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Incremental change or all at once? How to approach IT transformation

While the pandemic of 2020 has put some IT upgrades on hold, it’s also pushed a number forward. In a downturn or a stressed situation, innovation and rapid development often becomes more of a priority, but this also simultaneously increases risk.

/ Strategy
Last updated on September 22nd, 2020

How should businesses approach IT transformation

A good percentage of businesses will undertake some level of positive transformation using IT, some will spend the money and stay static, but others will end up losing money, market share and more.

‘Big Bang’ style IT transformations seldom work

To put things into context – according to Forbes, Mckinsey and Harvard University, around 70% of large transformation projects fail.

Change is a natural part of any business. Thanks to technology, the increasingly global nature of competition, and various other factors, most industries are moving more rapidly than ever before. However, recently, I’ve noticed that some businesses are attempting to change far too much at once.

Large software implementations, cloud migrations and changes to IT Service delivery are all current top priorities across the board, but, ideally, no business should be running all these projects (or even more) simultaneously. This approach, to be frank, is incredibly high risk and can slow a business significantly, rather than push it forward.

These ‘big bang’ style changes are nothing new. They’ve been happening for the past 20 years or more and, in my experience, typically follow years of underinvestment in the IT estate and tend to happen in five-year cycles. While it may deliver a transformed business, it’s an approach that’s full of risk and shouldn’t really be happening in 2020.

The desire for rapid change is, of course, valid. However, you can’t always have what you want – even with a significant cash injection. While transformation may be achieved eventually, questions will remain about the pain of the journey, the casualties and the outcome.

Why are businesses choosing this approach to IT transformation?

In the current climate, most sectors are under significant pressure to improve their competitive position, operations and their bottom line. This has been amplified by the COVID pandemic as the threats – and opportunities – are very real. However, when the need to change is driven by an external factor, then it’s change under duress and this is not a good place to be.

Businesses who weren’t as strategic and visionary with their IT operations as they should have been will be feeling the stress and this has ultimately led to a panic. They want to transform their business in a single step, so they can jump straight ahead of the curve. Yet this lack of alignment is a root issue, often causing businesses to stay in the big bang transformation cycle.

If businesses still see IT as PCs on desks, applications and technology, and an ultimate cost to the business then large issues will build up and compound. In these circumstances, there’s often little understanding of how IT supports and contributes to the success of other business functions or how it could drive market position, so there’s little proactive investment or it’s diverted into technology without true measurement of ROI.

You are now in the territory where a business has built up significant technical debt and change only becomes riskier and more expensive. Eventually, something must give, and change does happen, but the process is so drawn-out and painful that businesses leave it several more years before they attempt any more improvements. By this time technical debt has likely built up again, multiple red warning lights are clamouring for attention as the top priority, and the business finds themselves stuck in the same vicious cycle again.

Another significant driver for a big bang approach is when a business brings in an external consultant who puts a client-win over reputation. They get into the heat of wanting to win the business and ultimately tell the prospective client what they want to hear without really understanding (at worse) or considering all the factors in play, technically, but also operationally, culturally and strategically. The business hears all the right words and wants it to be true and can become blind to some of the realities.

Incremental change is the way to go

Incremental change isn’t exciting. It’s slow and measured. It appears complex and, at times, expensive. It’s often assumed that the longer an initiative takes, the more likely it is to fail. The early enthusiasm will lag, objectives will be forgotten, and problems will mount up. However, research by HBR actually shows that a long-term project which is reviewed frequently is much more likely to succeed than a short project which is reviewed infrequently.

Businesses need to be brave and adopt a slower way to deliver change. While the approach may not apply to every situation, it does have significant advantages:

  • In a wide sense, long-term benefit flows from staged evolution
  • Naturally reduces or eliminates risk
  • You can still align incremental change to the vision and changing business objectives
  • You can really focus on the tangible benefits at each stage of change, realising value incrementally
  • It’s relatively simple to change direction throughout the transformation
  • It lends itself to competitive and changing businesses sectors

In summary…

Competition is coming from all angles. Businesses are facing new challenges as a result of the pandemic and its aftermath. It’s never been more important for businesses to be agile and innovative so they can grab a competitive advantage. It’s essential that businesses engage with continual change and it should be their natural state.

Big bang approaches can work, but the context and the business situation must be appropriate. When you’re choosing your change approach, then really take the time to measure and evaluate the risk factors. If you’re not at least 70% confident that a big bang will deliver the results, then it should be avoided. Opt for the safer road instead. It’ll be slower but you will still pick up tangible results at various stages on-route.

Whichever approach you choose, delivery and execution are everything.