digital transformation failure

Digital Transformation Failure

Companies must prioritize digital transformation (DT) if they want to succeed. However, 70% of initiatives result in digital transformation failure. Why? Find out below. 

Digital transformation is the use of digital technologies in creating or modifying new business activities. The main business aspects that DT affects are customer service and company culture. 

Furthermore, DT yields a lot of positive results – and that’s the reason why it remains fashionable. The need for DT has grown deeper due to the COVID-19 pandemic. Companies implement DT in hopes of streamlining operations and better serve customers

However, the reality is harsh – the rate for digital transformation failure is 70%. Many companies make little progress with their DT initiatives. One of the main reasons is the failure to account for the cultural change required for DT. 

Thus, failing DT is costly. Outlined below are the main reasons behind digital transformation failure. 

Culture shock 

DT often requires a culture change to succeed. Yet, many organizations find this change insurmountable. A TEKsystems poll reported that 39% of organizations say that their organizational structure is not aligned to support transformation. 

Moreover, companies find it complicated to optimize the potential of technology. The lack of common vision and failure to consider the entire ecosystem results in digital transformation failure. 

Lack of CEO sponsorship

Transformation must start from the top. Business leaders must have active participation in the entire process, not just sponsorship.  Yet, leadership issues result in coming up short on interned ROI. 

The trouble with ‘what and how’

Resistance to change is a typical problem that DT leaders face. Assuming they get over with that problem, most companies fail to understand the technology and talent required to operate DT. This “what and how” trap delays transformation.

For instance, does a business need a new operating model for digital? How many experts does this require? 

The solution here is business unit leaders must collaborate with their CIOs to cover these gaps. Indeed, the pace of digital change makes DT difficult. However, it is a necessary ingredient for success. 

Wait-and-see trap 

Most companies stay on the “wait-and-see” mode until financial challenges and pressure mounts from the board – and rivals. As mentioned, the pace of digital change is fast. Thus, companies must keep up with the pace. 

Ironically, the COVID-19 has forced companies to accelerate their DT strategies in a matter of weeks instead of months. Indeed, the pandemic has driven companies through barriers. 

The technology trap

This is also called the shiny new toy syndrome. It is true that technology is a critical driver of DT. However, applying tools that don’t help in satisfying customer demands adds little value. Furthermore, the right digital tools enable new digital business models. 

Talent deficit

Digital transformation requires new talents such as software engineers and product managers. Yet, the deficit is so great that companies offer high salaries to these professionals – when they can find them. 

Lack of continuity

A CIO leaving a company also hinders DT initiatives. Senior-level leaders don’t want to inherit a transformation. They want to start from scratch to leave their mark. If CIOs and their staff jump ship, enterprises stand little chance of executing their digital strategies.