Positioning your digital

strategy for the new reality

Accelerating digital transformation efforts in times of uncertainty

$ Real insights Triggers and pain points

The systemic shock caused by the COVID-19 virus is making As organizations adapt to changing cultural and market
many CIOs and industry leaders ask what this means to our conditions, leaders will naturally seek to eliminate extraneous
economy, way of life, and their organizations. During these times items; however, eliminating key transformation efforts or digital
of uncertainty, there is a strong temptation to cut transformation capabilities may not position the firm to adapt to the crisis or the
programs in an effort to increase cash flow and contain expenses. emerging new reality. Factors that influence organizations to
However, in previous times of uncertainty, organizations that make these less than optimal decisions include:
eliminated or delayed transformation efforts found themselves — Misalignment of IT strategy to business goals resulting in
later lacking key competitive capabilities. inconsistent technology enablement of business priorities
Digital transformation is an example of a program that delivers — Lack of insights into which transformation programs drive
these needed capabilities. Eighty percent of revenue growth over key outcomes in today’s environment, like employee and
the next three years hinges on digital offerings and operations. 1 customer engagement
Technology leaders should continue transforming their operating
models and investing in key enablers, such as integrated cloud, — Unclear signals and fluctuations in customer needs that
automation, and blockchain. Companies that continue to invest in make discerning the customer requirements difficult in a
their digital strategy while balancing short-term efforts with long- rapidly changing market environment
term measures will likely emerge from this pandemic more
competitive.
1 IDCPress Release, IDC Launches New Framework to Accelerate Digital
Transformation and Help Enterprises Become Digital Natives (IDC, October 2017)

Our perspective

Cutting expensive, large-scale transformations may seem appropriate in the current environment. The need to preserve cash and
redirect scarce resources drives the agenda of many key leaders; however, this instinct may be counterproductive if one cuts needed
future capabilities. When reviewing one’s transformation program during times of uncertainty, it is better to ask “how can our
transformation program best serve us in today’s environment?” Many digital transformations use an agile method to determine their
priorities—building and working off a backlog of transformational outcomes. Rather than slashing one’s transformation programs, a
better response is to rework the transformation backlog to include today’s needs and continue to deliver on high-priority digital
outcomes that enable the business for the future.

To preserve your hard-won transformative initiatives, there are five lenses to consider:
1. Business impact
— Business impact: How should programs be reprioritized based on their impact? 2. Risk and compliance
— Risk and compliance: What is the risk of canceling or delaying the initiative? 3. Financial
4. Cultural
— Financial: What direct and indirect financial impacts will this program affect?
5. Third-party
— Cultural: How will cutting transformation initiatives impact the culture we
have worked to create?
— Third-party: How will this reprioritization affect my relationship with partners?
This approach to existing transformations offers much-needed technical outcomes,
but also continues IT’s capability development—a subtle, but critical outcome of a digital
transformation that can be completely derailed by canceling transformation initiatives.

Throughout this document, “we”, “KPMG”, “us” and “our” refer to the network of independent member firms operating under the K PMG name and affiliated with KPMG
International or to one or more of these firms or to KPMG International.
©2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International.
KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does
KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
 Near term Longer term

Identify opportunities to scale up investments in Stay committed to broader transformation initiatives that
Business automation technologies to augment a capacity really make a difference in your business (e.g., data,
impact constrained workforce, responding to these changing cloud, automation). Reevaluate your transformation
conditions by investing in future capabilities. roadmap, but don’t discard a valuable plan. Modify as
necessary, while staying true to strategic objectives.

Risk and Assess what IT capabilities need to be changed or Consider the future risk implications of the delay or
compliance improved to ensure that business continuity and cancellation of programs to regulatory compliance,
technology resiliency are not compromised with the security, legal, or audit execution.
new demands.

Financial Take stock of the current situation carefully; review your Evaluate the architecture of the entire value chain–front,
overall transformation roadmap and your primary middle, and back office–to ensure your transformation
business goals while you look to free up needed capital. initiatives stay aligned with your revenue streams and
Evaluate what you can deprioritize and look for customer needs.
opportunities to prune and invest versus slash and burn.

Cultural Assess virtual workplace technology demands such as Focus on transformation initiatives that allow you to
videoconferencing and collaboration tools to ensure boost the capabilities of your workforce, with an
your workforce is effectively enabled, while articulating emphasis on new digital capabilities and employee
the values that underpin key decisions, especially hard engagement.
decisions, that impact employees’ lives.

Third-party Reevaluate priorities, shift resources, and track progress Review your overall third-party approach to ensure it
more closely, while viewing third-party resources as aligns with your operating model and supports the
scalable resources to enable targeted responses in the future transformation efforts and is not shifting core
current environment. capabilities out of your organization.

Throughout this document, “we”, “KPMG”, “us” and “our” refer to the network of independent member firms operating under the K PMG name and affiliated with KPMG
International or to one or more of these firms or to KPMG International.
©2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International.
KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does
KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
 Where am I now? - Qualifying questions

Resilience Recovery New reality

– How well are your transformation – What new IT capabilities are needed to – How will you measure and report IT
initiatives aligned with your business support your transformation efforts? performance targets differently?
goals and objectives? – How do you ensure that your – How are you exploiting data as a
– Is your IT able to provide services to the transformation efforts stay risk neutral in strategic asset to make decisions for
business at market speed and quality? times of uncertainty? accelerating, delaying, or canceling
– Do you have a multiyear roadmap for IT – How do you quantify direct and indirect transformation initiatives?
capabilities required to support business financial impacts to canceling or delaying – How should you plan capacity as the
needs? transformation initiatives? recovery takes shape?
– How do you ensure IT initiatives are – How do you reinvest in your resources – How do you evolve your technology
aligned with the new acceptable level of and capital to ensure that winning ideas ecosystem to enable more digital
risk for the business? are continuously generated? capabilities?
– How are you navigating the contractual – Are you reassessing skills in order to – How will your organization adapt to
and relational nuances of programs that support the technology and delivery changes in culture and mindset to
depend on vendors to deliver? paradigm needed to support business? sustain ongoing transformation efforts
– How do you optimize the backlog of – How do you systemically prioritize and and position for future initiatives?
transformational outcomes as the current fund transformations in a way that allows – How can you approach transformation
situation increases demand for more agility and speed even during times efforts in an agile way to make future big
transformational outcomes? of unprecedented uncertainty? bets?
– How do you ensure resources stay – What changes will you make to your
engaged with transformation tasks at business and IT operating models to
hand while managing uncertainty as it achieve the right balance between
unfolds? stability and agility?

Getting started

As with any journey, the biggest challenge can be taking that first step. Organizations can take the following actions to get
started:
– Rework your transformation backlog to prioritize quick-win features, enablers, and capabilities with greatest business impact given
today’s conditions
– Consider the risk posture you will be left with as you reprioritize, and calibrate priorities based on the acceptable level of risk for your
organization during these times
– Quantify the direct (e.g., write-offs, interest charges, tax credit loss) and indirect (e.g., ramp-down/restart costs, contractual penalties,
future availability of capital) financial implications of each transformation initiative
– Formulate a resource and strategic sourcing plan according to the work, capacity, and skills needed for reprioritized transformation
initiatives and new levels of acceptable business risk
– Identify where external partners will be needed to supplement skills and capacity gaps, and fast-track your engagement with them

Contact us
If at any time you need help, please use the information below to get connected to a specialist
for more advice and support:

Steve Bates Barry Brunsman Phil Hoskins

Global Leader Principal Managing Director
CIO Center of Excellence CIO Advisory Transformation Delivery
KPMG International KPMG in the US KPMG in the US
T: +1 303 295 5524 T: +1 612-305-5155 T: +1 214-840-2071
E: sjbates@kpmg.com E: bbrunsman@kpmg.com E: phoskins@kpmg.com

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Throughout this document, “we”, “KPMG”, “us” and “our” refer to the network of independent member firms operating under the K PMG name and affiliated with KPMG
International or to one or more of these firms or to KPMG International.
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©2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International.
KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does
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