Avoiding digital transformation pitfalls is the only way legacy enterprises can survive and thrive in this hyper-competitive business world.
According to Deloitte, about 55% of companies are halfway through their digital transformation. Another 25% are starting to realize the financial benefits as their infrastructure matures. The remaining 20% have just begun to look at how to transform their companies. Even with recent events accelerating transformation, few businesses have reached digital maturity.
Despite investing millions of dollars and years of effort, the majority of companies fail because:
- Business and technical strategies do not align.
- They lack a holistic, but phased, implementation plan.
- They underestimate the required technical skills.
Digital transformation is a paradigm shift that many organizations have failed to recognize. Paradigms are the fundamental practices and concepts of a group. When they shift, that means those fundamental practices must change. For example, Copernicus’ theory that the Earth circled the Sun not only changed astronomy. It changed the world.
If companies want a successful transformation, they must be willing to change the essential elements of their culture. They must understand how people are influenced by and interact with technology. Without disruptive change, transformation does not happen.
Avoiding Digital Transformation Pitfalls
Digital transformation is not about technology. It is about the customer. Business and technology strategies must align to deliver an exceptional customer experience. It doesn’t matter if the mobile app has the latest bells and whistles. If it’s too difficult for consumers to use, the app has failed to deliver.
To be successful, IT staff must understand what’s behind the business strategy. Then, they must explain how the projects they propose are needed to sustain the business initiatives. For example, data collection and analysis play a large role in digital transformation and is a key business initiative. For IT to support the initiative, it needs to think comprehensively in terms of what is required.
Suppose the company wants to access its dark data to feed an AI solution for predictive recommendations on its website. The problem is IT doesn’t have the tools to extract the data, much of which resides in legacy systems. Even if IT had the tools, it doesn’t have the capacity to use the tools. The systems need to be upgraded. That’s just the requirement for extracting the data. What about cleaning, preparing, and integrating the data? Will upgrading the system for data processing be enough to meet the requirements for the AI solution?
Often, the business side of an initiative does not realize the complexity of the technical implementation. That’s why technical personnel must be involved at the start of each initiative. Without that involvement, IT has no way of knowing how to allocate resources to meet business needs. At the same time, the business strategy cannot succeed without technical resources. Business and technical strategies must align for digital transformation to happen.
Digital transformation is a continuum. No matter how digitally mature a company becomes, there will always be another step on the continuum. When planning a digital transformation, organizations must plan comprehensively and implement incrementally. There must be a priority list of projects that aligns with both the business and technical strategies.
Although each project is a piece of the transformation, it should be treated as a stand-alone project. It should have a clear start and end date. IT should appoint a project manager who is responsible for developing and maintaining a project plan. Transformation projects usually involve multiple departments, so it is best to create a multi-functional team to work on the project.
It’s easy to view an individual project as too small to need a project plan, but it is not always the technical complexity that determines the need for a plan. When multiple departments are involved, it’s important to maintain lines of communication. Removing silos is part of the paradigm shift that must happen if a transformation is to be successful.
As organizations move down the continuum, they must keep a comprehensive plan in mind. They must refer back to the plan as each incremental project nears completion to ensure that everything is progressing as planned. If adjustments are needed — and they will be — make sure they are done with a view to the overall project plan.
A recent survey confirmed that developing talent and skills throughout the enterprise is fundamental to a transformation. Yet, it is an area that many companies ignore. According to the report, organizations should:
- Redefine roles and responsibilities
- Create roles for integration and innovation.
- Invest in digital talent
Companies that followed these ideas were 27% more likely to have a successful transformation.
Transformation can create anxiety. Successful companies make sure to redefine an individual’s role to incorporate digital transformational goals. Companies that took the time to redefine job responsibilities in light of the culture changes were 1.5 times more likely to report a successful outcome. Employees were less apprehensive and more participatory in the transformational process.
McKinsey identified two functions that are needed for a positive transformation: a technology integrator and an innovation manager. Their roles are to bridge the gaps between traditional and digital operations. Integrators are employees who understand the new digital methods and can translate these processes into existing ways of operating. They help make the transition less intimidating. They often work on the business side of a company but have technical skills that help them bridge the divide.
Innovation managers are individuals with specialized technical skills that lead teams focused on digital innovations. They are part of the transformation that keeps the continuum moving forward. These managers are focused on the future while participating in the present.
Companies were more successful when they scaled their workforce either by hiring or reskilling. Digital transformation requires a different set of skills. For example, migrating all or part of an infrastructure to the cloud is a part of most transformations; yet, many companies do not train staff in cloud computing. IT departments often underestimate the technical requirements needed for transformation. They begin their transformation efforts without support, only to find the tasks too difficult to complete alone.
Before embarking on a transformation, businesses must ensure that they have access to the right resources. If not, they will be unable to sustain a transformation, and much of their efforts will be wasted.
Avoiding Digital Transformation Pitfalls
For digital transformations to succeed, organizations must shift their thinking to look at the business landscape as a blend of business and technology that addresses customer expectations. They must also accept that transformation is a continuum that requires constant innovation to remain competitive. If businesses are unwilling to experience a paradigm shift’s disruptive nature, they will fail to achieve digital maturity.
How is your company avoiding digital transformation pitfalls?