A Digital Governance Framework is a key component for successful transformations

Jamison Roof, energy and utilities expert at PA Consulting
Jamison Roof, energy and utilities expert at PA Consulting

Jamison Roof, energy and utilities expert at PA Consulting

Today’s CIOs need to determine how to satisfy increasingly technologically sophisticated and demanding customers (both internal and external), exploit powerful, but disruptive technologies like cloud and machine learning, and implement new agile development methodologies–all while managing the unrelenting pressure to reduce costs. This is especially true in the energy industry, with the added burdens of satisfying regulators and literally keeping the lights on.

 The DOM and Digital Governance Framework brings senior leadership, business, and IT stakeholders together, giving everyone a voice while maintaining a clear decision-making hierarchy 

To meet these challenges, many organizations are turning to new digital solutions, and often delivering them with new agile development methodologies. The right digital solution can reduce costs and provide the advanced capabilities customers expect. Energy providers are increasingly investing in digital customer self-service offerings, data management platforms, and business process automation to improve the ways they engage with customers and capitalize on the greater efficiencies brought on by enhanced technological capabilities. However, these initiatives often fail to provide all the anticipated benefits as quickly as their business cases promise.

Frequently, due to differences in objectives, processes and budget constraints, IT, and the business struggle to work together to use these new technologies effectively. As a result, digital transformation initiatives flounder.

Recently, an energy provider was struggling to complete its customer-centric digital transformation. Senior leadership had established a sound customer-centric strategy, the business had developed comprehensive requirements, and IT had successfully adopted Agile development. Additionally, an organizational design effort had been completed to determine the appropriate target operating model. The right things were being done, yet its digital vision and promised benefits remained unrealized.

What was going wrong?

Upon investigating, IT indicated that every enhancement requested by the business was a top priority and urgent, making it difficult to plan work. The business countered that IT estimates were unreliable, and there was no transparency regarding when or how requests got completed. Senior leadership was frustrated that both the business and IT were focused on incremental, low-value changes that would never result in an industry-leading, customer-centric organization.

Even after significant progress had been made, the initiative was faltering–and about to fail–because IT and the business remained fragmented, siloed and uncoordinated.

Using new technologies to meet new customer-centric goals requires new ways of organizing and working together to be successful. Putting in place a new organizational framework–a digital operating model (DOM)–is a critical step to adopt new technologies and implement changes effectively quickly. The DOM considers organizational design principals, new workforce capabilities, and business process improvements to leverage advanced digital technologies fully. As part of that DOM, a Digital Governance Framework should also be developed to establish clear accountability, implement decision-making processes, and establish guidelines for maintaining alignment with the digital vision. The DOM and Digital Governance Framework brings senior leadership, business, and IT stakeholders together, giving everyone a voice while maintaining a clear decision-making hierarchy.

There are several key components that should be part of the implementation of DOM and Digital Governance:

1. Establish a dedicated, cross-functional Digital Steering Committee: Formally establish a team that owns and is accountable for the digital vision. The most effective digital teams are business-led, but strongly cross-functional and founded on a close partnership with IT. Informed by customer insights from data analytics, the business determines what function or capability is required to meet customer needs better. IT is then ideally placed to determine how best to implement it, often able to suggest lower impact solutions that can provide high value more quickly.

As an additional benefit, by being cross-functional from the start, the digital organization can overcome internal resistance, and instead foster productive dialogue and achieve stakeholder buy-in.

2. Translate the digital vision into a strategy and guiding principles : Articulate and agree with the specific outcomes that are desired and the strategy for achieving them. In addition to the digital vision, consider enterprise, business, and IT goals and initiatives. Translate the strategy into a set of principles that guide decision making, e.g., does adding this content or feature help achieve our vision? If not, it could be deferred over higher priority items.

To avoid it becoming outdated and less effective, set the digital strategy as a team annually and revisit quarterly to update it as necessary to adjust to feedback, shifting customer behaviors, technological advances or other inflection points.

3. Define DOM governance processes: Build credibility by creating processes that are responsive, efficient, and transparent. Develop a decision-making process that has a simple governance structure made up of a cross-functional leadership team. A productive starting point is developing the process to prioritize business requirements. When considering requirements that are low effort and impact, such as minor technology enhancements or content updates, a smaller body to can perform the initial triage and "fast-track" the process.

4. Establish performance incentives: Executives in digital leadership roles should have performance metrics that aretied to the success of digital transformation. These could include operational improvements such as reduced customer calls, processes automated, or even technology adoption metrics. They could be tied to overall customer satisfaction ratings orspecific customer experience improvements. Or, they could be tied to financial results directly related to the initial business case for the digital initiative.

5. Use customer advocates to define end-to-end customer experiences: Create roles representing the interests of the customers to ensure a customer-centric focus is maintained across the business. Often when improving the customer experience, organizations focus on individual siloed customer touchpoints, ensuring the customer is satisfied at each one of those points, but fail to connect the customer’s end-to-end experience into one holistic view.

Following these steps, the energy provider that had been struggling to complete its customer-centric digital transformation:

• First created an entirely new digital department (not just a steering committee)dedicated to realizing the digital vision and developed performance metrics and for leadership in that department tied to the success of their digital solutions and customer experience.

• This was translated into a strategy that included prioritizing personalized content, increasing customer self-service, and providing a consistent cross-channel experience.

• They started by developing a simple process to prioritize enhancement requests and used it–on a limited set of enhancement requests–for several weeks. Once this process was tested and refined, it was rolled out with minimal updates to additional platforms and channels.

• Finally, customer advocate roles were created to represent the interests of the customers in decisions and guide the digital business solutions.

After implementing these changes, the energy provider’s digital transformation was able to resume the realization of benefits within six weeks.

A successful digital transformation cannot be a siloed effort. All the technology, vision, and skill in the world will not help you if the departments in your organization do not know how to work together. Realizing the full benefit of digital transformation requires a tailored strategy aligned to the organization´s digital vision, an accountable cross-functional team, and pragmatic and transparent processes and governance.

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