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In the good old days, “risk” from an IT perspective focused mainly on security. Is your network safe? Is your data secure? If a breach occurred, would you be ready to stop it? When it comes to digital transformation, however, risk is part of every decision you make—every app you choose, every cloud your data inhabits, and every customer experience you create. That’s why digital transformation needs risk management.
First things first: risk isn’t something to be afraid of. As any good investor knows, the higher the risk, the higher the potential reward. The important part of risk is being able to identify it, anticipate it, and treat it. This is where many organizations today have fallen short.
You can’t read the news today without learning about some type of tech news gone wrong. The city of Anchorage, Alaska, runs $50 million over budget for SAP expenditures. The State of Oregon and Oracle file lawsuits … against each other. Company after company admitting to being hacked through various forms of technology. Not to mention the number of inventions or products that have come out in the last 5 years that have failed—Google Glass anyone? What these headlines tell me isn’t that technology isn’t working or that digital transformation isn’t worth it. It’s that companies today are rushing headlong into digital transformation without a clear idea of where things could go off course—or how to get back on track. Digital transformation needs risk management for these very reasons.
If you’re currently engaging in digital transformation in your company, pay attention. The following are a few tips to help you begin implementing risk management in your projects and—in so doing—experience greater potential success in digital transformation altogether.
Expand your view of risk. A successful digital transformation project isn’t just about finishing on time and on budget. It’s about ensuring that you’re choosing technology that will work at the right time, on the right budget, in a way that will be fully embraced by those working in the trenches. Failing to consider any of these issues will lead to disaster, every time. For instance, imagine you choose to upgrade Salesforce within your company. You get a great deal, and the company promises to sync your sales systems in record time. But if you failed to engage your sales team on using Salesforce—if you failed to discuss with them what they need or how they’ll use it—if you failed to determine how Salesforce would interact with other systems in your network—your project will be unsuccessful. Learn to think of risk in terms of both infrastructure and culture every time.
Make strides in infrastructure and culture. Speaking of: digital transformation needs risk management because legacy-era infrastructure and culture are still running amok in today’s business world. Let me be clear: you will not experience successful digital transformation with archaic infrastructure and ideals. If your company is not willing to move the needle in both of those areas with every single digital transformation project it undertakes, there is no amount of risk management that will help you.
Consider virtual elements of risk. As a recent Deloitte report showed, risk involves every single aspect of your business, including reputation and brand. How will adopting a new technology—or failing to adopt a new technology—impact your reputation? How will adopting a new technology and failing impact your reputation? Again, risk management isn’t just about staying in the black. It’s about elevating your company at every level, because that’s what succeeding in digital transformation requires.
Remember the Big Three: Context, implementation, governance. Risk needs to be managed in terms of how you select new technology, how you choose to implement new technology, and how you ensure that it is sustainable over the long haul. Failing to manage risk in any of these steps or phases of project development could be disastrous. Take time to brainstorm each step before you undertake any new transformation endeavor.
In their report, Deloitte identified 10 specific areas where companies need to manage risk in digital transformation as part of a clear “digital risk framework.” Their focal points: Strategic, Technology, Operations, Third Party, Regulatory, Forensics, Cyber, Resilience, Data Leakage, and Privacy. While their list is long, it is in no way exhaustive. The truth is, digital transformation needs risk management at every single turn, in every single department, at every single step of the customer journey. Just as thinking in silos is dangerous in digital transformation, so is managing risk in silos. Risk management isn’t a departmental or project-based jobs. It’s an all-time job, and it needs to be baked into every aspect of digital transformation for your company to experience success.
While digital transformation can be a miracle worker, there is no technology that serves as a fail safe in digital transformation. Just as with any type of digital transformation your company undertakes, you need strong leadership, executive support, tech-friendly culture, data-driven decision-making, and a silo-less enterprise for digital transformation to succeed at the highest level. There is no shortcut for this, and there is no “risk management” program that can do the work for you. Digital transformation needs risk management because risk management provides the structure we need to understand the points at which our digital transformation projects can go wrong. But risk management doesn’t make a project succeed. Only we—leaders in the movement with a commitment to creating tech-driven culture—can do that for ourselves.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.
The original version of this article was first published on Forbes.
Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio