Digital transformation continues at pace, but as digitalization transforms businesses, digital transformation governance grows in importance. Any business transformation process comes with a degree of risk — but as with any other strategic change of direction, governance can make the difference between success and failure.
Here, we explore the current state of play in digitalization and why governance can be the key to success.
Digital Transformation: Where Are We?
In recent years, many organizations have accelerated their digitalization programs. Two contributing factors include the coronavirus pandemic and a move to online working, education, shopping and socializing.
With the opportunities of digitalization, though, come the associated risks.
There are numerous risks to pay close attention to when pursuing digital transformation. For example, there’s the threat of cyber-attacks, the risk of relying on IT tools to support your critical processes or the risk of suppliers failing to match your digital standards in areas like data privacy. It is vital not to ignore digital transformation risks. Governance must be prioritized.
The Importance of Governance in Digital Transformation
So, if organizations and their boards need to prioritize digital transformation governance, we need to explore what this means in practice. What is governance in digital transformation? We also need to consider why digital governance is critical.
Good governance in digital transformation is far from just a nice-to-have; research by consultants CapGemini found that “governance is a key determinant of success in managing digital transformation.”
To prevent and mitigate digital transformation risk, good governance is essential. No digitalization project is without its risks, but a robust approach to digital transformation governance will help to minimize them.
Further, this governance needs to be an intrinsic part of the digitalization strategy, not a bolt-on or afterthought. The governance approach should be embedded as a central tenet of your digitalization.
Questions to Ask From the Outset
- What are our controls for this process?
- How will our digitalization strategy be monitored?
- What will the success measures be?
- How will we know when things are going wrong?
Research carried out by the MIT Sloan Review found that governance-related concerns are a high priority for the people leading digitalization efforts in companies. The research also showed that “companies falter in many areas when it comes to providing structure and governance to digital transformation projects.”
What Governance Challenges Do Digital Transformation Projects Face?
Why do so many companies struggle with structure and governance for digitalization? There are several obstacles to digital transformation governance:
- Getting people on board. Achieving buy-in for a digitalization strategy can be an uphill struggle; governance of the strategy faces a similar challenge.
- Equally, having clear accountability is critical. But assigning ownership to each strand of the digitalization change process can be tricky — ensure you have distinct and clearly-communicated owners for every aspect.
- Finding alignment between business processes. Digitalization, as we’ve covered, embraces issues ranging from security to user experience to supply chains. Governance needs to identify and capitalize on synergies between the processes in all areas to ensure a comprehensive, non-duplicative approach.
- Understanding what a governance program needs to include. Because digital innovation is by its very nature new, getting your arms around the governance processes and measures needed isn’t always straightforward.
- Interpreting the data collected and insights achieved. Having controls in place, and capturing governance data, is pointless if that data cannot be interpreted and used to drive improvement.
What Does Good Digital Transformation Governance Look Like?
When seeking best practices in digital transformation governance, organizations need to recognize that:
- Transformation isn’t just about the tech; it’s about the culture. A culture that’s open and accepting of digitalization is a must. To create this culture throughout the business, board directors need to fully understand the advantages and challenges of a digital approach. Directors can lead by example here, for instance, by adopting a digital approach to meetings and board management.
- Alongside the board, a core team of accountable leaders can help to create focus and clarity around responsibilities. Digital governance champions can help to drive the message deep into all your locations and business streams.
- Digital transformation should be about the opportunity as well as risk. Focusing solely on risk without recognizing the benefits of digitalization is a mistake in governance. Organizations intent on reaping the rewards of digitalization need a governance approach that supports and facilitates digitalization rather than one that blocks it.
- You need a clear structure and ecosystem for your digital transformation program and your governance. Taking a methodical approach means less opportunity for omissions or inaccuracies in your governance strategy.
- Technology is your friend. Digitalization is all about technology, of course. But in digital transformation governance, technology also plays a key role. There are governance platforms available to support digital governance. These solutions remove the guesswork and create confidence by helping you to devise a structured framework for your digitalization governance program.
Follow a Clear Roadmap Towards a Well-Governed Digital Future
We are on a one-way path to digitalization — and the speed of travel is accelerating. The journey towards a digital future may be non-negotiable, but success is not guaranteed. A systematic stance on digital transformation governance can be the difference between achieving your digitalization goals or falling at the first hurdle.
And although there may be challenges en route, hopefully, the issues and solutions we’ve flagged here will help. More good news comes in the form of Diligent’s technology roadmap, Building the Optimal Future of Work, which has been designed to help organizations navigate their way through the digital transformation maze. You can download a free copy of the roadmap here.