To keep pace with market disruption and technological change, financial sector institutions in Australia must embark on a number of transformation programs each year. To ensure success, these transformations should be “value-driven,” says Oliver Wyman partner Simon Pelletier.
According to a recent survey by Oliver Wyman, with the tide of change moving faster than ever thanks to emerging technologies, executives in the financial industry are regularly pushing for transformations big and small.
However, many of these transformations fail for various reasons. “Transformation programs often fail to deliver all the expected benefits, and 40% of failed transformations end up with financial, operational and reputational consequences,” says Pelletier.
“Organizations clearly need to adopt a values-based approach to maximize their chances of success,” he adds.
Successful transformations must generally be driven by business leadership and driven by the organization’s strategic ambitions, detailed business plans and goals. “Delivering transformation cannot be driven by technology in isolation. It must be focused on realizing incremental value for the business, with functions and requirements pooled, prioritized and deployed in incremental capabilities.”
Once transformations are underway, business engagement is key, and business-IT teams should form a strong tandem. “There must be a continuous feedback loop between the business, technology and program teams to enable real-time re-prioritisation, problem solving and course correction.”
Businesses that make successful transformations must take full responsibility for the decision and the success of the transformation. This ensures continuous alignment with changing business priorities and rapid progress.
“In value-driven transformations, the business takes charge, sets the transformation goal, and prioritizes the deployment of capabilities that achieve specific growth goals and customer outcomes,” says Pelletier.
Another key success factor for implementing the transformation is ensuring sufficient agility “Knowing when to hit the brakes and change course when things go wrong is very important. And be able to make on-the-fly course corrections if needed.”
“Unexpected changes and events are inevitable in multi-year transformations, adding to the complexity of the process,” noted Pelletier.
“Value-based programs provide built-in flexibility that enables proactive risk management and on-the-fly delivery adjustments. Greater visibility into capability requirements, interdependencies and linkages to business value also enables the program to make informed, real-time prioritization and sequencing decisions to overcome delivery challenges.
Research has shown that when organizations follow a values-based transformation strategy, they stand a better chance of success. This success is mostly measured by financial return: A total of 80% of organizations see increased profitability after a successful digital transformation. Compared to other approaches, this number was significantly lower.
“Implementing a value-based transformation provides organizations with the best mechanisms to deliver on their strategic ambitions and business goals.”
“Based on real-world case studies, those who have adopted this approach have demonstrated a greater likelihood of impact delivered capabilities and success in maximizing value from their transformation programs,” concluded Pelletier.