives are likely to experience less than satisfactory value. If maintenance of increasingly complex and outdated infrastructure and systems is absorbing too great a percentage of your tech spend, it might be time to reconsider priorities.

Are business leaders' incentives linked to value-creating digital incentives?

Business leaders need to be incentivised on achieving success within their specific area of responsibility. As digitisation is aimed at increasing margins and efficiencies, it’s clear that the incentives should be linked.

Are you reaching more customers?

One of the key goals of any digital transformation project is to boost customer experience. If an organisation is unable to grow its customer base, or proportion of customer spend, it will stagnate. Measuring customer retention and growth is therefore a vitally important metric to monitor.

Topics: Insider, BPM, Guides and Resources, Trends

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