A state of constant upgrade is better for payment tech than a big project
A troubled payment transformation shows how IT project management is changing from larger initiatives to a faster series of smaller frequent moves.
Several years ago, an international utility company with millions of customers in North America set out to become more digitally adept. On paper, it was about as big and ambitious a “digital transformation” as they come. It was also expensive. And as it turned out, frightfully risky.
The goal was to move beyond simple tasks like paying electric bills online to begin offering customers countless new ways to manage their accounts, adjust their energy use and sign up for new products and services.
And that, of course would require any number of changes at the utility’s back offices. It would mean the ability to monitor customers’ energy use in real time. It would require providing installation and repair crews with complete and constant transparency into the grid’s operations and each end user’s quality of service. The “to do” list went on and on.
What could possibly go wrong? And why do digital transformations have such a notoriously high failure rate — as high as 84%, according to some studies.
What went wrong is that the consulting firm overseeing the job took a moon-shot approach to the project. The consultant worked up a $250 million budget, and brought in hundreds of people for a five-year digital overhaul — and a road map that would show little noticeable benefit until the entire project was complete. It was, in short, an old-style “big T” — a large- scale transformation project. And as a succeed-or-fail endeavor, it was fraught with risk because these Big Ts don’t often account for the extent of change an organization can handle or the constantly evolving business landscape the transformation must address.
A couple years into the effort, the utility realized it was burning up a lot of time and money, and hadn’t recognized any value yet. The organization leadership recognized it had to start over. Successful digital transformations these days are done not as make-or-break moon-shots but as a continuing series of smaller projects.
It’s about more than being fast and nimble. It is recognizing that digital innovation can take the risk out of big capital expenditure programs by breaking them down into what we call minimally viable products (MVPs) — taking a new product or service from concept to real world application much faster, and then learning from the market’s reaction how to improve it. Or to even abandon the project, if it’s clearly not delivering on the objectives. Put another way, MVPs are about de-risking the beast.
That’s the beauty of today’s digital technology. Now that the cloud, open source systems and agile methodologies have made organizations less beholden to a single vendor’s approach than in the past, digital technologies are empowering enterprises to become more flexible and experimental with less fear of negative consequences. Risk can be reversed, or recovered from with lesser impact on time and money. But that happens only in the agile, iterative process I’ve just described.
Instead of thinking of digital transformation as a one and done, bet-the-company proposition, it’s better to think of it as continual process — a "perpetual transformation" approach.
It’s an idea that tends to resonate with chief financial officers, who more often are serving the role of chief change agents for their business. CFOs, as the executives responsible for managing financial and strategic risk, have increasingly become the risk managers and executive sponsors for digital transformation.
For business leaders, the perpetual transformation model bridges the risk-reward challenges. Breaking large-scale enterprise transformations into MVPs mitigates the risk, while saving money and ultimately accelerating the entire process.
But it’s not a matter of speeding to the finish line — because there is no finish line. Once an organization can master the perpetual transformation model and make it its own, it can continually refine its digital journey.
The organization can go to market, learn from what works — and what doesn’t — and enjoy a constant cycle of greater innovation with lower risk. Month after month. Moon after moon.