DTO, or Digital Transformation Office, is a temporary, yet more initiative-taking, influential, and powerful body of the PMO-DTO couple. DTO is brought into being in organizations that opted to undergo a digital transformation. DTO’s reason to be is to invent what digital transformation means for a particular sector, business, or product, then to convince those who “are not sure”, and finally to ensure that the change actually takes place in the organization.
To give you a head start on how to launch a DTO in your organization, let’s name six real-life DTO examples. Also how they can make use of Project Portfolio Management software.
What is Digital Transformation?
Digital transformation is driven by digitalizing the organization’s DNA as well as key aspects (partially or fully) of its value proposition.1 There is no such thing as a digital strategy, just strategy in a digital world.2 Some companies call this function a Strategic Implementation Office, while Gartner refers to this as a Strategy Realisation Office.3
We will look closer at two models of how a DTO might support PMO, and six examples of real-life DTOs operating in traditional sectors.
DTO – two operating models
In both ‘Operational DTO’ model 1, and ‘Supervisory DTO’ model 2, DTO seems not to question the position of PMO.
Table 1. Two modi operandi of Digital Transformation Offices
|Operational DTO||Supervisory DTO|
|Digital Transformation Office runs digitalization projects, while Project Management Office runs the organization’s regular business projects.
DTO and PMO remain independent from each other but once the inventions and processes developed by DTO solidify, the PMO takes them over.
|DTO exercises its creativity to “invent” the change and specify its scope. Then the DTO guides and supervises the PMO who runs specific projects related to the digital transformation.
In this model, it is PMO who does the operational management related to the digital transformation.
|DTO has the very same PPM and Project Management competencies that the PMO does.||PPM and Project Management are the sole responsibility of PMO.|
—We seldom see a PMO disappearing simply because the digital transformation is taking place. It would take as much as a shift from projects to products to undermine the position of a PMO. However, the digital transformation does not necessarily entail a transformation to the product approach; quite the opposite – an organization undergoing the digital transformation might elect to keep the proven project approach – says Jerzy Sekula, a Product Manager at Softwareplant.
The lifespan of a DTO ranges from 6 months to several years. ‘Middle term’ describes the life expectancy of a DTO best. After all, the job of the office is to walk an organization through the transformation, a mission temporary in nature.
DTO’s place in organizational structure
Digital Transformation Offices tend to be higher in the organizational structure than Project Management Offices and for a reason. Access to the top management is a crucial prerogative of any DTO since it’s the DTO that invents and promotes the sometimes unpopular pro-digitalization initiatives.
To better understand why DTO sits higher in the organizational structure, have a look at table 2, depicting how DTO must be more creative and venturesome than PMO.
Table 2. PMO vs. DTO
|Goals||Maintains standards for project management within the organization.
PMO strives to standardize and introduce economies of repetition in the execution of projects. PMO is the source of documentation, guidance, and metrics.
|Has the liveability of the product portfolio improved? Has a mindset shift occurred in engineers and product managers? Is the transformed portfolio generating higher revenues and profits?
In other words, Benefit Realization Management is a concern – ensure that the execution delivers intended benefits and outcomes.
Only then, meet the schedule and budget.
Support and assist those who implement projects
|what and how?
come up with ideas and initiatives, then support and assist those who implement projects
|Reactive or proactive?||respond to what the business development managers want||be a business development manager|
|Motto||“Our projects are on time and on budget.”||“We are adapting to change while remaining relevant to our stakeholders.”|
|Key area of focus||Standardization, monitoring, and optimization of PPM processes||Planning, monitoring, and overall management of the change process in the organization|
Here is how McKinsey perceives the “elevated” mandate of DTO:
DTO breaks out of the PMO mold by changing the metabolic rate of the organization. The transformation office drives results through standardized, weekly, action-oriented meetings. Attendees include a sponsor for each workstream and other key initiative owners, plus a representative from finance and the chief transformation officer (CTO). The best TO meetings bear no resemblance to ordinary meetings dominated by presentations, debates, and “show-off” items. They are fast-paced, 60- to 90-minute sessions led by the CTO and designed to encourage action and remove roadblocks.
The TO team needs a mandate from the CEO to challenge upward as well as downward (including the CEO in the event that he or she falls behind set targets and milestones).4
Roles at DTO
To better understand the transformation-related roles let’s see what these roles are not about. A Chief Transformation Officer/Chief Digital Officer/CDO is not a Product Manager. The former is there to convert the latter into a visionary able to look further into the future.
Have a look at CTO’s responsibilities. Those are very different from those of a Project and Product Manager.
- CTO Drives growth and strategic renewal by transforming an organization’s traditional analog business into digital ones.
- Maps and transitions traditional processes to digital ones.
- Owns and centrally monitors the digital innovation project portfolio.
- Identifies new tools – AI, digital, CRM – that can support, enhance and improve existing solutions.
- Works closely with HR to attract and retain top talent.
How does DTO track progress?
While the Project Management Office’s responsibility is to keep an eye on schedule and budget, Digital Transformation Offices add the third pillar: ensuring that the digital transformation is actually happening and that the alleged benefits and revenue growth are becoming reality.
- Has the product portfolio become ready for the digital era?
- Has the mindset shift occurred in engineers and managers? Have they begun taking digital trends into consideration while making decisions?
- Are new projects, products, or initiatives generating higher revenues and profits?
These are stress tests a CTO should utilize to measure the progress of digital transformation.
Here are six examples of old economy entities walked through a digital transformation by Digital Transformation Offices:
- Editor’s office of a newspaper. DTO managed to make the digital edition a source of 20% of income and 50% of profits.
- Car manufacturer. DTO advanced “digital” design language to the strategic level. Internal combustion engine vehicles resemble electric cars in how they look and are selling at a premium price.
- Banking institution. DTO managed to convince both clerks and customers that e-banking and credit cards belong to the old world; instead, mobile payments have become mainstream, safe, and practical.
- Food joints. DTOs of food delivery apps were successful in reviving a good number of declining independent restaurants. Importantly, DTO here must not act as Product Management – the restaurants continue deciding on their menus independently.
- A transformation of the front office with digitally-assisted advice could leverage the standardized data from the customer interaction toward marketing initiatives. That way, customer experience and marketing opportunities can be redesigned to help increase wallet share.
- Tramway manufacturer. DTO talked engineers into listening to input from public transport systems social media profiles. This shifted the manufacturer’s center of gravity from electrical engines to passenger-centric electronic systems.
BigPicture software for Digital Transformation Office
Regarding a software tool for a DTO, many Project Portfolio Management tools will do the job. As a Chief Transformation Officer, try to borrow the proven tool from your PMO. As seen in table 2, what DTO adds on top of the PMO’s responsibilities are soft aspects of management, such as change management and communication with stakeholders. Besides the leadership and communication skills, a DTO needs proven project management planning and tracking tools, such as:
- Gantt chart and Roadmap
- Backlog – with configurable views and searchable
- Risk matrix
Why not share the software with the PMO? As both DTO and PMO collectively produce the Single Source of Truth, a panorama on both Project/Product Management and the digital transformation going on, they can effectively share the same software solution.
2 Scott Gibson, Group Executive Digital Practice, Dimension Data
3 How a Transformation Office Can Help Your Transformation Initiatives Succeed, Henrico Dolfing, January 2021
4 The role of the transformation office. Kurt Chauviere, Ben Maritz, and Jasper van Halder, McKinsey & Company, November 2016
5 Job description template: Chief Digital Officer, LinkedIn
6 Financial services digital intelligence: Time to transform the transformation office, PricewaterhouseCoopers, PwC