In our conversations with business leaders about technology, we often refer to having a “digital strategy” and find that many organizations aren’t familiar with, or don’t yet have, this important framework in place. So, what is digital strategy? To put it succinctly, digital strategy is a roadmap for how an organization can best spend its limited funds on technology and how that technology can enhance operations, staff performance, and customer experience — now and into the future.
Optimizing your organization’s technology investments requires a close look at the enterprise applications you use to ensure they work together to avoid gaps and, at the same time, that you’re not spending money on duplicative tech. Digital strategy integrates people, process and policy, and technology, prompting a look across the organization to ask critical questions such as: How well are we leveraging our tech stack to conduct business? Where is there underutilization? How does the utility of our technology extend to internal and external stakeholders? Do we have visibility into key performance metrics? Where are we going, and what technology do we need to help get us there?
Digital strategy should support business strategy
Effective digital strategy starts with your organizational strategy. Does the strategy indicate growth through acquisition? Are you considering international expansion? Is there a plan to accept equity investment in the future? When digital strategy aligns with the goals of your enterprise, you won’t invest in technology that doesn’t move the needle. This might sound straightforward, but it’s often missed when organizations get focused on the tech itself. Technology is an enabler; it should be there to support and advance overall organizational strategy and goals.
Case in point: AI. Or automation. Or the cloud, or “big data,” or machine learning. An aligned digital strategy keeps you focused on your strategic business initiatives as new technologies gain traction and you begin to consider investing in and integrating them. Whether your mindset is “jump in,” “not for us,” or “wait and see before we spend,” digital strategy aids the decision-making process.
Digital strategy at the intersection of people, process, and technology
The process of building your digital strategy and the roadmap to carry it out begins with understanding how people, process and policy, and technology work together in your current state.
From a technology perspective, how does your organization leverage its tech today? What tools are in your tech stack? What are the pain points and gaps? What works well? What tools are no longer supported by publishers, introducing risk to the organization? Is the organization dependent on proprietary tools that depend on a single resource? Often, we encounter organizations with custom-built solutions that work perfectly well for meeting business needs. The applications are fit for purpose, but when an enterprise doesn’t have the right standards or processes and policies in place, the apps may be introducing significant risk.
People also are a key component of digital strategy, although it’s common for organizations to lose sight of this important reality. How are you currently staffing around tech and the deployment of new technologies? Do you plan for backfill of positions that are core to operations during larger-scale implementations? Where are the constraints? What’s your organizational culture around technology? How do you handle change management and leverage tech to help attract talent?
Digital strategy visioning, timelines, and budget
Along with documenting current state, building your digital strategy is incomplete without deliberate planning. Timelines and budget also play key roles as your vision informs how you build out your strategy and roadmap. Let’s say you’re working toward an M&A transaction in the next three to five years. In that situation, your digital strategy might not include investment in a new ERP system, which isn’t likely to generate a return in that timeframe. Instead, your strategy might include an alternative solution that still enables improved business processes without an overarching transformation.
Digital strategy roadmap and building the business case
You’ve mapped current-state people, processes, and technology; your executive team shares a clear organizational vision and has identified timelines for anticipated milestones; and you’ve allocated a realistic budget. Your roadmap brings it together.
The most effective digital strategy roadmaps include multiple possible paths forward, each with pros, cons, and associated budgets. Some solutions might offer quick-hit improvement while others, such as the ERP investment mentioned earlier, will take longer and result in greater change.
There’s no single or “right” path for an organization, and establishing the business case for each is critical. For example, a new inventory management system under consideration by a manufacturer might increase inventory by 1.5 turns, saving the company $3 million in annual cash flow. Or, automation of a collection and cash application process will reduce headcount by 2.5 FTE. Your use cases should be specific.
Digital strategy as a platform for continuous improvement
The roadmap to carry out your strategy should include workstreams and key performance indicators (KPIs) to ensure it advances organizational goals. Your roadmap can also be leveraged as a tool to jump-start a governance or oversight committee that meets regularly to review progress, make modifications, and pivot based on new business needs.
When done well, your digital strategy and roadmap can serve as an ongoing management tool that drives continuous improvement and offers a new way for executives to manage tech investments as well as risks. For example, cybersecurity has impacted (or should have!) every organization’s digital strategy in the past 15 years, requiring new policies and layers of risk mitigation. In this way, a sound digital strategy and roadmap are powerful and organic; they flex as the organization’s unique business needs and objectives change over time to enable success.
