Digital transformation: How to beat the challenges of a federated organization

Leading a digital transformation is never easy – this one involved a legacy infrastructure, hundreds of stakeholders, and a global pandemic. Here's how one dedicated IT leader and his team made it work
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In early 2019, I started my role as business transformation executive for the Federal Reserve System, responsible for leading the digital transformation of finance, human resources, and procurement.

As the central bank of the United States, the Federal Reserve is a federated organization made up of 22,000 employees across the 12 Reserve banks. Each bank is its own separate legal entity with its own board of directors, CEO, CFO, CIO, and senior HR and procurement officers.

Over the years, technology was consolidated while processes and capabilities remained disparate, and it became increasingly challenging to deliver even basic capabilities. With over 40 disjointed, mostly homegrown legacy applications and a high degree of customization supporting proprietary business processes, the system was costly and challenging to maintain. New employees were frustrated by the poor user experience and difficulty accessing data, and collaboration and innovation were hampered.

It was time for a transformation.

When we launched our transformation initiative, we knew it would be hard. From a business process standpoint, the challenges would be substantial. But the greatest challenge by far was cultural: How would we run the transformation? How would we make decisions? And how would we implement the behavioral changes required to make the transformation stick?

In addition, nobody expected to tackle this initiative in the midst of a pandemic. But despite all the obstacles we faced along the way, our team worked hard and executed admirably, and we’ve been able to enjoy the benefits of this important digital transformation effort. Here’s a peek into how we achieved some of our wins.

Adjusting in the midst of a pandemic

During the design phase of our transformation, 30 to 50 team members would travel to various locations throughout the country on any given week, reviewing design requirements, meeting with stakeholders, and preparing for upcoming presentations. When COVID hit, first it was our offshore resources in India who could no longer work from the secure clean room we had built; then, one by one, various locations throughout the country began imposing restrictions. And just like that, we went from being-to-face to being entirely remote.

As the Federal Reserve, however, we had to quickly mobilize to address the impact of COVID on the economy. This pulled resources from the digital initiative and put in question its timing. We ended up adding six months to our original 21-month timeline, keeping as many milestones as possible close to the initial schedule and building in time for socialization activities such as training and testing. While this gave us slack in the event of a disruption, it also gave our stakeholders more flexibility to address the critical needs of the organization while still supporting the program.

[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]

In a federated organization that largely relies on building consensus for decisions, transparency is key. Although empowerment was a key principle of the project, it was important that we build support, excitement, and knowledge prior to go-live. This meant that our in-person sessions of 20 to 30 became virtual sessions with up to 800 attendees. All design sessions, design reviews, town halls, demos, and Q&A sessions were broadcast live and recorded for later review.

This helped tremendously in terms of transparency and keeping everyone in the loop because participants were able to come and go around the topics they were interested in. And even though more people engaged in the sessions, decision-making was more efficient because all the people we needed were in the room – from senior leaders to practitioners, information security, and audit.

This is just one example of how the pandemic opened up opportunities we otherwise never would have had – we just had to be nimble enough to adapt and take a leap of faith.

The value of digital project management

At the beginning of the program, one of our vendor partners suggested a new SaaS project management tool, which offered easy data access and transparency. Our project managers, practitioners, testers, trainers, and stakeholders could all update their specific tasks and see a consistent view of status.

While our digital PMO simplified and automated our weekly cadence of status review, it really showed its value when it came to cutover. Prior to go-live, we developed a plan, identified dependencies, and made sure we had accountable resources. We reviewed it a few times with the entire team to ensure that everyone understood their role.

When cutover activities began a few weeks prior to go-live, the process was entirely automated. A resource would be notified that they needed to perform a task and when the task must be completed. If they didn’t accept the task within a certain amount of time, an escalation automatically occurred. If they ran into an issue, they could flag the task and the appropriate party would be notified. Once the task was complete, they marked it complete, and the next task owner was notified.

From a leadership standpoint, we were able to watch the dashboard, see that tasks were getting completed and easily identify any areas of concern.

[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]

Today, the metrics and data we have access to has made a world of difference. We can perform polls and surveys of team members and stakeholders to see how they’re doing over the span of a project, where we need to improve, and where we are having the biggest impact.

This data is useful in other settings, too. In training, for example, if people indicate that a class isn’t providing what they need, we can quickly address the issue. Our digital PMO has enabled a new, data-driven cycle that has been incredibly valuable.

During COVID, our use of the digital PMO only accelerated. Team members could access everything seamlessly online, and even those who had previously preferred print over digital were soon swayed. The pandemic helped the leadership team embrace the changes we expected from everyone in the organization – essential to ensure that new routines and changes stick.

Data-driven analysis 

The night before we went live, I sat down with my tablet to see, for the first time, the results of our efforts. I was amazed at how much visibility I had into data I had never seen before. I could see my entire matrixed team working across the various legal elements. In a single view, I could see their development plans and previous performance reviews and provide feedback on the spot. I could even see the project budget, which formerly would have required days and additional help to pull together.

After go-live, we’re working to ensure that leadership has access to the proper dashboards and reports. Our goal is to provide the leadership team with immediate access to budget performance, hiring pipelines, key diversity metrics, and more. Ideally, this process will be like teaching people to fish – once they are comfortable, they will continue to learn until it becomes natural. Part of this transformation has been getting people to trust the data, and to trust in their ability to be more data-driven.

Hiring for digital transformation

Talent and hiring are important considerations when you tackle digital transformation. We decided to challenge our leadership team by asking them not to settle: We opened all positions and told our leaders to find the best candidate for each role, whether they were from inside the Fed or out.

Overall, this strategy was successful, but there were times when we needed to take a different approach. Hiring in the ERP space, for example, can be tough because resources are scarce and it’s difficult to find qualified candidates. While we did leverage a vendor partner and some external resources, our goal was to build as much expertise as possible internally. These individuals not only gained the knowledge and experience to manage the environment moving forward, but they led the transformation and will continue to improve it.

Looking toward the future

Today, the Federal Reserve System is on a much better trajectory than it was just a few years ago. In the months after go-live, we are focused on resolving any defects, providing support and training, and looking for opportunities to optimize.

As we look toward the future, we’re focusing on three priorities:

  • Taking a strategic approach to our data through the rollout of standard dashboards in business planning and operational activities
  • Exploring other business processes that should either move or be integrated into the platform
  • Exploring the emerging capabilities of machine learning and predictive analytics

We’ll also be focused on the cultural aspects of this transformation, making sure that everyone remains excited about new opportunities and that our stakeholders remain committed to our new direction.

While I gave up a CIO role to lead this transformation, I got much more in return. This project gave me the opportunity to lead a fantastic team that has made a lasting impact on the organization, along with a newfound appreciation for the challenges we face and the ways we can work together to overcome them.

[ Want more advice? Watch the on-demand webinar, The future of leading digital innovation: What's next, with Nancy Giordano, plus Red Hat's Margaret Dawson and IDC's Nancy Gohring. ]

Don Anderson is the Senior Vice President, Transformation Executive of the Federal Reserve System. In this capacity, he is responsible for the successful transformation of the finance, HR and procurement functions for 22,000 users.

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