How to lay the foundations for successful digital transformation projects

June 21, 2023

Nick Denning, CEO of IT consultancy Diegesis and veteran of multiple transformation projects, shares his tips on how to build successful digital transformation from the start

No one begins a transformation project aiming for it to fail, but many are challenged because the right foundations have not been laid. Government organisations, suppliers and partners all want to deliver on the initial business case, minimise risk, increase predictability, and meet time and budget targets. However, things can quickly go wrong if careful thought is not given to creating conditions for success from the beginning.

Starting with the right paperwork and structure is key to a successful digital transformation

From my decades of project experience, I’ve learned it’s vital to control projects through five key documents:

Contract – provides the standard terms and conditions that apply to all work on the project
Commercial terms – describes charges, responsibilities, assumptions, timescales and milestones that apply
Proposal – the full scope of the project tasks
Purchase Order(s) – customer funding approval. Beware if this seeks to override the above documents
Contractual Change Note (CCN) – protocols define who must sign them.

There will undoubtedly be hard bargaining to get to the initial agreement. The purpose of the paperwork is not to ‘get one over’ on the other party but to be clear about what is to be done, who is going to do it, the charges and how to manage changes or disputes while minimising impact.

Define the AS IS as well as the TO BE

A critical success factor for any successful digital transformation project is the time spent defining the AS IS architecture, the TO BE architecture and the plan, broken into phases, to get from one to the other. Without these, signed up by all, the risk of things being missed and the project being compromised is immense.

If a project starts without clarity, even as the result of an omission rather than deception, then there is scope for conflict. Transparency is always the best practice, both between parties and all those working on the project. If people do not understand ‘the rules’ of the project, then their decisions and actions can have major time and financial implications, which could impact successful delivery.

Holding an effective project initiation, regular project and steering committee meetings should identify, monitor and resolve issues.

Create a comprehensive agreement that handles change

A good agreement identifies the prerequisites that are required for a project to commence. It includes the responsibilities of each party, the impact of a party not meeting their responsibilities, key milestones, acceptance criteria, termination dates, and how deliverables will be accepted and documented.

The biggest danger to a project is when change is not identified and controlled. A good practice is to document and agree on potential changes with a CCN. Whenever an accepted deliverable requires change, it has to be the subject of a CCN. If there is any fixed price element to the project, then changes must be agreed upon by CCN.

Starting a change without prior agreement may compromise the design because of knock-on impacts. A customer might assume that a change is included in the original contract. The supplier might assume the opposite. The risk may not be properly considered, and the customer may repudiate the change.

The status of Purchase Orders must be clear. Is signing a Statement of Work (SOW) or CCN sufficient? Is a PO for a change mandatory or just a customer process? What happens if the customer’s processes do not align with the actual contract, and finance cannot pay invoices if a PO is exceeded, even if the PO is not part of the contract?

Whenever possible, make no changes during an individual phase. Group change requests, redesign and authorise as a package for completion in the next phase to avoid incremental “death-by-a-thousand-cuts” and to allow time for proper consideration.

Failure to resolve any of these points is a recipe for chaos.

Regular reporting for successful transformation

An effective way for a supplier to provide clear documentation on progress is to create another document called a Target Price Status Report (TPSR), where the supplier reports on; the initial estimate, work to date, forecast to go and projected over or understand.

If such reports are provided regularly, for example, each month with timesheets, then the customer is kept fully informed on progress and spending. This provides the information and opportunity to challenge these figures regularly while there is still time to rectify any issues, maintain relationships and keep the project on track.

Structure, procedures and reliability

Both customers and suppliers crave reliability and predictability. Therefore, organisations must discuss the strengths and weaknesses of their respective teams and how to share responsibilities and risks and address challenges.

An agreement on roles and responsibilities, change management procedures, and reporting provisions are essential in the contract. These need to be as ‘light touch’ as possible so that they are easy to follow rather than burdensome, eating into valuable project time.

If a project is going to fail, then it is better it fails fast. Identify the problems and stop. Take the actions needed to address fundamental issues and then restart. It is cheaper in the long term.

The great thing is that all parties enter into projects as partners, seeking to deliver the outcome for the agreed amounts and fully commit to meeting their respective responsibilities. Successful projects should provide positive outcomes for all parties, not allow one side to exploit the other to cope with unreasonable changes or have a supplier maximise profits at the expense of excellence. A successful project is truly a win-win and can lead to long-lasting, productive partnerships between customers and suppliers, so it’s worth laying the right foundations from the beginning.