At a recent digital transformation conference, our CEO explained how to use mathematics—specifically the theory of probability—to mitigate risk for digital transformation projects. He explained why phased digital transformation is crucial for long-term success. The highlights of that discussion are summarized in this blog. You will also find the full recording below for easy reference.
Calculating Probability for your Project
You’re perhaps familiar with the concept of probability from your school days. Many students learned about probability by flipping coins or tossing dice. When you flip a coin, you have a 50% chance of landing on heads. The more times you flip that coin, the more times you’re repeating identical conditions that could result in different outcomes. When applying probability theory to digital transformation projects, you’re not just trying to determine the outcome of one thing happening. Many factors throughout each stage of the project affect your risk of failure or success, which means the probability calculation becomes a bit more complex.
TAI Risk Estimators:
What introduces Risk?
There are many risks involved when starting a digital transformation project. Lack of experience and lack of planning can result in wasted time and money. Leaving the harder aspects of a project for last also increases the risk.
Uncertain use cases are risks when people are not exactly sure what they want and do not have a plan for how the software’s features will solve their problems.
Trying to achieve a goal in an unrealistic timeline will also pose a risk because it won’t allow enough time to get each phase of the project done. Think of it like this: if you have an important sales meeting in two months and it will cover four months’ worth of material, it will fail immediately because you’re not allowing enough time to properly complete it.
Of course, unavoidable risks like power failures, government legislation, employee turnover, and other issues can arise, too.
Calculating Risk for a Use Case
When you take on a digital transformation initiative, you must identify the use cases for what you’re trying to achieve. For example, if you’re implementing a CRM solution, some of your use cases might be:
- Triggering sales and task notifications from the CRM based on where the prospect is in the buyer’s journey
- Creating sales cycle and velocity reports to identify how long it takes a deal to move throughout the pipeline
- Setting up workflows to automate welcome emails to new CRM contacts
To calculate the risk for a use case, we can use this equation:
Experience x Difficulty x Effort = Risk (use case)
This calculation determines the risk based on the knowledge, necessary approach, and overall complexity that each use case will have for your implementation team. The more complex the use case, the more time and effort it will take to implement it, and the more risk you incur as a result. In the following sections, we explain how we weigh each of these factors and why we use that scale.
How to Weigh Experience:
The probability of your project being successful should be calculated based on each use case. How do we (at Technology Advisors) weigh experience for the use case? Why are out-of-the-box features weighted as 0 whereas understanding how to do something but never having done it is weighed at 2?
Out-of-the-box (OOB) features have a weight of 0 because an OOB feature has little to no risk for an implementor. Those features are standard and do not require any special knowledge or configuration, so getting them working is easy. On the other hand, if the implementor understands how to do a task, but has never actually done it before, we have to assume the risk is higher because of the learning curve and the testing to ensure the use case can be met.
We give a project an experience weight of 5 if we know it CAN be done but have never actually done it. Research will be necessary, and it will take time to make sure all the information is ready to carry out a task to the best of our ability.
These factors are true for all implementation partners. Every digital transformation project is unique, with its own set of challenges. The more experience your implementor has, the better they’ll be able to mitigate the risks imposed by experience.
Effort for Different Use Cases:
How do we calculate risks related to effort? We look at how long it will take to complete the task in hours. Configuration will take about one hour, while customization can take 8 hours. Security can take about 8 hours because of the complexities associated to it. Integrations can take about a week to implement. Adding OOB experiences beyond the regular scope will take about 8 hours because the implementor must learn the configurations within the app and make sure it all works together. Custom solutions can take a couple weeks because of the heavy workload that comes with such a project.
When looking at the difficulty of a project, we weigh it as 1 for easy, 2 for medium, and 4 for hard. When we multiply these with each use case score, we are given the chance of success for the project.
Here are some examples of multiplying the Experience x Difficulty x Effort for a use case:
How to Mitigate Risk
It is important to give your digital transformation project the highest likelihood of success. To do that, you must mitigate risk. Here are a few best practices:
- Deploy in Phases- Sectioning the project into different phases allows you to successfully complete smaller segments of the project in logical chunks. Breaking it down into phrases makes your goals more attainable.
- Utilize Low Code- Whenever possible, utilize low code capabilities to handle some of the easier tasks related to your project. Low code takes less time and experience to implement.
- Experienced People- Find individuals or consulting teams who have experience with your type of project and can complete tasks quickly, making your project more efficient.
- Planning- If you don’t thoroughly plan how your project will be implemented, you will increase your risk of failure. An experienced partner can guide these efforts.
- No Artificial Deadlines- Don’t create project timelines based on hopes and dreams. Work with your digital transformation partner to set logical deadlines based on the complexity of each project phrase.
- Lock Down Your Requirements- Having a clear vision of your requirements will lead you in the right direction. That’s why use cases are so important to your digital transformation project. Without them, your chance of success wanes.
We hope this mathematical explanation helped you better understand the science behind phased digital transformation projects. Technology Advisors has been helping companies implement successful digital transformation strategies for more than 30 years.
We succeed because we use strategic, phrased implementations that tackle the project in its entire scope but break down the segments of that project into achievable chunks. If you’d like a free consultation on your digital transformation initiatives, reach out to us at email@example.com.