Speaker 1: When embarking on any sort of digital transformation, your organization is going to go through some pretty significant impacts. But there are some very common patterns we see of how organizations are affected by digital transformation. So today I want to talk about the top 10 things that companies most often experience in terms of change impacts to their organization during transformation. My name is Eric Kimberling. I'm the CEO of 3DMX. We're an independent consulting firm that helps clients throughout the world with their digital transformation journeys. And organizational change impacts are a big deal when it comes to digital transformation. It's not just about implementing new technologies, it's about changing your operating model. It's about changing your people, changing your culture, all that good stuff. And what we find is even though the changes are pretty significant and they may feel unpredictable at times, they're very predictable patterns in terms of what we see with our clients and the impacts that they experience as a result of digital transformation. So today I want to give you a quick countdown of those top 10 things that organizations most commonly experience during digital transformation in terms of impacts to their organization. Now, the most obvious and least important aspect of change impact within our top 10 is the fact that your employees are using new technologies and new tools. And on the surface, yes, this sounds like a big deal, but in reality, this is the least of their worries, typically, when going through a digital transformation. Yes, the user interface looks different. Yes, they have to push different buttons. Yes, it's just a different change in their day-to-day work responsibilities. But in general, this isn't one of the most significant things but it's still something that needs to be considered as part of your training and communications to make sure that people are comfortable with the new technologies and how they use their technologies day-to-day. What I will say, however, is it's nearly impossible to effectively address this number 10 item on our list without addressing the other nine things first before you can get to that. But having said all of that, the impact of new technology itself and using a new system is number 10 on our list of the top 10 change impacts. The number nine impact on our list is the impact to the technical infrastructure. For many organizations, they're migrating from an on-premise solution to solutions in the cloud. And what that typically means is that you are getting rid of infrastructure that you had in the past, the physical infrastructure that you may have had. So instead of needing to have a big data center with lots of different servers and taking up space and money and capital investments, now you're shifting all of that to the cloud and now cloud solutions are typically hosting your systems and data. Having said that, not all organizations have made that shift to the cloud and not all organizations going through digital transformation are necessarily going to the cloud. Most of them are, but not all of them. But even if you're on-prem or you're putting in new technologies that are on-prem, as you've had in the past, you're still going to have impacts to your infrastructure. You're still going to have server upgrades and hardware and infrastructure upgrades that are important to support that technology going forward. So all that being said is the reason why the impact to the technical infrastructure is number nine on our list. The number eight thing that is most common with organizations going through change is the fact that they need new IT skills. Anytime you implement new technologies, go through a digital transformation, you need your internal IT department to have different skills than they've had in the past. Partly because there's new technologies, but partly because now you're having to integrate to other systems. You might be moving to cloud solutions. You might be trying to figure out how to leverage emerging technologies like robotic process automation or artificial intelligence, whatever the case may be. So this all requires your IT staff to constantly be up-skilled. And it may be that you have the right staff in place, but you just need to up-skill them and train them on new technologies. But it could also mean that you need to hire other people and bring in outside fresh blood into the organization to provide that competency. But either way, that's why new IT skill sets are number eight on our top 10 list. Another human impact that digital transformation has on organizations is the fact that it typically requires some sort of new reporting relationship or modified reporting relationships. And some examples might be your IT department. Your IT department may now start to report to the CFO or it may start to report to the CEO if it didn't already. Oftentimes, digital transformations are an opportunity to rethink how your organization is structured. Another example along those lines might be if you're moving to a shared service model where you're gonna consolidate or centralize things like HR or accounting or IT. That's gonna require new reporting relationships. And those sorts of things may seem like they have nothing to do with technology or digital transformation, but they absolutely should have something to do with the digital transformation. And that's something that should be thought through as part of your overall change strategy, as well as your overall implementation plan. So the right reporting relationships and addressing those reporting relationships are number seven on our list. Number six on our list is different business processes. So anytime you go through a digital transformation, if you do it right, you're not just gonna automate what you've always done in the way your workflows and processes have worked in the past. Now you should be thinking about what is our new way of operating? How are we gonna optimize business processes and be more efficient and effective in the way we operate? This requires some deliberate thought around how you want to improve your business processes, how technology can enable potential improvements, and how you can better align your business processes with your overall corporate and business strategy. So thinking through all this stuff is an important part of the planning process and that's why it's number six on our list. Another impact that's very similar to the business process impact that we just talked about is the fact that now you have more end-to-end integration across your enterprise. And that suggests that now instead of operating in silos, you've got integrated workflows and data flows between different departments and different functions and different locations within your organization. And it may sound like I'm saying the same thing as the previous point, but actually this one is different. And the reason for that is because those end-to-end processes affect people in a very different way, in a very significant way. And that's because now that we operate in the context of an end-to-end business process, now anything we do is going to be affected by stuff that people do upstream and the stuff we do is gonna affect people downstream. So that's something that requires a lot of change management and people need to understand that and they need to be taught and need to walk through and work through how their contributions to the end-to-end processes are affecting others. And so that's a very important point to capture and address as part of your change strategy, as part of your overall digital transformation plan. ♪♪ Digital transformation also results in new roles and responsibilities. I talked about reporting relationships and business process changes and end-to-end integration, but roles and responsibilities themselves are very broad and very impactful across the entire organization. For example, if you're implementing in a human capital management or HR technology that involves self-service, now suddenly you have taken the responsibility of entering benefits paperwork into the system, you've taken that away from HR and you're expecting end employees to be doing that themselves through that self-service model. So that's a big impact to HR. What is HR gonna do now that they're not entering that data? It's easy to say, well, that frees them up to do other stuff but what's the other stuff? What are they gonna do with that time that they freed up as a result of technology? So that's just one tiny example of how technology can affect someone's job and their roles and responsibilities. And certainly if you're beginning a digital transformation, you wanna make sure that you have a good understanding of what those impacts are because they're gonna be very broad if you're doing an ERP implementation or some sort of broad-based technology that affects your entire organization. The magnitude is going to be very significant. So be sure you're thinking about those end-to-end processes because that is gonna have a material impact on your organization as part of your digital transformation. What is the customer experience like? An important stakeholder that oftentimes gets overlooked in digital transformation is your customer. What does the customer experience look like? Oftentimes digital transformation is focused on how we make ourselves better and those internal processes more effective and less painful for us. That's all important stuff. We also have to think about how customers are affected. What does that overall customer experience look like and how are we gonna roll those changes out and make the customers part of that new journey in that digital transformation journey that we're on? For example, during the pandemic in 2020, we found that many organizations were forced into this e-commerce business model of interacting with and providing products and services to customers via digitization, not because organizations necessarily wanted to, but because they were forced to. Now, this resulted in a very different customer experience for organizations, and it's actually triggering more momentum behind this whole concept of focusing on how we service our customers because it's being disrupted so significantly by new technology and by economic changes in the world today. So really focus on that customer experience and understand and articulate what that customer experience is so that your employees understand it and they can all be aligned behind how they're going to impact and affect and enable a better customer experience, but also so you can use that as part of your value proposition to your customers as well. How can we make digital transformation more effective? Number two on our list is the fact that you have new business models. That's a very significant impact or it should be a very significant impact for your organization. If you're implementing technology simply to automate processes or simply to automate things that you've already done or have always done, you're probably not getting nearly as much value as you can or should be out of your digital transformation. And technology today has the potential to completely disrupt and transform your business model. I talked earlier about two of them that I'll use as examples here. One is the employee self-service. That is a business model change where now we're changing our internal business model to focus on employee self-service and HR is no longer going to be doing that manually or re-entering data into the system manually. Another example is the e-commerce example I gave earlier. If you're interacting with your customers differently, using technology as opposed to people calling in or even just visiting a website, now you're changing your business model, the way you deliver to your customers. And then finally, another example, which is just three of many examples, is machine learning. If you use machine learning and artificial intelligence, that's going to transform the way you do business. It's going to give you a leg up on how you use data, how you predict what consumer behavior might be or how the future might play out for your organization. And that's a change to your business model. That should be a change to your business model. So this is why new business model is number two on our list. Now, the single biggest impact that most organizations experience as a result of digital transformation is the one that's also most likely to not even be thought about or considered when planning for a digital transformation. And that is the overall impact on the culture of your organization. Everything we've just talked about, the other nine things that led up to this number one thing, they all trace back to culture and they all affect culture. So whether it's a new business model and process integration, whether it's new roles and responsibilities, new processes, whatever the case may be, that all affects culture and our culture should be affecting those other things as well. So just to give you a couple high level examples of cultural shifts that we oftentimes see with our clients. One is the midsize organization that has grown very quickly through acquisition and organic growth. They used to be a gunslinging entrepreneurial organization, but now they need to grow up and start acting like a real company, a mature organization. That's a very significant cultural shift that oftentimes is driven by digital technologies, but digital technologies alone won't change that mindset. So we have to have a change strategy that addresses and affects the culture in a way that helps. Another example is a type of organization that we commonly see, and maybe it applies to you as well, is that gunslinging organization that relies on tribal knowledge and heroics to get work done every day. If our digital transformation is meant to standardize processes and create a more repeatable, scalable business process that can grow and roll with the changes, then that's a big cultural shift. And that's a particularly hard cultural shift because a lot of people take pride in that gunslinging culture of heroics and whatnot. So understanding what we want our culture to be is very important, and we have to have a clear cultural and change strategy to help us get there. If we don't do that, then the other nine things, the other nine impacts are gonna be very disruptive, even more disruptive than they're going to be anyway. So making sure that you have a clear, deliberate strategy for culture is an important aspect. So for more information on how your organization is likely to be impacted by digital transformation, I encourage you to check out our Guide to Organizational Change Management. I've included a link to that below. That'll provide some resources and best practices to help you in your change transformation journey. In addition, I've included links to other resources that are meant to help you and provide guidance and best practices for your digital transformation. So I hope you found this information useful and hope you have a great day. Thank you.