September 16, 2020

70% of Digital Transformations Fail, and Here’s Why

Digital transformations fail all the time. According to an Everest Group study, 73% of companies declined to provide any business value from their digital transformation process. This percentage is really staggering. 

Even the most successful companies suffer from digital transformation failures. For example, GE started building an IoT platform back in 2011 to underpin its entire digital transformation initiative. Even though the giant spent billions of dollars on this massive transformation, the stock price kept falling, affecting many of its operating segments. 

What did the company do wrong? Well, nothing in particular. However, the digital transformation they wanted to perform at once was simply too much for an enterprise as big as GE. Instead, they needed a clear vision of their digital transformation objectives that affect each sector separately. 

And, GE isn’t the only giant that failed to transform digitally. Ford and Procter & Gamble are also examples worth mentioning. Although the number of companies that suffered from digital transformation failure is shocking, it hasn’t changed the perception that such activities are critical for companies‘ future across almost every industry. 

So, why do digital transformations fail so often? Here are the most common reasons: 

Lack of clear goals 

It is essential to define precise business goals before starting to implement the digital transformation process. They should become a vital part of your business strategy to support the company to achieve a new level of revenue.

What is even more important is that the employees should have a clear image of each of these goals. They should know how they will affect and transform the way they work. 

There are different digital transformation goals you can pursue, depending on your needs and requirements: 

To decide which goals to go for, start by determining the segments of your business that need changes. These might be some segments with low efficiency or an urgent need for digitalization to serve customers better. Then, you can start adding the remaining sectors of your company to the digital transformation plan. 

If your organization is large, you should create a roadmap that will contain all the goals and steps of the digital transformation process. This will help you get a better overview of the progress you’re making on the way. 

No dedication from senior management 

Senior management should be the leader of the digital transformation initiative. The senior management members should be present during the entire process, being aware of every step taken. They should be the ones monitoring the progress and whether the goals are completed or not. 

However, let’s not confuse awareness and dedication. Senior management shouldn’t just be aware of the things going on in their company. They should be dedicated to the process, participating in the most critical activities

One of their most important roles is to ensure that the staff won’t lose their positions if the digital transformation fails. They should also motivate and encourage employees to participate in the process more actively. Their commitment shows how necessary the change really is. 

Lack of expertise

Lack of digital transformation expertise leads to critical weaknesses, such as poor goals, lack of a coherent plan, low-risk assessment, and inadequate resource placement. Sometimes, a considerable portion of these failures makes the entire digital transformation process collapse.

Normally, a company that undergoes digital transformation doesn’t necessarily need to be experienced in this. Having professionals for all new technologies and methods you want to implement is merely impossible. 

The solution lies in finding a tech partner that can contribute to your digital transformation with real experts. While the regular staff is working on everyday tasks, your external tech partner can help you highlight the activities that can have the most significant meaning, give you an objective point of view, and prevent delays and errors. What is more, finding a tech partner means bringing onboard technology experts that will be here to take care of every technology-related struggle that you encounter along the way. 

Focusing only on technology 

Digital transformation is about making the company more tech-friendly. You should adopt new technologies, automate processes, and improve the overall quality of your customer service. 

However, you won’t do any good by solely implementing new technologies. These new technologies should be followed by business processes that support them and employees trained to work with them. 

What is even more important is that new technologies usually require a mindset switch. Automating and streamlining processes ask for a more agile mindset that can adapt to changes in real-time. Instead of strict rules and regulations, you need a flexible and dynamic work environment that embraces change. 

When starting with digital transformation, companies usually go with big technologies right away, precisely the case with GE we mentioned earlier. This is a big mistake. Instead, they first need to prepare the ground for the implementation of such drastic changes. 

Failure is normal

Digital transformation is an imperative path that enterprises must take to survive in a fast-changing environment. Digital transformation encourages companies to increase collaboration, productivity, and become more agile. 

However, change isn’t easy and doesn’t happen overnight. Instead, organizations need a strong roadmap and methods that will help them reach their goals more quickly. 

While companies are undertaking digital transformation without an adequate plan, the risks are increasing. That’s why digital transformations fail very often, with errors that almost everyone makes. And, this isn’t anything unusual. 

On the other hand, with smart and effective actions, and more importantly, with experts on board, you can avoid failure.