THE DIGITAL TRANSFORMATION PLAYBOOK FOR THE MIDDLE MARKET
Middle market incumbents stand on a digital precipice where action won’t always clinch success, but inaction all but guarantees failure. The challenge is toeing the line between risking too much and not risking enough. Ultimately, the middle market’s road to digital transformation is rooted in balancing smart risk and reality, where short-term priorities are addressed in the context of the long-term vision. For more advice, check out our Securing Dollars for Digital insight.
FORESIGHT TO THE FUTURE (ONGOING)
Click through the 10-step journey to digital transformation in the middle market.
1. Re-Imagine Your Business
Digital transformation is predicated on foresight: First, understanding how the forces of change today could reshape the business environment of tomorrow; second, identifying the potential impacts and opportunities; and third, reimagining your business models and operations for the forecasted future.
The starting point of your digital transformation journey is based on an assessment of where your organization is today, compared to your peers in the middle market and measured against a continuum of digital maturity capabilities. As part of your current state assessment, you should also catalogue the ongoing digital initiatives you already have underway.
2. Assess Your Current State
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3. Model Your Future State
Develop a future-state model to synthesize your strategic vision into a visual representation of the critical digital capabilities you will need to drive market acceleration, customer engagement, business innovation and operational excellence to lead in your marketplace and execute on your strategy.
Conduct a gap analysis to identify the data, technologies, talent and capital you’ll need to enable your digital future as envisioned in your future-state model. In addition to gaps in capability, the analysis should focus on the compatibility and agility of your current IT architecture, systems and processes with the digital enablers you plan to invest in down the line.
4. Analyze the Gaps
5. Map Your Digital Transformation Journey
The process of digital transformation is one of a series of deliberate steps to mature the digital capabilities underpinning the desired future state of the business. Your digital transformation roadmap should connect the dots between your future state and current state in small, achievable increments offering value creation and ROI along the pathway.
As business conditions change, value streams may evolve, requiring a more dynamic and flexible approach to budgeting where you can reapportion dollars and resources as opportunities arise.
One no-brainer for organizations exploring digital transformation financing options is maximizing federal and state tax incentives for R&D and innovation. Companies that take advantage of available credits and deductions have more cash, increased earnings per share, lower effective tax rates and the opportunity to increase their digital investments.
6. Figure Out Financing
7. Define the Project
Once you have stakeholder buy-in and budget, scope the project. Define a project-specific vision for business and operational incremental success—as prescribed in your digital transformation roadmap—centered on the customer and user point of view.
Coming up with the best possible solution starts with accurately defining your problem. We recommend embracing design thinking principles to reframe the problem statement in a human-centric way with empathy and emotion.
The goal of prototyping is to conceptualize ideas or hypotheses in a model that can be built and tested quickly and cheaply. Iterative, incremental innovation in small pilots enables faster decision-making and implementation, as well as the ability to adapt or change course at any point.
Once you have discovered something that works well, you must be prepared to absorb, integrate and expand on these successes.
8. Prototype, Test and Iterate
9. Prepare Your People
Operational change requires behavioral change to become truly integrated into the fabric of the business. To facilitate business enablement and user adoption, you need your employees to understand why they need to leave the status quo behind, believe in the strategy and engage in the process. Most importantly, they need to understand what’s expected of them. Equal attention must be spent on customer, supplier and partner enablement. Going digital requires ease, simplicity and convenience.
Incremental and continuous deployments of digital solutions and capabilities drives time to market, creates new sources of value, and furthers the digital maturity of your enterprise.
As the external digital environment evolves, so, too, may your desired outcomes. Don’t put foresight on the backburner while you focus on execution. Ongoing strategy refinement is prudent and even necessary. Continue to revisit and evolve your vision of the digital future.
10. Execute and Refine
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