| |DECEMBER 20239CIOReviewinitiatives in terms of their contribution to the overall purpose. A good portfolio should be centered on transformational, adjacent or core innovation value cases, with budget thresholds for each case.Digital transformation value cases can include existing business processes, but also the adoption of new capabilities. For instance, AntGroup in China created a new set of credit scoring capabilities using AI- based predictions using transactions from its payment gateway business.The criteria of what the value is to the business vs. risks should be linked back to the purpose of the digital transformation journey. If an initiative may represent a disruptive new business model that resonates well with the overall purpose, even if it's risky, an organization may decide to go for it.Digitalization means "Machine Readable", i.e., data driven.Data derived from processes, documents, biometrics, etc. needs to be in a machine-readable format. That is the key characteristic of digital. Regardless of the use case, data derived from business processes need to be in a machine-readable format.For example, Large Language Models such as ChatGPT, or image recognition and other AI driven value cases are derived from data, lots of it. If the data is not stored in a machine-readable format, it can't be used by machines.Value added business applications / new business models are not all equal.Ideally, any dollar amount spent on a digital transformation value case needs to identify the potential benefits to the organization. This is usually a struggle. Following is good approach to guide initiative's investments:Common Roadblocks to successCreating a digital transformation initiative may have profound implications. Many pitfalls can prevent success, for example:Underestimation of Organizational & Cultural ImplicationsOrganizations, especially large ones, are full of corporate silos. When organizations want to focus on a large and complex business process first, it typically goes through many departments, run across different functions and fragmented systems. Without senior leadership looking across the organization to help break silos, value cases may end up in fragmented implementations with underperforming results. At the end of the day, it all comes down to people. And people, especially in large organizations, have different priorities and objectives. This is why many organizations are setting up product oriented cross-functional digital transformation offices, with strong senior sponsorship and shared objectives. To navigate these silos, methodologies such as scale agile framework or similar are good starting points to align everyone toward common goals and help to manage change.Unrealistic ExpectationsAgain, it all starts at the CEO level. I had one CEO that wanted results without investing. Another one wanted short term ROI that simply was not feasible. Establishing investment thresholds depending on the type of initiative is a good start and KPIs for each digital transformation initiative are key regardless of how disruptive the ideas are, adjacent value cases to expand products or services or cost related. Metrics to measure success are critical to manage investments and fostering a culture of fail is ok as long as it's cheap and fast.ConclusionYour Digital transformation will be a long and winding road. To overcome this, a pragmatic, people centric approach, following the definition stated here can help your organization to drive change through technology. It's a difficult journey, but if executed properly, can position, and drive your business to the future. THE CRITERIA OF WHAT THE VALUE IS TO THE BUSINESS VS. RISKS SHOULD BE LINKED BACK TO THE PURPOSE OF THE DIGITAL TRANSFORMATION JOURNEYInnovationTypeTransformativeAdjacentCore10%20%70%10%20%70%Disruptive business models, new to industryNew products or markets for existing markets of productsNew features for existing products% of Digital Transformation BudgetExpected % of new ProfitExamples
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