CS124 Technology in Business Lecture 10 - Digital Transformation

X T H E U N I V E R S I T Y O F S T R AT H C LY D E CS124 Technology in Business Lecture 10 – Introduction to digital transformation Dr Fraser...

X T H E U N I V E R S I T Y O F S T R AT H C LY D E CS124 Technology in Business Lecture 10 – Introduction to digital transformation Dr Fraser Macdonald [email protected] X In this session T H E U N I V E R S I T Y O F S T R AT H C LY D E Introduction to digital transformation Learning Outcomes Analyse scenarios involving People, process and technology digital transformation in business using quantitative Build, buy or bodge and qualitative methods Technology delivery process Initiate stage of the process  Digital transformation fundamentals X T H E U N I V E R S I T Y O F S T R AT H C LY D E X Digital transformation T H E U N I V E R S I T Y O F S T R AT H C LY D E “Digital Transformation” is the general term for the strategy of applying digital technology to areas of a business There is an assumption that some or all of the business is making insufficient use of technology which could deliver some form of competitive advantage Technology is not the key driver - it is an enabler - the starting point is always focused on where the business can be improved Digital Transformation is continuous – the work is never complete as technology and the business continue to evolve Commentators describe Digital Transformation as a “journey” X Digital transformation process T H E U N I V E R S I T Y O F S T R AT H C LY D E Strategy development Current state Implementation analysis X Analysis to strategy T H E U N I V E R S I T Y O F S T R AT H C LY D E External business environment Strategy development Business Internal strategy and business policy processes X The 3 components of DT project success T H E U N I V E R S I T Y O F S T R AT H C LY D E Process People Technology X Process T H E U N I V E R S I T Y O F S T R AT H C LY D E Previously, we noted the value in documenting and standardising processes Business Process Management is the structured approach to improving processes As part of digital transformation, it’s prudent to heavily focus on process improvement: There is little point in adding technology to a poor (complex or inefficient) process Alternatively, technology may suggest ways to improve the process that would not be possible otherwise X Process metrics T H E U N I V E R S I T Y O F S T R AT H C LY D E Cycle time: Total time taken to complete a process from start to finish (shorter == more efficient) Cost per transaction: Total cost to carry out a process for each transaction. (lower cost == more profit) Efficiency Resource utilisation: percentage of available resources that are used in a process (lower == more efficient) Standard deviation: Low SD implies values are close to the mean, therefore more consistent Variance Range: Difference between highest and lowest value. Small range implies more consistency Customer satisfaction: how well the product/service meets customer requirements (higher == better) Effectiveness Error rate: number of defects or errors created in the process (lower == better) Quality rate: proportion of output that meets the required standard (higher == better) Compliance rate: Extent to which a process complies with rules or regulations (higher == better) Control Risk rate: Frequency of identified risks occurring (lower == better) X People T H E U N I V E R S I T Y O F S T R AT H C LY D E Perhaps the toughest part of transformation is the People element In general, people can be resistant to change, such as new ways of working or adopting new systems Any transformation requires a high degree of engagement and “selling” Understanding user needs is fundamental to all of this – how are you making their lives easier? A key element of transformation is identifying stakeholders – and managing them Alternatively: FIFO – fit in or fly off X Stakeholders T H E U N I V E R S I T Y O F S T R AT H C LY D E The people who have direct interest in the transformation are known as stakeholders They can include System end users, of all levels Senior managers Budget holders Suppliers Customers …. Stakeholder management is the process of identifying, analysing and managing the needs of stakeholders X Technology T H E U N I V E R S I T Y O F S T R AT H C LY D E We’ve covered an array of types of technology that can be employed as part of transformation There is a lifecycle involved in acquiring and deploying tech - this lifecycle must be managed and executed appropriately There are a number of ways to acquire the technology for the identified need X Technology acquisition approaches T H E U N I V E R S I T Y O F S T R AT H C LY D E In-house Bespoke development (build) Outsourced Technology User-developed acquisition (bodge) Tailored Off-the-shelf (buy) Standard  Technology delivery process X T H E U N I V E R S I T Y O F S T R AT H C LY D E X Delivering a technology any project T H E U N I V E R S I T Y O F S T R AT H C LY D E Initiate Plan Execute Close  Project initiation X T H E U N I V E R S I T Y O F S T R AT H C LY D E X Project initiation T H E U N I V E R S I T Y O F S T R AT H C LY D E Generally triggered by a recognised need in the business or activity in the digital transformation strategy Activities include: Establishing project goals and objectives Stakeholder identification Risks analysis Resource identification Initial plan development Outline finances Developing a business case  Business case X T H E U N I V E R S I T Y O F S T R AT H C LY D E X What is a business T H E U N I V E R S I T Y O F S T R AT H C LY D E case? Goals and objectives Companies have finite resources to invest in improvement activities such as digital transformation Resources Stakeholders As such, they need to prioritise spending and ensure value for money Business Case A business case demonstrates why the proposed work is needed and what the benefits of undertaking Plan Finance the work are The reasons and benefits of a project may seem obvious to those directly involved, but may be less Risks obvious to others It draws together many of the activities in project initiation If the business case does not add up, the project does not move to the planning stage and that’s OK X What are the benefits? T H E U N I V E R S I T Y O F S T R AT H C LY D E Better planning and decision-making: help compare different options and their costs and benefits, making it easier to plan and make smart decisions. Stakeholder agreement: ensures everyone involved understands the project’s goals and benefits, increasing the chances of success. Clear justification: explains why the project is a good investment, breaking down costs, expected benefits, and overall impact in a convincing way. Understanding risks and opportunities: help identify potential risks and benefits, allowing you to address any issues before they arise.  Project goals and objectives X T H E U N I V E R S I T Y O F S T R AT H C LY D E X Goals T H E U N I V E R S I T Y O F S T R AT H C LY D E The goals summarise the key benefits of the transformation project These generally fall under the four “process” areas mentioned previously Efficiency (time and/or money saved) Variance (reduction thereof) Effectiveness (improved customer satisfaction, reduced error rates, etc) Control (improved compliance etc) Clear goals allow the value of the project to be easily articulated – why are we doing this project? If the project goes ahead, the goals are a starting point for assessment of its success (or otherwise) X Goals - examples T H E U N I V E R S I T Y O F S T R AT H C LY D E Improve the utilisation of cloud infrastructure by from average of 75% to average of 80% (efficiency) Reduce the end-to-end time of the hiring process by 2 weeks (efficiency) Provide stakeholders with increased visibility of project finances to allow these to be monitored on a daily basis (control) X Objectives T H E U N I V E R S I T Y O F S T R AT H C LY D E Objectives relate to the concrete deliverables of the project Examples include: Deliver a contemporary document management system Train end users to competently use the new system …  Stakeholder identification X T H E U N I V E R S I T Y O F S T R AT H C LY D E X Stakeholders T H E U N I V E R S I T Y O F S T R AT H C LY D E Stakeholders are the people who have a vested interest in the project - the outcomes of the project affect them in some manner Project stakeholders can be internal or external to the business Stakeholder require some degree of management, based on their interest in the project and their influence in the project The business case sets out an initial stakeholder mapping X Stakeholders T H E U N I V E R S I T Y O F S T R AT H C LY D E Internal External Individual contributors Suppliers Operational managers Customers Middle managers Senior managers Government X Stakeholder mapping T H E U N I V E R S I T Y O F S T R AT H C LY D E Keep Manage informed closely Interest Minimal Keep contact satisfied Influence X Stakeholder management T H E U N I V E R S I T Y O F S T R AT H C LY D E The stakeholder mapping informs how we “manage” stakeholders From this, the project will have a communications plan to make sure stakeholders are kept informed, included in decision making and so forth The stakeholder mapping will change over time especially for long-running projects, so needs to be maintained as part of project management As a technologist, you will be a stakeholder and your technical (and other) input will be key to project success  Risks and assumptions X T H E U N I V E R S I T Y O F S T R AT H C LY D E X Risks T H E U N I V E R S I T Y O F S T R AT H C LY D E Identification Risk management is an entire Identify the key risks related to the scope of the project discipline in itself – many companies employ professional Monitor Assessment risk managers Review risks, including assessment Consider the probability and impact of the and response risk There is a risk management process which provides a Response structure for considering risk Determine an appropriate response X Risks identification T H E U N I V E R S I T Y O F S T R AT H C LY D E Identification Project risks are potential Identify the key risks related to the scope of the project events which will impact on the achievement of objectives Monitor Assessment Review risks, Consider the They can include: including assessment probability and impact of the and response risk People Technology Financial Response Determine an Reputational appropriate response Legal …. X Example technology project risks T H E U N I V E R S I T Y O F S T R AT H C LY D E Loss of one or more key resources (people) during the project - how would they be replaced or who can shadow them to gain the relevant knowledge? Implementation delays resulting in the project overrunning – what is the impact on the project objectives and project benefits? Customers have a poor experience of the new technology and take their business elsewhere – damage to reputation Integrations with systems are problematic/brittle and take much longer or cannot be achieved – what is the alternative? Significant undiscovered bugs in the system, resulting in errors/bad data (Post Office, I’m looking at you) X Risks assessment T H E U N I V E R S I T Y O F S T R AT H C LY D E Identification Consider the probability of the Identify the key risks related to the scope of the project risk occurring – high/medium/low Monitor Assessment Review risks, Consider the Consider the impact of the risk including assessment probability and impact of the and response risk occurring – high/medium/low Together, these can be used to Response Determine an give an overall grading appropriate response X Risk assessment T H E U N I V E R S I T Y O F S T R AT H C LY D E Impact Low Medium High Probability Low Trivial Tolerable Moderate Medium Tolerable Moderate Substantial High Moderate Substantial Intolerable X Risks responses T H E U N I V E R S I T Y O F S T R AT H C LY D E Identification Once risks have been Identify the key risks related to the scope of the project assessed, an appropriate response can be generated Monitor Assessment Review risks, Consider the One mechanism to do this is the including assessment probability and impact of the and response risk 4 Ts: Tolerate, Treat, Transfer, Terminate Response Determine an appropriate response X Risk responses T H E U N I V E R S I T Y O F S T R AT H C LY D E Tolerate – no specific action or mitigation required Treat – take some action to reduce the probability/impact and hence overall classification of the risk. For example, a resource risk could be reduced by hiring additional staff Transfer – usually a contractual or insurance mechanism is utilised. For example, outsourcing development using a contract that places penalties on the supplier for underperformance (Post Office, I’m looking at you again) Terminate – don’t undertake the corresponding activities as the risk level is too high X Risk monitoring T H E U N I V E R S I T Y O F S T R AT H C LY D E Identification On an ongoing basis, risks must Identify the key risks related to the scope of the project be reviewed to determine whether: Monitor Assessment New risks should be added Review risks, including Consider the probability and assessment impact of the Existing risks can be removed as they are no and response risk longer relevant The response for an existing risk needs to be Response updated Determine an appropriate response X Finance T H E U N I V E R S I T Y O F S T R AT H C LY D E At the start of the project, it’s important to set out a budget detailing all costs that the project is likely to incur This can be refined further during planning, but a good draft budget is key to understanding the value which will be delivered by the project Costs that can occur include: All staff involved in delivery Software licenses Hardware purchases Premises …in fact, any business cost X Plan T H E U N I V E R S I T Y O F S T R AT H C LY D E The business case will include an outline plan for delivery The plan lists, at a high level, the key tasks and milestones, and who will be involved The helps with feasibility – can the right Resources be made available at the right time It also helps understand when value will start to be delivered by the project and will create a strong business case The plan will evolve but it’s important to have X Resources T H E U N I V E R S I T Y O F S T R AT H C LY D E The business case will set out key resources needed for project success They can include people (with the right skills), company assets such as compute resources or any specialist hardware If resources already exist, how will they be accessed and how much will it cost (Finance) and when will they be needed (Plan). If resources have to be acquired, what is the cost (Finance) and Plan for doing so? X The end T H E U N I V E R S I T Y O F S T R AT H C LY D E The section has introduced digital transformation The key elements are people, process and technology We’ve outlined the first stage of a technology delivery project, which is aimed at setting the project off on the right footing In L11, we’ll pick up on the transformation process at “Plan” X X THE P U LNAI VCEE RO S FI T U Y SOEFF USLT R LAET AHRC N LI N YGDE