Why is it important for companies to take a considered and holistic view of their tech stacks?

A company-wide technology strategy should align with your business strategy – your tech stack should drive operational efficiency and improvement in line with your overall strategy. While specific tools can fix functional challenges, technology strategies are most powerful when utilized as enterprise-wide solutions that enable the organization’s corporate objectives. Aligning your technology & digital capabilities to your business strategy also ensures you are not purchasing non-essential applications, which negatively impact EBITDA.

Taking a company-wide approach to tooling leads to better technology investment outcomes – companies that take a function-driven and siloed approach to tooling selection risk improving one department at the expense of the overall enterprise. Many core tooling components are cross-functional by nature and need collective input to maximize their effectiveness. The enterprise-wide perspective considers how the required capability will impact other up-stream and down-stream business processes, data models and users thus enabling leaders to make tooling decisions that are more strategic and better balance benefits and risks.

Who is responsible for digital transformation across your company? 

CEOs are ultimately responsible – given the cross-functional nature of most digital transformations, the CEO must ensure the desired digital capabilities will enable the corporate strategy, sufficient cross-functional support is provided by his/her team, and the initiative is / continues to be a high priority focus for the organization. During execution, the CEO’s primary role is governance to ensure the initiative stays “on-track” and any identified blockers are quickly addressed. The CEO’s focus is not a technical go-live but the realization of the business benefit for which the digital transformation is forecasted to deliver.

CXOs or cross-functional strategic leaders should drive execution – given digital transformation often involves significant operational improvements, each impacted C-suite member must actively champion the changes for their function, which includes validating the business benefit, confirming functional requirements, validating solutions, allocating internal resources, etc. The day-to-day management of the program should be assigned to a capable individual on a full-time basis, ideally with the necessary skills, experience and influence to drive change within the organization. 

How should non-technical CEOs involve themselves in improving the company’s digital capabilities?

Focus on operational challenges and inefficiencies – start with identifying your current operational challenges. Ask how the impact could be reduced or eliminated by deploying technology / digital solutions. For example, technology can often drive a significant EBITDA improvement when your business is experiencing significant manual effort, headcount bloat, elongated processing times, or other significant inefficiencies.

Be mindful of future growth and scalability – realize that changes in target market (up or down), revenue models (i.e. consumption or usage), or integrating add-on integrations will require business system optimization work. Therefore ensure that any business system optimization spend is creating a scalable architecture (i.e. future-proofing) that will enable you to improve ROI on all monies invested and avoid the need for cash eroding “rip and replace” type initiatives.

Consider whether improved data flows and data visibility would help your organization make better decisions – leadership performs better when it has access to better information. If there is an opportunity for technology to improve how information flows throughout your organization or to provide better optics around how the business is running, all levels of management can make more strategic decisions and react to both opportunities and risks more proactively. 

Bring in technical experts to suggest specific solutions – the CEO shouldn’t be limited by their own familiarity with technical solutions. Experts can recommend capabilities, tools, integrations, and customizations to address the strategic challenges and opportunities the CEO identifies.

When is it particularly important for a company to evaluate their tech stack?

During platform acquisitions – private equity firms must consider the overall architecture and systems of their portfolio companies to ensure they’re set up to scale. This is essential before increasing transaction volume or pursuing M&A growth. 

Before significant growth phases – evaluate your tech stack before you start growing. It’s easier to have the right platforms and systems in place so that you can harness the benefits of growth and ensure that margin and profits grow in line with revenue. Digital transformation is less disruptive and often better executed when it’s undertaken proactively, rather than in the middle of a hectic, high-stress period of rapid growth.  

When facing operational challenges – major operational challenges are often an indicator that some of your tools and/or processes aren’t working properly. Evaluate your tech stack to see if technology is the issue – or if it can help address the issue.

During regular strategic reviews – technology is always evolving, and new solutions are constantly emerging. A digital strategy that was optimized a few years ago isn’t necessarily optimized for today. By periodically reassessing your digital strategy, you make it easier for your business to accommodate new technologies that can potentially impact your business or even your industry as a whole.

What are key tool categories that most companies consider as they undergo a digital transformation?

There are three levels of tooling priority:
Priority 1 Tools: enable the foundational activities of running a business	CRM (Customer Relationship Management) – tools like Salesforce are crucial for managing customer relationships and selling to your customers. ERP (Enterprise Resource Planning) – systems like Intacct or NetSuite are essential for managing billing, finances, and core finance operations.
Priority 2 Tools: fuel business growth	MAP (Marketing Automation Platform) – marketing automation fuels your growth engine and drives the business forward. PSA (Professional Services Automation) – if professional services are a significant part of your offerings (PSA drives 50% + of revenue, and/or requires significant resources), PSA tools facilitate growth by making it easier manage and execute projects. If PSA represents a small portion of your offerings, you can manage this work offline or incorporate into your CRM or ERP.
Priority 3 Tools: improve long-term planning and performance; these tools leverage data from other systems	FP&A (Financial Planning and Analysis) tools –  tools to provide better business insights and support a more rigorous financial planning process.  Customer support and success tools – tools that proactively manage customer health to prevent churn. Success tools enable your team to improve customer relationships, driving increased revenue and customer satisfaction.

Every company needs priority 1 tools – Priority 1 tools are the core systems that most businesses need to be successful – the relevance and priority of all other tools vary depending on the size, stage, industry, and nature of the organization. 

Tool Selection

What are the five stages in the digital transformation framework?

	Key activities		Who’s involved	Key output
Assess	Review corporate strategy, market alignment, existing capabilities, and current tooling.  Determine current state of business systems and confirm necessary improvements to increase productivity (positive EBITDA impacts) and scalability (future proof architecture)		CEO and C-Suite leaders	Business Systems efficiency and scalability diagnostic including high level business case & benefits
Architect	Develop a comprehensive view of how information should flow across different tools and systems. Build digital strategies, factor in future needs, automate processes, improve data utilization, and develop customized blueprints that enable your systems to work together.		As the project transitions into the executional phases, top-performing executional stakeholders become primary participants.	Business system architecture and data model that shows how information flows throughout the organization
Plan	Develop a roadmap for implementation, considering resource availability, budget, prioritization, and the pace at which the organization can absorb change.  Break the transformation into pieces to make it more manageable.		Executional stakeholders are primary participants, while leadership must sign off on resource availability.	Resource plan and implementation roadmap that’s tied to business benefits
Deliver	Execute the plan at a realistic pace, tracking progress, mitigating risks, and ensuring all stakeholders are completing their assigned tasks. This includes transforming legacy data, updating processes, and upskilling/ sourcing talent as needed.		Internal and external resources needed to successfully complete required tasks. Note that the ratio of internal/external resources will vary depending on scope, complexity, availability, capability, etc.	Digital transformation deliverables including governance frameworks
Optimize	Track the benefits realized from the transformation, reassess the strategy, and continuously look for ways to improve and adapt to new technologies. Consider user adoption as well as market and customer trends.		The realized enterprise solution sits within Strategy or with the CTO so that system changes are governed appropriately.	Realized benefits and constant technical reassessment

How do you effectively evaluate your current tooling? What common gaps and risks should you look for when evaluating your current tooling capabilities?

Identify capability gaps that are critical to your business strategy – map your current functionalities directly to the business outcomes they impact. By understanding where your current tools fall short, you identify quantifiable opportunities where new investments can make a meaningful impact. 

Determine how well your current technology is being used – tool usage is as important as the tools themselves. Run system reports to determine the number of custom objects and fields within your systems to determine level of technical debt. There are many ways to improve system use without significant investment such as modifying business processes, retraining users, and deploying improved governance. However, if your current solutions aren’t being used as originally designed, then this can also be a sign that you don’t have the right systems in place.  

Understand adoption rates – users working outside the system are a red flag indicating adoption issues. If adoption is your ultimate goal, focus on getting users into the system instead of implementing new systems. This may require you to challenge or change existing behaviors, which is no small feat! 

Keep an eye on peers and competitors – every company is different, but comparing your technology strategy to others in your industry can point out areas of opportunity, risk, or competitive advantage.

How should companies approach tool selection and capability assessment? 

Identify quantifiable business outcomes – clearly define the benefit or outcome you’re expecting from a digital capability before you select a new tool. This helps align technology decisions with business objectives and limit scope creep. 

Maximize existing tool capabilities – many companies only utilize 30-50% of their purchased tools’ capabilities. Focus on fully leveraging your existing investments to maximize your tooling ROI and reduce the total number of systems your business needs. 

Focus on creating an integrated data model – each tool should support and align with your integrated data model. If you aren’t rigorous with this requirement, you increase your risk of data duplication and technical debt. 

Prioritize scalability – if you expect significant growth or M&A activity, scalability is just as important as other factors when selecting new solutions. If a tool can’t scale, it likely isn’t worth the time and disruption it will take to implement. 

Be mindful of industry-specific needs and trends – different industries have different levels of digital maturity, or specific requirements driven by operational needs or compliance. For example, cloud computing might be new in some industries and commonplace in others. This is especially important to keep in mind if you anticipate entering a new industry through M&A.

How do you determine whether the benefits of retooling are worth the disruption and distraction?

Quantify costs and benefits to objectively (and confidently) determine whether retooling will help the company reach its strategic goals – make the decision to invest in digital transformation as simple as possible. Quantify all productivity and capability enhancements you hope to achieve through digital transformation and compare that opportunity to the costs of allocating short-term resources and investing in technology. If the benefits you are pursuing are aligned to your business strategy, this exercise should demonstrate the true worth of digital transformation for your business. 

Prioritize long-term benefits over the “tyranny of the urgent” – digital transformation should be an enabler of the value you expect to create from this process. It is tempting for leaders to think of transformation projects as distractions from the day-to-day demands of running a business, but effective transformation drives the business in the same direction as your core activities – just on a longer time horizon. Tracing the project to quantifiable benefits helps your team understand the true importance of the project.

How do companies mitigate the disruption caused by digital transformation?

Don’t “skimp” on key stakeholder involvement – time your key stakeholders invest upfront saves significant time for the wider team later. If the right people help ensure that the solution is designed to meet real business needs, you’ll end up with a better tool and a project timeline that requires minimal extension of time, budget, and resources. 

Make the transformation a strategic priority, even if it requires a delay – all projects go more smoothly if your team has the bandwidth and leadership prioritization to give them the effort they deserve. Adjust project timing as necessary to set yourself up for success. 

Proactively recognize the broader impacts of technological projects – technology doesn’t exist in isolation. Any change to your tools and systems will impact people (who might require support regarding adoption, training, and role definition), processes (which might need to change), and data itself (which might require cleaning or transformation). Plan for these impacts and be vigilant in identifying potential problems before they become major derailments to your business. 

Integration + Data Consistency

What are key data objects that you need to include in each of the main tooling areas?

Tool Category	Key Data Objects for Integration Only
CRM	• Leads • Accounts (Source of truth) • Contacts (Source of truth) • Opportunities (Source of truth) • Contracts / Entitlements (Source of truth) • Products • Price Lists
ERP	• Items / Products (Source of truth) • Customers / Accounts • Contacts • Sales Orders  • Invoices (Source of truth) • Expenses
Marketing Automation	• Leads (Source of truth)
PSA	• Projects (Source of truth) • Project Invoices (Source of truth)
FP&A	These tools typically pull data from the core data objects in your other systems.
Customer Support	• Accounts • Contacts • Entitlements • Cases (Source of truth)
Customer Success	• Accounts • Contracts • Cases • Invoices • Projects

What is a data object map, and how do you build one?

Data maps are a fundamental component of system architecture that gives you insights into the core data structures within your tools or systems – they have several key aspects that help users understand how information flows across your tech stack. 

Elements of a Data Object Map
Core Data Structure Mapping	Data object maps identify the primary data objects in your system. For example, in Salesforce, key data objects include accounts, contacts, and opportunities. In NetSuite, you might have sales order objects and invoice objects. Objects are essentially equivalent to database pages, containing various fields of information.
System- specific objects Mapping	Each tool or system comes with its own set of native objects. You must understand these native objects when planning your overall architecture and integrations.
Integration planning	Data object maps help you plan how different systems will integrate by helping you visualize how data objects from various tools will connect. They also help you determine which pieces of data should flow between systems.

Draw a visual diagram to build a data object map – represent each object as a box, and draw lines between the boxes to visualize the relationships between different data objects. Each connection represents an integration point where you’ll be passing field level data from one object to the other. Focus on your core data objects to make sure you understand how the most important aspects of your systems will fit together. 

Establish governance immediately after finalizing your data object map – assign single points of ownership to each data object to ensure that the data within those objects is maintained responsibly. Once the reliability of your data is compromised, the data object map no longer accurately represents how information is being shared across your organization.

How should companies approach system integrations after an acquisition? 

Integration facilitates combined operational and sales activities – if the strategic objective of a merger is to drive synergy by providing more sales opportunities or combining core activities across two businesses, system integration enables that goal. Integration makes it easier for teams to cross-sell and upsell across a wider product set, and allows leadership to leverage efficiencies by standardizing work and key processes within back-office functions. 

Companies that operate independently might find improved reporting tools more useful than a full integration – full-scale integration might not be worth the cost if the two businesses are strategically and operationally unique relative to the other. In this situation, it could be more beneficial to deploy a data warehousing and business intelligence layer over the transactional data to enable standardize reporting. This would be a more cost effective approach for obtaining the analysis and insights you need to manage your portfolio as a whole.

Remember that consolidation is the most important objective – to maximize the benefits of any M&A transaction, you need to commonize datasets, processes, and capabilities. It’s impossible to realize the full benefits of M&A integration without going through this process.

Overall

What are the most important things to get right?

Determine business benefits / outcomes and obtain unwavering support from leadership – business benefits become your “north star” when undertaking a digital transformation. They help guide and motivate the team during the highs and lows of business system optimization work. Having strong leadership support throughout is absolutely critical to ensure priorities are maintained and the team stays focused.

Digital transformation doesn’t just help you make the most of future opportunities; it can also create them – if you want to be acquired by a company or a portfolio that values system scalability, it can be advantageous to have a robust system architecture in place before conversations begin. Undertaking business system optimization work is a forcing function for operational transformation and improved data reliability, which creates enterprise value, increases exit multiples and accelerates time to exit.

What are common pitfalls?

Not generating a business case – many companies see business system work as just something that needs to be done and about as fun as a routine medical procedure! This should not be the case given company resources and budget are finite. Take the time to quantify the resulting productivity and scalability improvements a digital transformation or business system optimization will deliver and expect your company’s bottom line to improve as a result. 

Overlooking the Architect phase creates more problems instead of saving time – many teams are tempted to skip this phase because they don’t see the relevancy and “know” what system work needs to be done. Taking this approach causes project teams to overlook key integrations and/or necessary data alignment work, which poses a significant risk to the quality of the solution and often results in delayed go-lives, overspends and additional project phases required to make corrections. However, time invested to properly architect your solution significantly expedites the rest of the project by creating a referenable “blue-print”. 

Digital transformation teams of “B” and “C” level players develop suboptimal solutions – leadership often prefers that top performers focus on their day-to-day roles instead of participating in the digital transformation process to ensure business operational continuity. It’s crucial that your best, most experienced, strategic oriented people participate because you want your future systems / solutions to support your best ways of working that will drive your business forward in the long term.   

Beware of “technical Frankensteins” in companies that do a lot of M&A – technical debt is common and easy to accumulate. Systems that have been cobbled together without proper integration lead to inefficiencies and a wide array of potential problems or risks in the future. If M&A is important to your business, you must consistently prioritize the Architect phase and be vigilant regarding data, process, and reporting standardization.