Top 5 Reasons Digital Transformation Efforts Fail

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Top 5 Reasons Digital Transformation Efforts Fail

Digital transformation has become a trending buzzword in the business world in recent years. Thousands of companies from different industries are rapidly adopting digital technologies to remain in constant transition and continue to grow with the market changes. Unfortunately, many barriers lead to digital transformation failure.

According to a study by McKinsey, over 70% of all digital transformation initiatives fail. In this post, we’ll share the main reasons companies fail to meet their transformation objectives and often do more harm than good in the end.

But first, let’s briefly recall what digital transformation is and what it entails.

What is Digital Transformation?

Simply put, digital transformation is the process of integrating digital technologies into different areas of a business. This digital transition aims to fundamentally change how you do things and deliver value to your customers at different points of your production and sales funnel. This can include:

  • Automating key processes
  • Adopting new technologies to enable round-the-clock availability
  • Improving user experience
  • Cutting down expenditure and improving operational efficiency
  • Changing the company’s culture
  • Adopting new products, services, domains, etc.

Top 5 Reasons Digital Transformation Efforts Fail

Here are the main causes of digital transformation failures:

1.     Failure To Understand Digital Transformation

Many businesses mistake digital transformation as a process to employ the latest equipment, software, and digital solutions. While going digital is a fundamental aspect of transformation, there’s much more to it than meets the eye.

Looking to stay ahead in terms of technology is a great starting point. However, you need first to understand the impact of this change and whether or not it will help generate more revenue and profit. This way, you can ensure that your plans align with the core concepts of transformation, including interoperability, scalability, agility, flexibility, and cultural overhaul.

Digital transformation is a continuous process that involves using several strategies to adapt to consumer behavior changes, deliver value, and stay relevant.

2.     Unclear Transformation Goals

Understanding digital transformation is one thing; doing it correctly is a whole new mountain to climb. Many businesses fail to identify the exact business goal they want to achieve. Therefore, they fail to create effective strategies to help them get where they want to be in terms of revenue, user experience, workplace culture, etc. Digital transformation can involve many things, including:

  • Process automation
  • IT infrastructure overhaul
  • Data-driven decision-making and business intelligence
  • New technologies
  • New website
  • New sales or marketing strategy
  • New product, service, or domain
  • Digital-first customer experience
  • New business model, etc.

So, ask yourself. What are your goals? More importantly, do you have the team and resources to achieve these goals? To avoid issues, consider your company’s business vectors and create a roadmap incorporating realistic milestones to keep track of your progress.

3.     Internal Resistance

One of the biggest drivers of digital transformation failure is internal resistance. No matter which industry you work in, getting out of your comfort zone to start new projects or experiment with new practices requires courage.

Since this increases risk, it’s only natural for an organization and its employees to resist change and not support the digital transition. These organizations fail to realize that the risk of not transforming is much greater than the risk of transformation failure, especially in the current era where going digital is the new norm.

For example, Nokia dominated the cellphone market from the late 90s till 2007. However, it failed to keep pace with changing customer needs and market dynamics. Simply put, it stuck with Symbian OS and mainly focused on improving hardware. Consequently, iOS and Android cellphones rapidly flooded the market and knocked Nokia off its pedestal.

Other examples include Blockbuster, Kodek, MySpace, Enron, Polaroid, etc. 

4.     Impatience

Many companies make the mistake of digitalizing their processes too fast. This ultimately leads to delays, disruptions, and failure. It is impossible to effectively manage several changes simultaneously even if you have an excellent budget, the right team of subject matter experts, and technologies at your disposal.

If you want to ensure your transformation strategy is effective, you need to be patient and pay attention to detail as changes to internal company policies and plans often come from the top. Therefore, it’ll take some time for the change initiatives to sink in and get the prep work going.

5.     Lack Of Expertise

Suppose you want to leverage the power of data by incorporating data analytics solutions that use technologies like artificial intelligence and machine learning. Or, you want to make a new web or mobile application for your company using the latest web development technologies, such as headless WordPress or react architecture.

To do either of these things, you need the right team of subject matter experts. Unfortunately, many businesses, especially startups and small ones, lack the experts required to foster the change. Even those that do can’t always expect them to put aside their day-to-day tasks and prioritize transformation initiatives.

This is where external partners come in, specifically transformation experts, that offer objectivity and bring in the technical experts you need to power your initiatives. Trying to do everything yourself with limited expertise often leads to disruptions, loss, and failure.

Conclusion

At Deltalyz, our team of experienced data scientists, developers, and business analysts can help you extract, authenticate, and use data to generate actionable insights. Whether you’re looking for an infrastructure overhaul or a stunning web/mobile application, we offer tailored solutions according to your needs, processes, budget, and industry opportunities/threats. Therefore, you can rest assured we’ve got what it takes to help you transform your business using cutting-edge technologies and data-driven solutions. Feel free to get in touch with our team for more information and a free quote.