Tips for Mitigating Risk During Your Firm’s Digital Transformation!

Mitigating Risk

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The future of business is digital. It empowers companies with more capabilities, facilitates more meaningful interactions between corporations and customers, and hastens important processes. 

However, digital transformation doesn’t come naturally. All these techniques and integrations must be integrated into your business with precision. Any mishaps can have far-reaching consequences, and you could set your company back rather than advance it forward if you fail to prepare properly and in mitigating risk. 

Still, as long as you have a plan, you’ll be able to avoid many risks that digital transformations can bring. These measures can be quite involved, but with enough hard work and determination, you’ll be able to ensure a smooth and steady transition.

There are many ways of mitigating risks during your firm’s digital transformation. We’ve listed them for you down below.

Define Your Broader Goals

Digital transformations can span years. Therefore, you’ll need to set realistic expectations for the shift, as it’s a continuous process that will transform your industry indefinitely. Suppose you move too fast on these matters. In that case, the existing infrastructure of your firm can struggle to catch up.

Too slowly, the transformation may be a constant process as new innovations are developed and released by the time you finish the first phase. Either approach can be a drain on time and resources. 

Define your objectives with clarity before any transformation takes place. Can you forecast investment returns? Does the shift address or neglect any compliance measures you must cater to? Which cybersecurity measures will you have in place during the change, and is it worth upgrading to a better provider? 

Another consideration is the buzzwords and jargon that often come with digitization. After all, you and your staff need to speak the same language when utilizing these systems and collaborating more effectively with specialists. Setting goals around learning those terms is recommended.

Train with Reputable Course Providers

Because there are many ways digital transformation can go wrong, you must learn about these processes from expert specialists. Fortunately, this counsel is more easily sought than ever before. You can sign up for an online course from the MIT Sloan School of Management that covers organizational design for digital transformation to ensure you approach these business changes with finesse.

The course duration is six weeks with time commitments of 6-8 hours per week, so these studies should be easy for you and your colleagues to fit into your schedules. The course was designed for leaders in all sectors who wish to prioritize leveraging the capabilities provided by technology.

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It’s important to adapt your mindset so that you’ll be in the best position to make mass changes to your business. An educational course can help you learn new techniques that you can take back to your business. 

The time management aspect is vital too. Digital transformation cannot be done half-heartedly or absent-mindedly, and you need to be present in your business for as long as you’re planning these developments. 

Balance the Books

You should utilize digital transformation to overhaul certain elements of your business, such as within your accountancy department. For example, you can use accountancy software and other such digital tools to help you process sales more accurately, and even keep track of all the outgoings in your business.

Digital transformation can give you a clearer understanding over your finances. Balancing the financial books via financial tools is a great place to start when digitally transforming your business.

Secure the latest financial figures before you undergo digital transformation. Look at the running costs and find out where the areas for improvement are. What do expenses look like around existing infrastructure, digital or otherwise? Can you forecast the most promising ROIs post-transformation? Gleaning this information puts your business in a better position for funding the replacements of obsolete processes and software. 

Finances inspire discipline, and there’s no better way to have a reality check than to review the company’s funds. You’ll have a better idea of which plans are feasible and which areas of your business need to be replaced by digitization. Always start with the financials. Consult an accountant or financial advisor if you want to perform a deep dive more promptly. Establish where your firm stands.

Examine Companies That Failed

It’s important to look at the past when considering your business’s future. This means looking at how your business has failed in the past, as well as looking at the failures of other firms over the years. You can examine these situations more closely to see if any lessons can be applied to your own firm in mitigating risk.

Unfortunately, many firms have failed to undergo a digital transformation smoothly, with 70% falling by the wayside. That percentage alone should be enough to inspire more care in these matters. Reasons for failures included falling behind competitors at crucial moments, not integrating digital services into existing company infrastructure, and timing the firm’s evolution alongside an economic crash. 

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Some failures may seem like bad luck, but your company should constantly run numbers inside and outside the firm to forecast any turbulence for mitigating risk. While digital transformation is an advancement of your firm’s prospects, your business can be particularly vulnerable while the shift is underway. Don’t lose sight of that perspective, and ensure you don’t only focus on the change while other aspects of your enterprise are neglected. 

Given that 70% of firms outright fail to implement these measures, there will likely be a percentage of businesses that struggled with digital transformations but ultimately found their way. Consequently, it’s likely you know professionals who’ve had a tough time with the transitions, so it may be worth consulting mentors and network contacts to see if they have any advice to impart. 

Enforce Team Cohesion

Digital transformations are not about upending your business and starting over with gadgetry. They’re about taking your existing business and placing it online as is, with digital changes that enhance the business. It has been stated that strong partnerships between finance and tech executives greatly elevate the chance of digital success in the workplace, too. These dynamics improve the effort to secure the necessary funding for digital initiatives and can help to reshape the long-term budget for digital spending.  

Everybody in a company needs to be enthusiastic about the firm’s digital transformation. If senior staff members aren’t on board, problems and oversights will arise immediately. Workers at all levels must be enthusiastic, and they should ensure they adapt to new work principles promptly. Job security needs to be reassured so people aren’t worried about losing their jobs through digital transformation. 

Encourage team building pre-digital transformation so that the team feels more connected before the changes come. Ensure workers support one another and offer help at the first signs of trouble. If every employee in your business can come together, digital transformation will be something to share and celebrate rather than be feared.

Manage your digital transformation with care and be willing to learn before and during the change, and you’ll be better prepared to adapt, and mitigating risk that is associated with a company’s digital transformation. 

Mitigating risk article and permission to publish here provided by Grace Murphy. Originally written for Supply Chain Game Changer and published on February 24, 2023.

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