5 Reasons Digital Transformation Fails
I haven’t set foot in a grocery store since the pandemic began. And I’m vaccinated now, but I haven’t seen it actually change. The reason is simple. Buying groceries online is much more convenient for busy professionals like my wife and myself. Why do great apps do the hassle of providing a seamless, frictionless shopping experience?
The human, economic and social impact of a pandemic will be felt for generations. In the digital world, it changed the game. Being isolated and socially distant, most consumers are effectively interacting with businesses. Within a very short period of time, all products and services needed to be digitally accessible. B2B, healthcare, higher education, financial services, and public sector organizations were expected to offer the same seamless digital journey as B2C’s corresponding organizations. Those digital experiences stay here.
5 Causes of Digital Transformation Failure
Estimated despite all its investments $ 3.3 trillion by 2025, Many Digital Transformation Initiatives Fail — 84% according to Forbes.. According to an Everest Group study, disability measurements vary from organization to organization, 73% of companies We were unable to provide business value from the digital transformation process. It’s trillions of waste and no profit. So why do digital transformation initiatives fail?
Sure, many reasons negatively impact digital transformation, but from 20 years of experience in this area, the top five factors are cost, business issues, understanding of corporate culture, establishing good success criteria, It turned out to be a mistake in leadership decisions.
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Cost is the first topic that comes to mind when discussing digital transformation initiatives. After all, companies are investing in digital transformation to increase revenue and reduce costs, right? Unfortunately, when it comes to investing, companies often work on digital transformation with a much lower budget than needed. Expecting the spectacular results of digital transformation, we’ve seen many times companies find creative ways to reduce their digital transformation budgets. They buy the cheapest products, hire the cheapest consultants and choose the cheapest routes, but expect the greatest business value.
Open source solutions, cost-effective consultants, and efficient delivery models are fine, but there are usually big warnings that are ignored. I live with the motto “High is cheap”. After all, spending less will always catch up with you. What organizations can save by using cheaper products and consultants often pays for heavier customization, technical debt, and maintenance costs. The cost of effective digital transformation rarely fluctuates. What fluctuates is where and when to use it.
Related article: Digital Transformation: Why Now?
Understand business problems
Using more does not mean using most. Every space has good and bad products, yes, good products cost more than usual. However, choosing the right and good product is often a difficult decision. Most executives see the shiny objects of known brands and dazzling demos and think it cures all their illnesses. They fall in love with the product, write checks, and force teams to use it.
What’s missing here is a true understanding of the business problem you’re trying to solve before you buy the product. The maxim that “understanding the problem is half the solution” is more relevant than here. Otherwise, the Damocles sword will hang on your entire initiative. This sounds intuitive enough, but it’s still rare in the field of digital transformation.
Corporate culture is probably one of the most influential factors in the success of digital transformation initiatives. Investing the right amount of money in the right solution with these initiatives is not enough. Adopting and nurturing digital transformation requires a proper culture. Most digital transformation initiatives are aimed at “transforming” the way organizations do business. That cannot be achieved without the approval of everyone in the organization. I’ve seen dozens of examples where companies have invested millions of dollars in amazing solutions and teams just ignore them and avoid them. In fact, ensuring that your corporate culture is suitable for digital transformation is very important and can help minimize the negative effects of all other obstacles.
Related article: Digital transformation efforts stagnate without cultural change
The secret to success
Most digital transformation initiatives start with the goal of staying on budget and delivering on time, but they can’t fully focus on business value. The point of digital transformation is to transform your organization wherever your digital touchpoints are. These high goals need to be rooted in success indicators based on the impact of transformation, not the transformation process itself.
Therefore, instead of focusing on time-to-market, you should focus on repeating the time-to-market of your organization. You should also focus on gradually improving the ROI of future projects as a result of the initiative, rather than focusing on staying within the project budget. Too many initiatives fail because they weren’t given a few more dollars or a few more sprints to do it right. This is exactly the result of the project team targeting the wrong Polaris.
When leadership sets unrealistic timelines and expectations from day one, it has a huge impact. We often see initiatives tagged with crippled goals, short budgets, and aggressive timelines. Leadership also determines who will lead these digital initiatives, including internal employees and external consultants. Leaders are unable to select the right internal people if they allow internal politics to play a greater role than benefits in the decision-making process. For external consultants and agencies, we strongly recommend a competitive approach in which the agency needs to “win” the job, rather than acquiring vested interests through relationships. To ensure fair competition, it is necessary to include pilots and POCs to prove the capabilities and vision of the institution.
Related article: Four Personal Leadership Techniques to Drive Digital Transformation
Bonus: Value can and should increase
This bonus factor has an indirect but significant impact on digital transformation initiatives. Some organizations still rely on the Big Bang methodology to achieve success. Its value may never see sunlight when they inevitably miss their target budget and timeline. Digital transformation initiatives need to implement what they are trying to solve and step-by-step and continuous improvement, while gradually reducing budget and time-to-market. One of the common pitfalls here is paralysis of analysis. Analysis paralysis stops progressing when trying to define the best results. Another common trap is that “good things get in the way of good things” because the increments are fine.
These five (and one bonus) factors are by no means comprehensive, but they are some of the most common reasons why digital transformation initiatives fail. Avoiding these pitfalls is not easy, but perhaps —probably — recognizing them will make your digital transformation journey a little easier.
Dr. Ali Alkhafaji is the CTO of TA Digital and a technology leader and evangelist with 20 years of industry experience.