When it comes to digital transformation, our SMEs and big corporations are right there with the best of them. That’s the conclusion, anyway, of a new report that asks Australian organisations how they are faring in the digital age. We sat down with an HR expert to learn more about what these findings mean for HR professionals.

The report, released today by Microsoft and titled Embracing Digital Transformation: Experiences from Australian Organisations, is based on in-depth, qualitative interviews with private and public sector organisations about the peaks and pits of managing this type of change and staying ahead of the curve.

One common thread that emerged is there is no one-size-fits-all approach to digital transformation, says Ingrid Jenkins, HR manager at Microsoft Australia. However, for organisations willing to experiment, the flow-on effects of digital transformation are worth it.

“Once you consider what it feels like for an employee to connect to the organisation in a digital interface, it becomes easier to direct your people to the information they need to do their job well,” she says.

What are the biggest digital transformation pitfalls?

There are some common areas where organisations go wrong when implementing this type of change. Here are the big ones and how HR can lead the charge for effective digital transformation.

1. Be clear about why you’re undertaking digital transformation

The first question you need to ask is ‘What does digital transformation look like to us?’. If you ask Jenkins, it’s the evolution of technology and how we use it in terms of business models. This will look different depending on factors like organisation size or industry, but it applies to how you handle transformation internally, how you cascade it through business strategy and how you use technology as a differentiator.

HR can view this through two lenses, says Jenkins. The first is how digital transformation affects the HR function itself. How do human resources practitioners use technology for self-service? What tools are there to collate and analyse data from a people perspective?

Many of these changes come down to automation. Jenkins says that as artificial intelligence becomes more sophisticated, many of the transactional aspects of HR will done by AI. However, she stresses this shouldn’t scare people. If anything, “It’s the next evolution of HR. It follows the trend of HR stepping up and taking on a more strategic role within organisations.”

The second is more broad, and folds HR’s role into the strategic objectives of the organisation. What does it mean for HR practitioners in a business partner capacity? How will digital transformation drive changes within the organisation, and what does it mean in different contexts?

2. Understand the market you operate in

HR needs to understand the overarching business strategy and its role in helping drive that strategy forward. Many aspects of digital transformation are now driven by what employees demand from organisations, says Jenkins.

“Everyone appreciates the war for talent,” she says. “If we don’t demand these changes, then incoming talent will; businesses need to understand what motivates their workforce and the types of people they are trying to attract – a lot of the talent organisations are looking to bring in will demand different ways of working, and we need to keep up with their changing expectations.”

For example, increasing use of flexible work practices will lead to a more dispersed workforce. As ‘anytime, anywhere’ work takes off, and proximity is no longer a prerequisite for employment, companies will need to “become more savvy about virtual connections,” says Jenkins. Use of technology is a huge enabler for this shift.

3. Don’t do too much at once 

“It’s an evolution; you can be ambitious about what you want to accomplish, but you need to have realistic expectations around what opportunities are there,” says Jenkins. Your best bet? Focusing on small projects where failure is an option – and even encouraged.

A majority of the organisations surveyed have a ‘test and learn’ approach to digital transformation. This makes it easier to reconcile the pace of technological innovation with the time it takes to implement these changes.

“The pace of technology is really driving an environment of experimentation where businesses can learn quickly what works and what doesn’t,” she says. “They can then redirect their efforts and continue to constantly evolve. No one can afford to wait until there is a complete end-to-end process to test – you do that, and competitors will speed right past you.”

4. Don’t underestimate the level of change this will bring 

Because digital transformation touches every facet of a company, HR needs to understand the impacts in terms of workforce trends and changes, says Jenkins. It’s not that HR needs to suddenly become the experts in all things technology, she adds, but practitioners do need to know the strategic intent behind digital transformation and how technology can enable that change.

Making this connection is why HR can – and should – lead the charge, she says.

“Digital transformation matters to the businesses we partner with, and they will either embrace it or face the consequences if they don’t,” she says. “We know there has been and will continue to be a huge shift in the future workforce, so we need to think about what this means for workforce planning and our organisation’s ability to refresh and stay up to date.”

5. Invest in cultural transformation to complement change

This includes how you manage that change, and how you bring your people along. According to the report, organisations typically fall into one of two camps: ‘motivated but constrained’ and ‘ proactive and embracing’. The latter makes digital transformation a priority, while the former has good intentions, but is often hampered by internal obstacles.

One uniting factor of successful digital transformation was strong leadership buy-in and pro-innovation mindsets. When these are absent, the biggest hurdle becomes fear and uncertainty, says Jenkins.

“Sometimes leaders are unsure what the demands of digital transformation are, or how they will lead their teams through it,” she says. This is “absolutely a mindset shift,” and people “need to get comfortable with doing something that doesn’t generate traditional markers of success.”