Why 7 out of 10 Digital Transformations Fail by Daniel Wright

An astonishing 70% of digital transformations fail. Furthermore, just 16% of executives say that their digital transformation efforts are succeeding[1]. To many people, these statistics are as alarming as they are surprising. After all, today, most companies understand the benefits of digital transformation. 

They know that digital transformation can improve efficiency, productivity, employee happiness, and drive a great ROI. CIOs are distinctly aware of the benefits digital transformation brings to employees and how it improves their day to day working environment. If this is true, then why do so many digital transformations fail? A lot of it has to do with how organisations approach digital transformations. Evolving with emerging technology and creating digital processes might be a top priority for organisations, but often putting into action is fraught with problems. 

Put simply, deciding you want to embark on a digital transformation project is just one part of the equation. It's a big step, but it's the first step. Ultimately, projects succeed or fail based on a bunch of factors, including clarity of objectives, employee buy-in, and how thoroughly success is measured, among other things. Roadblocks and pitfalls are remarkably common, and avoiding these is paramount if you want your digital transformation project to succeed. 

With this in mind, here are common pitfalls to avoid to ensure that your Digital Transformation succeeds.

 

Not Engaging with People

All successful digital transformations require buy-in from employees and stakeholders. Without engaging with teams around the business, you risk implementing solutions that are ineffective or poorly received. Sometimes, getting highly engaged employees requires changing the company culture. Some organisations have a culture of resistance or cautiousness to change, and this can be a significant roadblock to transformation projects. You can't always change company culture overnight, but you can work with the culture you have and make it work for your project. 

Carey Oven, at Deloitte & Touche LLP, said, "When organisations undertake digital transformation and focus only on technology at the expense of culture, that can hinder progress in many areas.[2]"

To back this up, Carey references an example of a financial services organisationthat wanted to adopt robotic process automation despite the company culture being resistant to new technology. Due to employee reluctance, the organisation was unable to deploy the bot even one full year after implementation. 

Beyond the negative consequences of not engaging with people, there are also distinct advantages to actively engaging. For example, Buckinghamshire NHS Trust (BHT) managed to speed up one of its digital transformation projects and deliver more than initially defined in the scope, due to high levels of engagement. BHT wanted to implement ServiceNow, a new solution to replace their legacy IT Management (ITSM) toolset. 

This was a bold move during a pandemic, but they more than rose to the challenge. Ultimately, BHT, supported by our team at Monochrome Consultancy, managed to speed up their service, deliver the project early, under budget, and deliver significantly more than defined at the start. 

A key factor in achieving this step in their digital transformation journey was employee engagement. Here are some of the things they did:

  • Regular drop-in sessions and town halls so the team was always kept up to date and could ask questions. 
  • Selling the benefits their changes, such as when implementing new processes.
  • Delivering extensive employee training and reference material, so employees know exactly how to use the new solution to their advantage. 

Click here to read more about BHT's digital transformation journey with Monochrome Consultancy. 

 

Not Being Clear on the Goal

Often the goals of digital transformation projects are articulated in such a high-level manner that they are near impossible to translate into concrete initiatives. This leads to situations where project team members are unclear on their objectives and lack direction on how to achieve impactful outcomes. When goals are confusing or lack clarity, projects fail. Remember, projects are only as successful as the people working on them. 

Digital transformation doesn't happen on its own; it happens due to the efforts and actions of employees. But without a clear goal, employees can't work their magic. Additionally, if you don’t know what the business will achieve post-transformation then you risk spending significant amounts of money and getting little in return. 

Before you can start on your digital transformation journey, you need to identify a clear business goal that is grounded in impact. How will this goal impact the operation and are employees aware of your goals?

A digital transformation project may involve many the following:

  • Process redefinition and automation. 
  • Moving to new ways of working (such as remote working). 
  • Adopting new or emerging technologies. 
  • Implementing a new digital services and offerings.
  • Developing new website(s) and content. 
  • Improving the customer experience through digital channels. 
  • Implementing a new digital marketing strategy. 
  • Changes to the organisation model. 

It's critical to determine what digital transformation means to you and your organisation. What specific goals do you want to work on? Can you work on several goals at the same time, or does it make more sense to stagger your transformation? Sometimes organisations have ambitious plans for change, but they lack the resources and infrastructure to work towards the goal successfully. 

Before you start, ensure that your employees are clear on their goals by engaging with them during meetings, town halls, and so on. Sometimes you can't wait for employees to come to you with questions, you have to lead the questions yourself. Often people feel that they "should" know what to do, they'll figure it out along the way, or something will "click" soon. These employees may not feel confident airing their queries and concerns, but as a leader, you need to ensure they are clear on the direction.

Developing an ‘elevator pitch’ can really help with this. Being able to succinctly tell people ‘What’ you are doing and ‘Why’ can take some time to perfect. However, it is a valuable tool as firstly it requires clear thought to define and secondly it allows people to be consistent with the messaging, which aligns your team.

 

Starting with the Tech

Don't start with the technology; start with the goal. Sometimes we can be clouded by the buzz surrounding emerging technology. We see something flashy, and we want it, but first, we need to consider where it fits into our business ecosystem. You do this by focusing on goals first, and technology second. Your approach to digital transformation should be goal-oriented. 

Once you have established the goal, then you can start to look at what technology will best help you achieve your goal. Of course, the overarching goal of all digital transformation is to benefit the business, such as Improving Customer Experience, Improving Employee Engagement or simply to gain a decent return on investment (ROI). Not all technology can promise this; it's for you to select the ones that can. 

 

Not Being Able to Measure Success

A vital element of any successful project is measuring success. Ideas and ambitions are great, but you need to know when you have achieved them (when to stop). If you fail to do this or keep adding in new elements to the project to the point where it's more of an ongoing checklist of wants, then you'll lose sight of the value you are adding. 

Since adding value to the organisation is your top priority, you have to approach Digital Transformation with this in mind. Clearly define, track, and measure both milestones and your success criteria. Define what success means and what failure means; only then will you know how close you are to achieving your goals. 

 

Not Approaching It the Right Way

Best practices are known as best practices for a reason. They help you achieve results smoothly and efficiently, and are grounded in evidence. When considering how to approach your digital transformation, don't try to reinvent the wheel. And don't try to clamber your way through the process, hoping everything will come together. 

How you approach your digital transformation can mean the difference between a project that fails to launch or fails to meet its milestones, and a project that exceeds expectations and adds value. Approaching it in the wrong way can lead to employees turning against the project early on, stakeholders lacking confidence in the benefits, and investment going to waste. 

There are tons of great resources and case studies out there that can inform you on tried and tested digital transformation strategies. If you're looking for a place to start, then read our article on how to approach your digital transformation.

 

Conclusion

The points above are just some of the pitfalls faced by organisations embarking on digital transformation. It's undeniable that digital transformation projects help change businesses for the better when done successfully. A study by Adobe found that in 2019, digital-first companies were over 60% more likely than their peers to have exceeded their business goals[3]

There's also no doubt that digital transformation will continue to be a top priority for organisations of all sizes as we move through the 2020s. Even with coronavirus threatening to dampen revenues for businesses everywhere, digital transformation remains a priority. One study found that while 52% of companies plan to make cuts, just 9% plan to make cuts to digital transformation projects[4]. This is promising news, but avoiding pitfalls is critical to success. 

 


To get in touch about how we can help ensure your digital transformation or IT projects are successful. Feel free to contact us, we would be delighted to help.

 


References 

[1] https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/welcome-to-the-digital-factory-the-answer-to-how-to-scale-your-digital-transformation

[2]https://deloitte.wsj.com/cio/2019/07/18/the-role-of-culture-in-digital-transformation/

[3]https://www.adobe.com/gr_en/modal-offers/article-digital-trends-2019.html

[4]https://www.pwc.com/us/en/library/digital-iq.html

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Daniel Wright founded Monochrome Consultancy, specialising in Digital Transformation, IT Transformation and Project & Programme Delivery.

With his background in IT and InfoSec Dan is a techie at heart.

For more on Dan and/or Monochrome visit: www.monochromeconsultancy.co.uk