How to avoid the three of the most common reasons digital transformation initiatives fail
With technology ever evolving in every industry, many organizations are implementing digital transformation initiatives to increase efficiency, deliver innovative new services to customers, and stay competitive in their markets. While digital transformation initiatives can reap remarkable rewards, they’re typically resource-, personnel-, and time-intensive undertakings.
Unfortunately, many of these transformation efforts are unlikely to pay the anticipated operational benefits and financial dividends. According to a McKinsey study, less than one-third of respondents felt that their companies’ transformations were successful at both improving organizational performance and sustaining those improvements over time.1 While the odds might be steep, here are a handful of common pitfalls to avoid, and thus, help propel your digital transformation initiative into the success column.
Reason 1: Insufficient strategy
A major mistake that can derail many digital transformation initiatives is starting and continuing the process ad-hoc rather than developing and executing a well-thought-out strategy. The debilitating fallout from an ill-defined strategy can be further compounded by selecting and continuing to work with non-aligned implementation partners and technology vendors.
A key component of most digital transformation projects is cloud computing. Analysts at Gartner project that more than 85% of organizations will embrace a cloud-first principle by 2025, and thus, many won’t be able to fully execute their digital strategies without using cloud-native architectures and technologies.2 Therefore, selecting a well-orchestrated ecosystem of cloud providers and partners with capabilities that align to your transformation goals can greatly boost the likelihood of success.
Once a clear strategy is in place and partners and vendors are selected, organizations should dedicate one or more project managers to liaise with outside parties and to track progress on all of the workstreams and dependencies in constant flux. Project managers can help ensure the initiative stays within scope and budget, remains aligned with the defined strategy, and progresses towards desired outcomes.
Reason 2: Inadequate organizational change management
Digital transformations can be lengthy undertakings. MIT Sloan School of Management research on enterprise digital transformations, “on average, it took 22 months before companies began to see measurable results from the digital transformation process.”3 All of the time, money, and energy organizations devote to these dramatic organizational changes can fail to bear fruit if a proper organizational change management plan isn’t an integral aspect of their strategy.
When organizations meticulously design, implement, and communicate a thorough change management plan, they can facilitate a smoother transition from their former technology landscape and all its associated workflows to their digitally enhanced one. By empowering employees and customers with the knowledge, trainings, and tools necessary to effectively use the new or upgraded digital technology, organizations can increase the adoption and engagement of the improved processes, applications, and services.
Reason 3: Disregarding impact on customer experience
Suppose your strategy is executed on time and on budget, and your employees understand and embrace the new processes. In that case, your success still isn’t guaranteed if many (or even a single one of significance) of your external facing digital assets or touchpoints fall flat with customers. While a robust change management and communication plan can help encourage customer adoption, if user experiences are drastically changed without careful forethought, then organizations risk undermining the overall success of their digital transformation.
Conduct deep and detailed customer surveys to gauge their opinions of user experiences around important technological interfaces that will be impacted by the digital transformation initiative. Ignoring any insights gleaned from those surveys and failing to beta test the changes with select power users will increase the risk of rolling out poorly received new or updated products and processes. This can jeopardize existing customer loyalty and crater their spending with the organization.
Increase the chance for success
By being cognizant of these three potentially significant mistakes and taking preventive measures, you can boost the likelihood of achieving your digital transformation objectives. By formulating and following a comprehensive strategy, communicating and enabling extensive change management programs, and focusing on customer experience and satisfaction, you can make your digital transformation a successful one.
- McKinsey & Company, Losing from day one: Why even successful transformations fall short, December 2021
- Gartner, Gartner Says Cloud Will Be the Centerpiece of New Digital Experiences, November 2021
- Fortune, If you’re not focusing on customer experience in digital transformation, you’re losing value, October 2022