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Who Should Sponsor a Digital Transformation Project?

SMC digital transformation experts
Posted by: Sharon Squires-Hansen on
March 1, 2023

“An active, visible, engaged, and effective executive sponsor is the number one contributing factor to the success of a change initiative.”

You have probably heard this time and time again. There have been countless studies in academia, and real-world examples that attest to this and whilst other factors still impact the success of enterprise software-driven change (such as having the right business process, choosing the best-fit technology, and having accurate data), the underlying consensus is that getting the right Executive sponsor does matter, to ensure appropriate governance, and to inspire people to adopt the change.

So what you are probably wondering is, “Which of the big C’s (CFO, CEO, COO, CIO, etc) at my organisation should sponsor our ERP, CRM, HCM, or other enterprise software project?” As usual, the consulting answer is…”It depends.” The purpose of this article is to expand on this by first setting the foundation of what an executive sponsor’s role is in an Enterprise software-driven change project and the considerations you need to make when selecting the primary sponsor. It will also tackle the pros and cons of the typical suspects, CFO vs COO vs CIO.

What is the role of an executive sponsor in a digital transformation project?

The role of a sponsor is to drive the digital transformation project forward. Therefore, an individual with a high level of authority and influence, who is enthusiastic and engaged, within an organisation, signals a commitment to a transformation project. By contrast, a disengaged or absent authority figure signals the opposite, a lack of priority.

At SMC we have seen our fair share of technically simple projects suffer from delays or even fail to go live, because of ineffective executive sponsors that lead from a distance, or through delegation. This is one of the biggest leading indicators of project failure or success. We have also seen a multitude of highly successful active executive sponsors, who have made even the most technically complex projects run smoothly.

In our experience the difference between an ineffective sponsor and an active executive sponsor is that active executive sponsors:

Provides leadership and support

The sponsor is responsible for providing leadership and support to the project team, ensuring that the project aligns with the organisation’s goals and objectives, and making key decisions.

Ensures resources and budget

The sponsor is responsible for allocating the necessary resources, including budget, personnel, and technology, to ensure that the project is successful.

Drives project success

The sponsor acts as an advocate for the project, helping to secure buy-in from other stakeholders, and driving project success by ensuring that the project is prioritised and receives the necessary support.

Builds project credibility

The sponsor’s presence and support help to build credibility for the project, and their involvement can help to secure the necessary approvals and resources to ensure the project is completed successfully.

Ensures alignment with business needs

The sponsor should have a strong understanding of the business needs that the software is intended to address, and they should ensure that the project is aligned with these needs.

Another commonly overlooked aspect of being an active executive sponsor is their effectiveness in navigating through organisational culture, their ability to be empathetic to the needs of their organisation and team, and their ability to lead, not just direct change. A sponsor can work hard to try to send all the right signals by ticking off the checklist above but still fail to be an effective executive sponsor if they do not have the strong change leadership skills required to build support and momentum for the digital transformation project.

Who is a better sponsor for an enterprise software lead digital transformation project? The COO, the CFO, the CIO?

The answer is, it depends on who in the C suite has sufficient authority, influence, power, enthusiasm, and availability to ensure that any conflicts that could impede the change are resolved in a timely and appropriate fashion within the scope of the digital transformation project.

Often, we see that the default option for many organisations is to appoint the CFO or the CIO. Whilst, well-meaning, often the choice of appointing a CFO or CIO comes from the mistaken belief that ERPs are just finance systems or that ERPs are just another technology/information system. Our experience at SMC is that whilst the CFO or CIO may be the best sponsor for the project, the decision should be based on considering their ability to influence, engage and drive change in the user groups that are most impacted by changes in processes and behaviours that the new ERP system brings. Most often than not, they are outside of finance.

Simply put, the executive sponsor should be the person who influences or controls the business areas that are most heavily impacted by the digital transformation project.

Typically, for enterprise software implementation projects that focus on improving business operations or customer-facing interactions, a COO may be the most suitable sponsor. For projects that involve no impact outside of finance processes, a CFO may be the best sponsor. For projects that involve support functions within the business that does not have any impact on customer-facing interaction or operations, a CIO may be the best sponsor.

That said, it isn’t always the case. In some instances, the transformation is so widespread in the impact that it may even be the CEO that would be the best sponsor. Alternatively, in some organisations, the right executive sponsor may not be the most obvious person, due to the unique makeup of an organisation culture that may see other executives or even senior managers command higher levels of influence.

Therefore it is important to understand the power structures and lines of influence within your organisation and the interpersonal and change leadership skills of the executive team when appointing an executive sponsor, and building a network of change sponsors throughout the organisation.

In summary, having the right executive sponsor is critical to the success of an enterprise software implementation project, and it’s important to select someone who has the necessary influence, authority, and understanding of the project, and change leadership capability to drive it forward.

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