Why read this post? It will help you sanity check your approach to buying digital transformation services and/or supporting solutions that may involve significant integration complexities.
Why misunderstandings arise when buying digital transformation services
In over 85% of the Expert Witness work we undertake for the High Courts, we see a client that has attempted to buy advanced software solutions, only to find that what it has procured does not achieve what is expected of it. The client often blames the software supplier and/or systems integration partner for providing a product that is not fit for purpose. In turn, the systems integration partner/supplier will often blame the client for not being clear about its requirements and/or for changing its requirements part way through the project.
Six common mistakes
What we have determined, having over the years worked on similar cases, is that there are often six key issues that create the foundations for misunderstandings between supplier, systems integrator and buyer, well before the digital transformation services solution and/or services have been procured and/or implemented.
Identifying these issues early on and adapting to avoid such misunderstands arising in the first place, makes all of the difference to the chances of you:
- Selecting the right supplier(s),
- Buying the right type of advice and solutions,
- Assuring a fit for purpose implementation, and
- Benefitting early from greater effectiveness and management information that gives you real insights.
#1. The ‘rush’ for senior executives to see progress
On-the-ground project teams are often under pressure to meet unrealistic project deadlines. From the procurement of the solution to its generation of benefits outlined in the business case, due diligence, contracting and the solution entering into business-as-usual, the deadlines to achieve each of these stages are not always considered as thoroughly as they should be. Unfortunately, there are times we have seen that they can be practically plucked out of thin air to achieve a budgeting or internal political aspiration.
As your project team will be under pressure to demonstrate to the senior executive team that progress is being made, corners may on occasion be cut in an attempt to ‘speed up’ the project by cutting out processes perceived to be ‘unnecessary’. The result being a team more rapidly able to place an order for the ‘solution’. I’m sure you can see the dangers that this could generate as it is often due diligence invested in these early stages which provides both client and supplier with the way forward, along with the clarity needed to design the blueprint to implement and assure a fit-for-purpose solution.
#2. Not knowing what ‘good’ looks like
Prior to embarking on the procurement of a potential solution, the amount of upfront time you need to invest, in order to be clear about ‘what good looks like’ for your organisation, is much higher than most people think. The complexity, number and type of business processes you are trying to improve through the implementation of the solution has a direct impact on the amount of upfront time you need to invest.
Realistically, even for capturing the more simple key processes and putting them into ‘Use Cases’ and supporting requirements documents in the right way will take between 3 to 6 months. For more complex solutions that will support wider organisational change, it would be wise to factor in 12 to 24 months for process capture, designing of appropriate ”Use Cases’ and aligning them to your requirements.
#3. Buying the wrong type of digital transformation service/solution
Often, organisations that are buying and implementing slightly more complex IT/digital solutions, attempt to buy one or more and integrate them, with the expectation that once trained, everyone will start to use those solutions and, as a result, the operating processes in the company will improve.
The business change aspects of ‘why’ processes need to improve, ‘how’ each solution will specifically help the users to achieve those improvements and ‘what’ the specific steps are to implement, operate and enter into business-as-usual the digital solution which supports the operators in the desired change, can be significantly underestimated.
The question to ask is, are you really trying to procure a series of software solutions to help optimise your processes? Or do you instead really need to buy business change support (advice/consulting), and get the advisors to recommend appropriate software solutions that are more likely to be fit for purpose?
#4. Designing a procurement strategy before you know what you are buying
It’s not unusual for management teams to jump in and decide they need a procurement (and contracting) strategy before going to test the supplier market. It is perceived that this can give senior executive teams visibility of ‘progress’ in the project.
It’s a potential ‘deliverable’ and/or ‘milestone’ in seeing the project advance. This step can be fine providing that (a) you are already clear on ‘what good looks like’; the hurdles that any consulting advice and/or digital solutions will overcome for you and by when; and (b) you have already completed a well-informed Early Market Engagement exercise, that has provided you with the appropriate information evidencing that your digital change project objectives are achievable within your budget, timescales and the resources you have available to you.
Without being fully informed of these two key points, it will be difficult to practically assess whether it would be better to buy a single solution, multiple solutions that need to integrate into one another, or consulting advice from a solutions integration partner who can help determine what’s actually required to achieve the outcomes you expect.
#4. Go to Early Market Engagement, ‘too early’
Organisations often see an Early Market Engagement exercise as a way to gain visibility on ‘the art of the possible’. They want to understand, ideally without pre-conceptions, what ideas and concepts other suppliers and their clients are using, and whether they may suit their own organisations.
This is a positive approach, but the outcome can work against you if this is not structured in the right way. Think of it like this; if you were a supplier that a client had approached with only a vague idea of its aspirations – in other words, the client hadn’t been through the ‘hard miles’ of trying to understand its target operating model (or Future State), the real business objectives it wished to achieve and the operating hurdles it was trying to overcome, and it didn’t have a clear idea of how much it wanted to improve those outcomes by, and by when – would you class them as a higher risk potential client or a lower risk potential client? Consequently, how would you apply your pricing model based on the relative exposure difference of dealing with a high risk client as opposed to a low risk client? Would you charge them the same or weight your pricing according to the risk they pose?
Ensuring that you have a clear articulation of ‘what good looks like’, your expectations and requirements alongside the quantity by which you wish to measure improvements against, means (a) you can have a mature conversation with potential suppliers, exploring the ‘art of the possible’ in the context of knowing what you are trying to achieve and by when, and (b) suppliers can be persuaded to minimise any estimated (or actual) risk pricing in their solution costs. Strategic and specialist suppliers crave mature clients and they will beat a path to your door offering highly competitive value in order to work with you.
#6. ‘No regrets’ work
This type of work is usually undertaken when there is uncertainty about how, or whether, a project will progress in the near future. In order for the senior management team to ‘see progress’, members of the project team will often undertake various types of work that they believe will survive the approach of the project.
Such perceived work includes drawing up business cases, project plans, programme plans, planning activities, procurement and contracting strategies and so forth. However, having recovered over 500 complex projects and system integrator relationships, we know that unless you are clear about what business outcomes any potential solution is expected to achieve, all of the planning activities in the world will not mean much in practical deployment terms, as they are highly likely to have to change anyway. This will just lead to significant re-work for you.
When there are uncertainties about how the project will progress, the only ‘no regrets’ work that will end up with ‘no regrets’, is to have complete clarity (and internal agreement) over your expectations. See the next section to be clear on what this looks like.
3 activities to ensure you select the right digital transformation services supplier and solution
#1. Clarity of expectations
Mentally imagine yourself in ‘Target Operating Model’ or ‘Future State’ mode. Pretend the business change advice you are looking to procure has led to changes in how you operate your organisation. In turn, that business change advice has led to either your own team or a systems integrator implementing solutions that work well for you and you are now operating really effectively in BAU mode.
Having waved that imaginary magic wand, try to articulate what outcomes and objectives are you now achieving by using the new solutions that you couldn’t achieve before? How are your supplier relationships for those solutions operating? By what degree have the outcomes, objectives and supplier relationships improved? How are you reporting progress and return on investment? How long did each step take you?
Bear in mind, there are three types of articulation you can provide to suppliers and these range from being completely aspirational through to outcomes you can date and time stamp. Having this sort of clarity helps you in two ways:
- Firstly, it provides your internal stakeholders with user-friendly direction, that if you invest in this programme/project, what your organisation can expect to achieve and by when. Most importantly, elicit further iterations of clarity from these stakeholders so they all buy into the process and sign it off.
- Secondly, providing these greater levels of expectation clarity to potential suppliers during an Early Market Engagement exercise, and showing that your key stakeholders have signed off on them, will ensure suppliers are more likely to class you as a ‘mature’ client, placing you into the ‘low risk’ box. In supplier terms, ‘low risk’ means (a) the end-to-end project costs will be significantly lower than if you had not provided them with this clarity, (b) you’ll more than likely get the best supplier teams working on your project and (c) both of these mean you’ll be more likely to have a fit-for-purpose solution implemented, on time and on budget. A win-win for you all.
The above is really simple to state, but seriously challenging to capture and articulate in the right way. Most organisations avoid it because it’s ‘hard thinking’. But this is why some 56%-87% of complex digital transformation projects fail outright; often costing more than double the original budget, more than double the original implementation time and still end up not being fit for their intended purpose.
So how do you achieve this type of clarity? At a high level, you need to put together:
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- An outcomes statement. Determine which outcomes you are trying to improve, by how much and by when.
- Use Cases. Put together some use cases (1 simple, 1 medium complexity and 1 high complexity) for each business area you are looking to improve outcomes in. These use cases should describe operating scenarios of what you are doing now and how you would like to see them improve.
- Outline the specific ‘things’ you (a) want the new solution to avoid and (b) ‘think’ you would like it to do. But most importantly, show on the ‘Use Cases’ (see above) ‘where’ these particular requirements might improve your operations. It is particularly important to ‘join up’ all the requirements you have listed to show ‘where’ in the operating process these improvements will be activated in the ‘Use Case’. This helps prospective suppliers during any Early Market Engagement process really understand what it is you are trying to achieve, how you are currently going about it, and gives them an insight into what you think the business change might look like.
Using the above for an Early Market Engagement process, you will be much better informed as to whether your outcomes can be achieved on time, to budget and within the resourcing and financial constraints you are working to.
#2. Ask the market what you should buy, and why you should buy it
Your Early Market Engagement process for your digital transformation project should help to inform you whether you have the right ‘scope’ of expectations and the degree to which your internal team, (a) have the capacity to undertake and resource a project of the scale you are thinking of entering into, and (b) have the knowledge and experience of undertaking potentially complex business change projects, including a specialist understanding of how to procure complex solutions that may need to be integrated with one another.
This point is particularly critical. In our expert witness work, we see all too many organisations buying complex solutions that have to integrate with one another, not actually realising that their internal team don’t have the capacity, expertise and resources to procure the right advice and implement the business change on top of buying and implementing the right solutions and helping the organisation adapt to their use.
So, by undertaking an Early Market Engagement process in the right way with appropriate diligence, the market will ‘ask you the right questions’ to establish whether you have the right internal resources to buy multiple solutions to support the business change process yourself, or whether procuring a systems integration partner may well be a much more cost-effective option.
If you do think (or you are told) that your own team can stitch all of this together without the need for a business change or systems integration partner, just ask for evidence of where they have completed this type of programme before, as an internal team, and what evidence they have that the end-to-end programme was implemented within budget and on time, and the degree to which it was fit for purpose. If the answer (or evidence) is flaky, then seriously consider at least asking the market for a potential system integration or business change partner procurement instead of trying to buy the solutions, integrating them yourselves and hoping for the best. It usually doesn’t end well.
#3. Construct an informed procurement and contracting strategy
If you follow the two steps above, you will have the means to construct a digital transformation procurement and contracting strategy that will be far more informed. In turn, the procurement process itself will be much more certain (easier to contract for), containing far less ambiguity (minimising the potential for misunderstandings during implementation). And, if it is structured the right way, this means you’ll select a Business Change Partner, that will also act as prime contractor for procuring the solutions necessary to achieve the business outcomes you need and support the implementation of the hard miles of the business change. Likewise, the implementation process, while this can still be painful in terms of getting people to change, you will have a clearly defined series of steps which is likely to lead to a much faster implementation to get you into BAU and the planned for huge improvements in effectiveness.
Conclusion
The significant challenges of digital transformation projects and history’s lesson that the odds are stacked against success should mean that organisations would be advised to approach their pre-contractual procurement stages with care. However, evidence from our extensive expert witness work suggests this is not always the case.
As always with such things, clarity of detail and care to communicate with your strategic partners and to ask for professional support at the appropriate time, should all be part and parcel of the process to avoid misunderstandings and maximise your chances of achieving your defined outcomes.
If there’s one lesson to learn from the last two thousand or more words, it’s, take your time, borrow from the carpenter’s hymn sheet ‘measure twice, cut once’ and your fit-for-purpose solution will be one step closer to reality.
