“Strategy without tactics is the slowest path to victory. Tactics without strategy is just vanity before defeat."
"The Art of War", Sun Tzu
Content
For digitalization and digital transformation to work and produce results, they must become strategic objectives. But any strategic direction also requires a strategy. And below we will share our vision and experience. What should a strategy consist of so that it is practical to life and can be used, and not be a document in itself.
The digitalization and digital transformation strategy is a fundamental document that describes where you are now and where you are going, what goal you are pursuing, what projects need to be implemented and how much money is needed for this, where you will get it from. But just like the organizational structure, strategy is a living document. Although it is compiled for 3 years, it needs to be updated and progress monitored annually. The world does not stand still: new technologies appear, you can move faster or slower, market trends can change, the political situation can also have an impact.
Below we present an average initial strategy with examples of projects for an industrial company with 300–500 people. It is based on our systematic approach .
Strategy structure
Section 1. Assessment of the current situation
Company strategy and strategic goals, market type and industry
Competitor analysis (products/services, financial indicators)
Market trends
Assessing the company's maturity
Organizational structure and divisions of the company
Change, Project and Product Management
Work with personnel and type of culture
Internal communication
Digital maturity (digital culture, personnel and competencies, processes, digital products, models and metrics, data, infrastructure, information security)
Key company limitations
Data from business customers by area of activity (tools used, pain points, suggestions)
Section 2. Target model
Goal (what we want from digitalization)
Key tasks to achieve the goal
6 directions of digitalization (BCG model)
Digital business
IT infrastructure
Organizational effectiveness
Economics and finance
Personnel Management
Logistics and logistics
Production
Digital Marketing
Digital Products
Digital analytics
Digital manufacturing (industry 4.0)
New ways of working
Road map
Section 3. Change Plan
Portfolio of technological projects
Digital business
Digital Marketing
Digital Products
Digital analytics
Digital manufacturing (industry 4.0)
New ways of working
Necessary organizational changes (organizational projects)
Required personnel competencies
Required competencies
Competency Matrix
List of projects
Required financial and human resources
Sources of financing
Efficiency mark
Summary
Introduction to Strategy
This section should contain information about the company for which the strategy was developed and at what point in time the data is reflected.
Assessment of the current situation
Company strategy and strategic goals, market type and industry
We describe the company's strategy and what goals it has, what market it operates in and what clients it has.
For example:
active growth strategy;
strategic goal - to increase sales volume by 2 times in 2 years and with an increase in the number of personnel by 30%;
B2B with large corporations in the electric power industry (electricity and heat generation).
This allows you to understand what you need to focus on - reducing costs, creating new products, etc.
Industry and company performance, including comparison with competitors
Here is a list of 5-10 key competitors, and compare ourselves with them by:
product offer;
financial indicators.
For each competitor, we indicate a link to the website, main services/products, and financial indicators. For the purity of the analysis, you need to take data from the same financial aggregator (Rusprofile, Checco, Federal Tax Service, etc.)
At the end, we make cross-comparisons of our company with competitors over the past year.
This is how we understand where we are compared to our competitors, who is worth emulating and who to track.
Market trends
Reviews key commercial, product and digital market trends. This is a guideline for us.
Organizational maturity
Organizational structure and divisions of the company
We describe what type of organizational structure is used in the company; it is ideal to provide a schematic display of the divisions and their subordination with the number. And for each, describe the key functionality of 5-6 functions or as is. This, among other things, will allow you to see distortions.
A large number of changes will require a large number of projects, and the described org. the structure simplifies communication. Plus, digitalization and digital transformation may lead to the need to change the organization. structure. This also becomes the starting point for estimating the number of support staff. After all, if a company has an active growth strategy, then it needs to grow without inflating its staffing structure.
Work with personnel and the current level of organizational development
We describe the level of organizational development, for example, according to the spiral theory and Adizes theory . According to Adizes, it is useful to study at what stage of growing up you are now, what your profile actually is and where you need to change. Spiral theory helps to understand the next level of development and how to appropriately work with changes.
We also describe policies in the field of working with personnel. Including how the work on its development is structured, what projects and tools are available.
All this allows you to understand where the company should move, what directions to develop, what solutions are needed, what imbalances should be eliminated.
Project, change and product management
We describe how the company usually implements projects, introduces changes, and creates products. Are there formal tools, or is everything chaotic and reactive? If formal tools are used, then which ones, what they are based on, how long ago and what the result is.
This is one of the key areas, because digitalization and digital transformation mean a large number of projects and changes, and the creation of products. And this section influences organizational and HR projects in the roadmap.
Communication
In practice, restrictions on communication and relationships in a team are one of the main limitations. It is necessary to describe in detail what types, forms and channels of communication dominate in the company, what tactics for dealing with conflicts dominate. How horizontal connections are built, how upward and downward communication works. What emotional background dominates in the company, especially between departments and how managers work with emotions. This allows us to understand potential problems in implementing the strategy.
It is also useful to describe how external communication is structured: with clients, partners, authorities.
This is generally a key direction. Properly built and streamlined communication is 70% of success.
Digital maturity of the company
Digital culture and the use of digital technologies in regular management practices
Penetration of digital tools into everyday tasks: planning, monitoring task completion, organizing, holding meetings, staff development. Also worth noting here is the openness of the corporate culture and the willingness of people to accept new technologies and changes.
Personnel and competencies
Compliance of personnel with the competencies necessary for successful work in the context of the active implementation of digital tools. digital economy. Can they solve basic problems, or do they need those. support on every issue? Are you able to formulate requirements for digitalization and automation of your processes? Do they have sufficient erudition about the possibilities and disadvantages of digital technologies? Simply put, do they have the necessary digital competencies from Chapter 11.
Processes, lean manufacturing and quality management system
The use of process management and lean manufacturing practices, the presence of a quality management system, including: the presence of a catalog of the company’s processes and their owners; availability of descriptions of key processes and instructions for them; knowledge of methods for describing and optimizing processes by line managers; mastery of lean manufacturing and design thinking tools; regular analysis, monitoring and optimization of processes.
Digital Products
Analysis of existing products, including digital ones. Readiness to integrate digital technologies into products.
Models and metrics, data-driven decision-making strategies
Constant updating of models, their suitability and reliability, inclusion in business processes. Including the use of digital models for decision making. For example, modeling financial indicators to make decisions on launching projects or new products. Using data-driven, data-informed and data-inspired strategies.
Data
Access to the necessary data in real time while ensuring the required level of security. Completeness and quality of data for decision making. In this case, it is advisable to evaluate the company in the following areas: data management and quality; regulatory and reference data; corporate architecture for data storage and processing, BI tools; data security; metadata.
Infrastructure and tools
Access to modern digital infrastructure and provision of work on all types of devices, including for remote work.
Information Security
How work with information and cyber security is structured in the company. Are effective security approaches being used, or is there an attempt to provide total protection.
Data from business customers by area of activity
We conduct interviews and collect information from top officials (owner or CEO) and functional managers (deputy general directors) in areas. Let's find out:
what IT solutions are used;
what problems there are at work, what prevents you from fulfilling your duties;
What are your wishes and vision for the implementation of digital tools?
Firstly, this work creates the right perception among the team. They are asked what they need, rather than being told from above. And this is already one of the tools for introducing change, the first step. Secondly, digitalization should start from business customers and solve their pain first. Otherwise, they will ignore the tools being implemented.
Key company limitations
We analyze what restrictions there are within the framework of the theory of system limitations - material, political, market, mental. For example, corporate rules, established habits of the old team, industry regulation and customer requirements. You can also conduct a SWOT analysis, but it is not necessary. The same applies to the register of risks (global, local, etc.) - good, but not critical. Risks will be addressed within each project.
This also allows us to ultimately understand what we need. If we, for example, are in a regulated industry, then there is no point for us to create advanced products, the market simply will not accept them. We need to focus on efficiency. Or see what new industry we can enter with new products. Or maybe you will understand that you need to go to the authorities and promote changes in the rules. So, for example, when we were implementing an asset management system, it would have been a very good idea to lobby for the abolition of paper journals of orders and work permit forms.
Target model
Key tasks
Here we describe the key tasks. For example:
build decentralized digitalization, in which the digitalization department will coordinate projects, support colleagues, advise and accompany. But the initiatives and main work will be in the departments;
build a unified IT architecture with a group of companies with unified technical support for standard software;
launch new IT products and get new sources of profit;
increase the internal efficiency of the company.
6 areas of business model digitalization
We describe how we see the company in the future and where we want to go. You can find practical examples in our book “Digital transformation for directors and owners. Part 2. Systematic approach.”
Digital business
This direction can be divided into 3 blocks:
increasing operational efficiency;
searching for new niches and startups for investment;
developing technology partnerships and piloting innovations.
If we talk about the block of increasing operational efficiency, then here is a target model of how the work of key departments should be structured: production; economics and finance; HR and personnel records management; supply, logistics and equipment repairs; organizational effectiveness and office management; IT infrastructure; commercial efficiency and customer service.
IT infrastructure
Target model in this direction:
modern and regularly updated server equipment and company data storage, with the ability to build BI analytics, create digital advisors and train AI;
a modern and equipped mobile employee workplace (office, production base, field personnel);
a unified multi-factor authentication system for all employees and use of Gazprom Group services;
centralized IT support for a group of companies;
a package of modern and regularly updated office software for each workplace;
specialized equipment and software have been introduced to ensure information security and early detection of intrusions.
Economics and finance
Target model in this direction:
automated calculation of wages and other personnel accruals;
automated generation of accounting and management reporting;
automated budget calculation;
the creation of expense reports and other accounting documents has been optimized and automated, unnecessary documents have been eliminated;
an ERP system is used for resource planning and management;
contract activities are automated, including using smart contracts and blockchain technology.
Organizational effectiveness
Target model in this direction:
paperless and seamless internal and external document flow has been built;
each document is approved only by the necessary employees;
government reporting is generated and transmitted automatically;
Key business processes and the interaction of IT systems have been optimized and automated;
the company's projects are implemented in digital tools with automation of reporting and standard tasks;
meeting minutes are generated with the participation of artificial intelligence and the creation and tracking of the agenda is automated.
Logistics and logistics
Target model in this direction:
Seamless integration between internal accounting systems and external services has been organized, including automated collection of reporting documents from external services;
digital services and analytics are used to organize logistics;
the process of managing warehouse stocks and moving equipment and consumables has been digitized and automated;
the process of tracking and moving equipment has been digitized and automated;
A system for targeted storage of materials in the warehouse has been built.
Personnel Management
Target model in this direction:
HR electronic document flow has been introduced and optimized;
each employee has a personal account in which he undergoes adaptation and has access to training courses, instructions, regulations, can obtain certificates, pass exams, apply for leave and solve typical problems, submit an idea;
upon employment, each employee immediately receives all the necessary equipment, the necessary software is installed and access is configured.
Production
This block must be developed for each company. But for manufacturing companies, it is advisable to describe the target maintenance and repair model here. For example, automated planning based on predictive analytics and a risk-based approach.
Customer service and commercial efficiency
Target model in this direction:
the entire sales cycle is conducted in a centralized CRM system and typical tasks are automated ;
Constant analysis is carried out along the sales funnel to determine where customers are falling off;
the client has a personal account with transparent information about the status of product production / service provision and the ability to contact his manager and leave feedback;
Based on the results of the provision of services, a customer survey is conducted and the results are recorded in the database;
the company provides not only premium services and relies on 1,2,3 key clients, and the portfolio is diversified;
the market/industry is regularly analyzed and based on the analysis, plus analysis of customer feedback, new services and products are launched;
the client can order a personalized service or product without long waits, and the calculation and preparation of a commercial proposal takes 1-2 days;
cold calling is carried out using robots that are difficult to distinguish from people;
the company is actively working to identify promising startups that can become an additional source of income;
the company has digital products that it sells to customers or commercializes by selling them to its competitors.
Here, in essence, just like with production, it needs to be worked out individually for each company.
Digital Marketing
Target model of marketing activity, what digital tools and services are needed. For some types of businesses this may not be particularly relevant.
For example, the company is represented in all major services, a marketing strategy is built and implemented, work with clients is carried out, feedback is collected and analyzed.
Digital Products
A model of which digital services and products may be in demand by customers and can become a source of additional profit.
Digital analytics
A target model of how work with analytics, data storage and building models for decision making should be structured.
For example:
the company has built a corporate warehouse and data lake, introduced BI analytics tools and a developed network of analytical dashboards for each manager, department and project;
regulatory and reference information is unified with the group of companies;
the company has developed and implemented its own system for supporting and making decisions on production and commercial processes, with automated analysis of economic indicators, drilling timing and preparation of a commercial proposal;
Digital twins of the main business processes have been built and constant work is underway to optimize them, including using big data analysis tools and data science.
Digital manufacturing (industry 4.0)
A target model of which Industry 4.0 tools are suitable for the company and appropriate for implementation.
For example:
automatic collection of big data from equipment using the Internet of Things and export of data to storage with attachment to digital twins of each product has been built;
own equipment, or custom-designed equipment, is designed in 3D and with the creation of digital twins;
data collection from IT systems, including telemetry systems, is automated and occurs without human intervention;
production processes and tasks are managed either by an expert system or an artificial intelligence solution that operates on big data to make decisions;
3D printing is used to produce spare parts or unique products;
The main production operations in production are robotized.
New ways of working
A target model of what services and tools are needed to organize seamless communication, increase convenience and personal efficiency.
For example:
a seamless ecosystem has been built for communications and work time planning - mail, calendar, messages, voice calls, video calls and conferences;
the company uses modern tools to organize the effective work of both individual employees and project teams;
each employee has the opportunity to work remotely, and access to the calendar, mail, messages and calls is available from a mobile device;
Access to the main tools is possible from any device, without specialized settings.
Stages of digitalization and key tasks
We discussed this section in detail in the article Digital transformation and digitalization: competencies and roadmap
But we can roughly distinguish 3 stages:
Stage 1. Preparation
Stage 2. Introduction of technologies
Stage 3. Consolidation of changes and commercialization
Portfolio of technological projects
You can find examples of projects in the book “Digital transformation for directors and owners. Part 2. Systematic approach” . Here we will look at what programs and portfolios there may be.
Digital Business Program
Portfolio: IT infrastructure
Portfolio: “Economics and Finance”
Portfolio: “Organizational effectiveness and office management”
Portfolio: “Supply, logistics and equipment repairs”
Portfolio: “HR and personnel records management”
Portfolio: "Production"
· Program: “Digital Analytics”
Briefcase: "Corporate storage"
Portfolio: “Analytics and Decision Making”
· Program: “Digital products and customer service”
· Program: “Digital Manufacturing”
· Program: “New ways of working”
Portfolio of organizational projects
Here we also provide a list of programs and project portfolios that are needed for the effective and efficient implementation of digital technologies. You can also find examples in the book.
Program: "IT"
Program: “Project Management”
Program “Process Management, Lean Manufacturing and Systems Constraint Theory”
Program “Regular Management Practices”
You can also add tasks here to implement digital business areas:
searching for new niches and startups for investment
developing technology partnerships and piloting innovations.
Required personnel competencies and portfolio of HR projects
We describe the competency matrix, taking into account the organizational structure, and describe the training plan with priorities and deadlines.
Program: “Personal competencies and motivation”
Program: “Digital Competencies”
Program: “Management tools and competencies”
Portfolio: “General Projects”
Also, when describing target projects, it is useful to indicate the business customer of each project. This will make it easier to work with the budget and eliminate situations when no one needs the project and its product.
Required financial and human resources
We conduct a preliminary assessment of the necessary financial resources and who needs to be hired. For example.
Financial support
The necessary funding for the first stage projects, according to preliminary estimates, is about 300 million rubles. This amount is due to the need to purchase IT solutions located in the data center of the group of companies.
Or you make calculations using the subscription model of SaaS solutions. Then the amount will be about 20-30 million rubles per year.
Human resources
Staffing is possible in 2 options:
carrying out decentralized digitalization with training of company employees in the necessary management competencies;
carrying out centralized digitalization with the implementation of all projects by the project office.
Decentralized digitalization
In this case, all projects are implemented by the departments of business customers: procurement and supply, production, maintenance and repair, personnel, economics and finance. The organizational development and digitalization divisions provide a supporting function.
In this scenario, a portfolio manager for digitalization projects is needed; business analyst/business process specialist; data and reference data specialist; project administrator.
Employee Responsibilities
Head of digitalization project portfolio
Coordination of internal projects of the company and those centralized by the group of companies
Organization of personnel training in the necessary digital competencies
Formation of requirements and control of maintaining project documentation for IT projects
Collecting needs from business customers, structuring ideas, bringing them to the digital committee
Formation of a budget for digitalization
Development and updating of IT strategy
Interaction with IT solution providers
Business Analyst/Business Process Specialist
Description, modeling and optimization of business processes
Formation of functional and non-functional requirements for technical specifications
Preparation and updating of user instructions
Prioritization of initiatives and calculation of effects from digitalization and automation
Development of business metrics
Data Scientist
Inventory of data and flows in the company and IT systems, their optimization
Creation of rules and regulations for the collection, storage and processing of data
Checking data quality and working with reference data, including updating and development
Training staff to work with data
Participation in the implementation and improvement of IT systems
Construction of a corporate data warehouse and formation of functional requirements for it
IT Project Administrator
Documenting change requests in IT systems and projects
Maintaining technical and execution documentation for projects
Preparing and tracking digital project schedules and analytical reports
Organization of working groups and meetings
Centralized digitalization
In this case, all projects are led by the digitalization and organizational development department. In this scenario, a portfolio manager for digitalization projects is needed; business analyst/business process specialist; specialist in working with data and reference data and for every 2-3 active projects 1 project manager. Also in this case, you can also refuse a number of HR projects.
Employee Responsibilities
The responsibilities of a project portfolio manager, a business analyst, and a data specialist are identical. And project managers will be responsible for:
development of project roadmaps and implementation plans, analysis and identification of risks, preparation and implementation of corrective measures;
calculations of personnel load and project budgets;
organizing the work of project teams and internal communications, organizing and holding meetings;
project management and interaction with performers and specialized services of the central office of the group of companies, including monitoring the work of contractors and maintaining execution documentation;
preparation of analytical information on projects.
Sources of financing
In this section we describe sources of financing (investments, own funds, loans, etc.).
The digitalization financing model is possible:
only own funds;
attracting resources from external sources;
combining own resources and attracting resources from external sources.
Additionally, the type of funding source can be assigned to each project in the project lists.
You can also indicate the main ways to reduce costs
Optimization of functional requirements (including adaptation of your processes to out-of-the-box solutions and selection of solutions that solve key problems)
Using SaaS solutions
Using cloud infrastructure
Systematic approach to digitalization
Efficiency mark
We offer the following model:
Financial performance and commercial efficiency
Financial result: OPEX, EBITDA, profitability.
It is advisable to compare relative indicators with market competitors
Commercial efficiency: share of revenue from new products and services, diversification of the client portfolio.
HR
Ratio of total personnel to production
Labor productivity (million rubles of revenue/person, also possible million rubles of profit/person), staff turnover and satisfaction.
Staff satisfaction (IT function, availability of information, usability of tools)
Processes and internal efficiency: automation and digitalization
Automation: the degree or share of process automation, the number of workers in routine processes, the number of errors.
Procedures: time of approvals, number of meetings/meetings/sessions.
Management: standard of control.
Partnerships and Innovation
Ecosystem: partnerships with universities, accelerators.
Efficiency of implementation of new technologies: number of tested technological solutions, pilots of which were implemented, of which implemented.