Steps to Execute Digital Transformation Strategy

Like many buzzwords, “digital transformation” has been distorted to the point that it can be difficult to know what it means. Despite being used in many ways, the term digital transformation means leveraging technology strategically to reinvent the way an organization does business by driving efficiency, innovation and long-term value. A clear understanding of digital transformation helps businesses avoid wasted time, money and effort on misaligned initiatives. 

Unlike some business initiatives, which end once new processes are in place, digital transformation is an ongoing journey. The goal isn’t just to implement new tools but to evolve continuously in response to an ever-changing digital landscape. To succeed, organizations need a clear roadmap and actionable, people-focused approaches. 

What is a Digital Transformation Strategy? 

A digital transformation strategy defines how an organization integrates digital technologies to modernize operations, improve customer experiences, and achieve lasting success. It aligns digital initiatives with business goals, ensuring measurable value and sustainable growth. A strong strategy optimizes decision-making and imbues employees with the skills and mindset to adopt new technologies effectively. 

The Key Components 

New technology is naturally a critical part of digital transformation, but these initiatives demand a strong foundation of leadership, talent, operational efficiency, and customer-centric focus. Two critical frameworks, laid out below, guide this transformation:  

5 pillars of digital transformation 

• Leadership & Management Team – Executive support drives success by setting a clear vision and ensuring continuity across departments. 

• Skilled Workforce – Employees need training to properly leverage digital tools. 

• Strategy and Workflows – A well-defined strategy aligns digital initiatives with broader business strategy and goals. Effective workflows make it possible to integrate technology in ways that enhance efficiency, decision-making and customer experience. 

• Technology – The right technological infrastructure supports innovation and scalability. Cloud computing, AI, automation and data analytics provide organizations with the tools to streamline operations and uncover new growth opportunities. 

• Customers and Stakeholders – Improving user experience, streamlining communication, and increasing accessibility all contribute to long-term success. 

5 key areas in digital transformation 

• Plan – A structured digital transformation plan outlines objectives, milestones, and the roadmap for implementation. 

• Platform – Digital platforms provide the foundation for transformation efforts. Scalable cloud solutions, automation tools, and integrated data systems support efficient operations and collaboration. 

• People – Change succeeds when employees are engaged, trained and supported. 

• Process – Technology and business processes must evolve together. Optimizing workflows, improving cross-functional collaboration, and reducing inefficiencies create long-term value. 

• Performance – Defining key performance indicators (KPIs) and tracking progress is necessary for delivering measurable impact. Data-driven insights help organizations refine strategies and achieve lasting results. 

Steps to Execute a Digital Transformation 

A successful digital transformation follows a structured approach where each step builds on the last while addressing key aspects of the change. 

Step 1: Assess existing technology 

Before implementing new systems, organizations need a clear understanding of their current technological infrastructure. This includes evaluating existing tools, identifying gaps, and determining where improvements can be regarding efficiency, security, and scalability. 

Step 2: Identify key stakeholders and leaders 

Digital transformation requires strong leadership and collaboration across departments. Identifying key stakeholders, such as executives, department heads, IT leaders and end-users, is the first step in securing needed commitment, direction and accountability. 

Step 3: Define clear objectives  

Organizations need to set measurable goals that fit with broader business priorities. These can include improving customer experience, streamlining operations, or increasing agility in decision-making. 

Step 4: Build a comprehensive digital transformation roadmap 

A step-by-step roadmap should set milestones, prioritize initiatives, and establish a timeline for executing strategies and tactics across an enterprise.  

Step 5: Identify budget and resources 

Allocating budget and resources for new technologies, employee training, process optimization, ongoing maintenance, and change management are necessary to achieving long-term benefits. 

Step 6: Prepare and equip employees to adopt new digital tools 

Providing comprehensive training and hands-on support, and fostering a culture that embraces digital change, directly influences your employees’ ability to integrate new tools into their daily work. 

Step 7: Integrate new technologies 

Once the groundwork is in place, organizations can implement new systems and platforms. Seamless integration with existing workflows and processes is key to minimizing disruptions and maximizing efficiency. 

Step 8: Monitor, evaluate and adjust the strategy 

Digital transformation is an ongoing process. Organizations must continuously track performance, measure success through key performance indicators (KPIs), and make adjustments as needed to optimize strategies and drive continuous improvement. 

Why Is Digital Transformation Critical for Businesses? 

Digital transformation is now a necessity for organizations looking to remain competitive and agile in an increasingly digital world. Why? Digital transformation enables you to:  

Improve efficiency and productivity 

Automating processes, streamlining workflows, and integrating smarter technologies within organizations reduces manual effort, eliminates redundancies, and improves overall efficiency. 

Increase customer satisfaction 

Modern customers expect seamless digital experiences. To build engagement and earn their loyalty, it’s necessary to transform business operations with user-friendly platforms, data-driven insights, and personalized interactions. 

Stay competitive  

As industries evolve, businesses that fail to adopt emerging technologies risk falling behind. Digital transformation equips organizations with the tools and capabilities to stay ahead of competitors. 

Keep up with digital trends 

Organizations that continuously adapt to evolving technologies position themselves for long-term success by maintaining relevance and innovation in their industry. 

Challenges in Digital Transformation 

While digital transformation offers significant benefits, it is not without its challenges. Here are some common challenges organizations must navigate: 

Employee resistance to change 

People naturally resist change, especially when it disrupts familiar processes. Without clear communication and effective change management, employees may struggle to adopt new technologies and workflows. 

Technical limitations 

Legacy systems, outdated infrastructure, and integration issues can slow down transformation efforts. Organizations must carefully assess their IT landscape and invest in scalable solutions that align with their goals. 

Skills gaps 

A successful digital transformation requires a workforce equipped with the right digital skills. Many businesses face challenges in upskilling employees or hiring specialized talent to support new technologies. 

Budget constraints  

Depending on your existing infrastructure and workforce readiness, digital transformation requires significant investment in technology, training and process changes. Without sufficient funding, your organization may struggle to realize its vision. 

Lack of leadership alignment 

When executives and department leaders are not in agreement on transformation goals, initiatives can lose momentum, leading to delays or inconsistent execution. 

Poorly defined goals 

Without a clear and measurable understanding of what success looks like, you risk implementing changes that do not produce real value. 

How Change Management Enables Successful Digital Transformation 

Selecting the right tools for digital transformation is only part of the equation. To realize full value, people need to be prepared to adopt and use these changes. Despite its critical role, less than 70% of organizations are using a structured change management methodology. This suggests that companies may be underestimating the importance of structured change support, putting digital transformation efforts at risk.  

Organizations that apply change management to digital transformation initiatives experience higher adoption rates, less employee resistance, and greater operational efficiency. A structured approach helps employees understand, embrace and sustain the changes needed to achieve transformation success. 

Key Actions for Driving Digital Transformation With Change Management 

Secure leadership support and commitment 

Employees look to senior leaders for direction, and their level of commitment directly influences how the organization responds to change. Leaders who actively support transformation send a clear message that it’s a strategic priority, not just another project. 

However, sponsorship goes beyond approving budgets and setting goals. Employees are more likely to adopt new ways of working when leaders visibly champion the transformation. Prosci’s research highlights that active and visible sponsorship is the number one contributor to successful change initiatives. Effective sponsorship follows a structured approach known as the ABCs of Sponsorship: 

• Actively and visibly participate in the change 
• Build a coalition of sponsorship across the organization 
• Communicate support for the transformation effectively 

Integrate the technical and people sides of digital transformation 

With strong leadership in place, it’s essential to ensure that both the technical and human elements of digital transformation move forward in sync. Organizations often focus heavily on implementing new technology but underestimate the importance of preparing people to use it. 

Prosci Unified Value Proposition

 Prepare, support and equip employees throughout the project or initiative 

Change can be disruptive, but providing employees with clear communication, role-specific training, and ongoing support makes adoption smoother. Employees must be given the tools, knowledge and confidence to integrate new digital processes into their daily workflows. 

Equip people managers to support their teams 

People managers play a critical role in digital transformation. When they have the right knowledge and tools, they can guide their teams through uncertainty, address resistance, and reinforce the benefits of change. 

Actively prevent and mitigate resistance 

Resistance is a natural response to change, but it can be minimized and even prevented through proactive engagement. Leaders must listen to employee concerns, communicate transparently, and reinforce the benefits of new digital solutions. 

Leverage a structured change management approach 

To sustain digital transformation, organizations need a structured, research-backed approach. The Prosci Methodology provides a repeatable, scalable framework for managing the people side of change, equipping them to engage with and adopt critical transformations. 

The Prosci Methodology is comprised of three main components: 

• Prosci Change Triangle (PCT) Model – Balances four critical aspects of successful change: Leadership/Sponsorship, Project Management, Change Management and Success. 

• ADKAR® Model – Equips individuals with what they need to achieve successful change: Awareness, Desire, Knowledge, Ability and Reinforcement. 

• 3-Phase Process – A structured roadmap that enables organizations to scale individual change, from preparing effectively for change to managing implementation and sustaining outcomes. 

Change Management Case Studies 

Prosci has enabled many client successes in digital transformation, including the example below. Explore our other case studies to learn more.  

Texas A&M Implements Workday 

Texas A&M University System faced the challenge of modernizing its outdated payroll system, which was costly to maintain and no longer met the needs of its employees. A structured change management approach delivered a smooth transition, with a coalition of sponsors and change agents providing training and communication. The result: high employee readiness, minimal disruption, and a repeatable framework for future projects. 

Municipal Utility Builds a Change Management Office for ERP Implementation 

One of the largest municipal utility companies in the U.S. faced significant digital transformation challenges due to fragmented systems and outdated processes. With a $200+ million ERP transformation project on the horizon, leadership recognized the need for a dedicated Change Management Office (CMO) to guarantee project success. 

Working with Prosci Advisory Services, the utility company developed a CMO operating model focused on project support, capability building, standardization, and change portfolio management. Partnering with Prosci, they developed a Change Management Office (CMO) to lead their $200+ million ERP transformation. In just six months, the CMO gained company-wide trust, ensuring smoother digital adoption and long-term success. 

Embracing Change to Build a Digital-First Organization 

Organizations that take a structured approach to digital transformation position themselves for long-term success. Strong leadership, a clear strategy, and a workforce prepared for change create the foundation for real progress. Businesses that treat transformation as an ongoing effort, rather than a one-time initiative, can develop the agility needed to adapt and compete in a rapidly evolving digital world. 

But success depends on more than adopting new tools. Our research shows that organizations that prepare, equip and support employees throughout the change can achieve measurably better results—up to seven times better, in fact. Effectively managing the “people side of change” is how top organizations turn the challenges of digital transformation into opportunities to thrive.