Natasha Bougourd, Lead Applications Writer, TSG, highlights the five most common reasons as to why digital transformation projects fail, in this report
Digital transformation has evolved since the term emerged in technology circles a few years ago. initially, it was dismissed as a buzzword or a fad – a fanciful idea that could never truly be realised. However, business leaders are finally understanding and implementing the fluid and adaptable strategy; 79% said that digital transformation is now a strategic priority (Vodafone).
Adoption of digital transformation strategies is on the rise, but that doesn’t necessarily mean that it’s being implemented effectively – up to out of 10 digital transformation projects fail (Couchbase). So whilst it’s encouraging that businesses are embracing transformation through technology, it’s evident that these strategies and projects aren’t being approached in the right way. Unsuccessful transformational projects can happen for a multitude of reasons, as there are a number of factors that can contribute to the failed execution of your strategy.
Lack of strategy and direction
Often, businesses can dive head-first into an exciting new project without understanding what they’re doing or why they’re doing it. This lack of a clearly-defined strategy is why 35% of digital transformation projects are unsuccessful (Wipro Digital). Whilst it’s key for leaders to recognise that digital transformation doesn’t necessarily mean a complete overhaul of their business’ technologies and processes, it must be a clearly-defined strategy with distinct goals and outcomes.
Businesses must identify a goal, whether it’s streamlined order processing, improved customer communications or higher-quality data that will lead to a better service, in order to measure their efforts. Additionally, setting out these goals helps you understand where to implement changes, ensuring you don’t stray from your focus and apply effort in areas where you’re less likely to see a return. Which is strongly linked to the next reason businesses often fail when it comes to digital transformation…
Buying all the latest technology
An incredibly common and frustrating misconception is that a business can only achieve digital transformation by implementing flashy new technology. And while innovation and modernisation are key tenants of business transformation, this is a one-dimensional view.
By implementing a technology that’s modern an innovative but that doesn’t fit with your business’ goals, you’re setting yourself up for failure. If you’re a services business, augmented reality technologies probably aren’t going to bring you many benefits. But for a furniture or clothing manufacturer, that type of technology can be a game-changer.
According to Forrester, 2019 brings with it the understanding that digital transformation is as much about small, incremental changes as it is about seismic shifts. Many businesses are reliant on ERP and CRM technologies to manage financials and customer data, and the systems are considered to be business-critical but boring. By simply upgrading an existing system and taking advantage of new features like artificial intelligence, these solutions now have the power to be transformative rather than restrictive.
Lack of executive-level understanding
There’s no point in implementing a digital transformation strategy if your executive team either doesn’t buy into it or doesn’t understand it. This often boils down to the fact that many leaders lack confidence in their own digital skills (Deloitte) or the skills of their people.
It’s essential that executives drive this strategy forward, but this executive team must have IT representation. As the department that likely owns a business’ many technologies, IT holds the key to getting the most out of those technologies, spotting areas of weakness and identifying systems that must be improved.
Not all businesses have a sizeable in-house IT team; that’s where a managed service provider can be an invaluable tool in devising a digital strategy. For MSPs and IT service providers, digital transformation is their bread and butter. These organisations live and breathe business technology and are expertly-placed to identify the solutions, or strategic changes, required.
Resistance from other business departments
An Oracle study into the barriers businesses face when moving to the cloud discovered that finance and HR departments are the most resistant to change, but many businesses struggle to implement digital transformation initiatives due to resistance from around the organisation – evidenced in multiple studies from the likes of Harvey Nash, IFS and Futurum.
This reluctance to embrace digital change can occur for a number of reasons. Often, employees get comfortable with the systems that they know and have worked with for years. If you dig deeper into this, it often boils down to insecurities around digital skills.
To overcome this common barrier, businesses need to take a two-pronged approach of educating colleagues and consulting them in the process of change. Tearing apart the systems they know and work with every day without understanding their needs won’t do you any favours. A key tenant of digital transformation is how it can transform the way your people work, eliminating manual or repetitive, time-consuming tasks so they can focus on adding value. What’s more, newer technological advances focus on user experience, meaning they’re easy to use. By presenting your strategy in this way, you’re sure to win over even those most resistant to change.
Your customers aren’t at the heart of your strategy
When focusing on back-office changes, it can be easy to forget about the most important element of your business: your customers.
Reassuringly, 95% of respondents to the Couchbase survey said that the ultimate aim of digital transformation was to improve the customer experience. Customer service can make or break a business relationship; 70% of organisations that move supplier do so because of poor customer service from their previous partner (Accenture).
Digital transformation has the potential to improve so many areas of your business. You can make significant cost-savings by eliminating redundant technologies and processes, increase your profits by improving or increasing your products or services through technological changes, or better understand the pain points of your industry and use data to drive better insights. But without taking the customer experience into account, you’re setting your business up for failure.
Natasha Bougourd
Lead Applications Writer
