5 key reasons why Enterprise Digital Transformation initiatives fail

While many factors can play into Digital Transformation initiatives failures in an enterprise, below I have summarized five key areas of concern for you to consider before starting your Digital Transformation journey.

Forgetting the fundamentals

Never forget the basics - It is all about the customer (external or internal). Concentrating on the technology and not on the customer or how the products/services/experiences will help the customer will lead to nowhere. You should also consider the business model implications of your offerings upfront when creating your Digital Transformation vision and strategy. Organization culture plays a key role in Digital Transformation success. A collaborative and agile work culture goes a long way in ensuring the long-term success of Digital Transformation initiatives in any organization. No Digital Transformation can be successful without bringing agility to your processes and operations. It will help you stay relevant and competitive in your industry. What ties everything together is collaboration between all units within the company. To build long-term success innovation and experimentation should be encouraged at all levels in your organization. This will help you to come up with new and improved ways of creating and offering targeted products/services/experiences to your customers. For you to show the business value and benefits, always make sure that you are measuring and communicating the progress and ROI of your new or improved products/services/experiences offerings to all stakeholders. According to @Shane Fogle, a Principal Delivery Leader and a top social influencer

 "Communication is critical, especially to your internal customers. It is important to communicate a clear and concise message around what is changing and how the change will impact their work processes, etc. In a previous delivery, we had representative stakeholders from all functionally impacted groups attend a bi-weekly communication update meeting to ensure everyone received consistent messaging and was kept abreast of progress"

If you are interested in Digital Transformation fundamentals then check out my articles on the What, why and Who of digital transformation & How of digital transformation where I discuss them in detail.

Trying to take over the world

Starting digital transformation within a large enterprise can be a monumental initiative and depending on the scope of the project maybe an impossible feat to accomplish. Instead of taking on a colossal initiative across the whole organization it may be prudent to take an incremental or a phased approach. For internal organization transformation maybe, you try it out for one unit of the company instead of across all units. You can scale across all units or abandon depending on the results of the pilot. For external transformation efforts you can pick a single product/service/experience to introduce or improve for your external customers using the Minimal Viable Product (MVP) approach I discuss in my innovation and experimentation article. For taking on Digital Transformation in one big swoop, you do run the risk of budget shortfall before completion along with spreading your resources too thin to be effective in their effort. General Electric fell into this scenario and their GE Digital division failed and was eventually sold off in 2015.

Not picking the right vendor

Many enterprises use out-sourced vendors for many of their initiatives. If your digital transformation efforts are going to use an out-sourced vendor, you want to make sure that you go through a proper procurement process and consider multiple vendors with relevant experience in your particular technologies and industry. If appropriate, always consider having the potential and short-listed vendors to build a Proof of Concept as a part of vendor selection. Some companies put their blind trust in certain vendors they have worked with previously and do not consider any other factors in selecting them for the transformation initiatives. Selecting them maybe the natural choice, considering the already built relationship with them, but it may not work in the long run due to the nature of the initiative. Not having rigor around the out-sourced vendor has led to digital transformation disaster at Hertz, where they hired Accenture without a rigorous procurement and vendor selection process. Along with that Hertz allowed Accenture to run wild and didn't have tight initiative oversight. End all is that earlier this year Hertz sued Accenture for $32M.   

Completely throwing out the older technology

Transformation initiatives should not consider swapping out the older technologies for completely newer technologies. Rather adopt an incremental experimental methodology and take a hybrid approach of using old and newer technologies together for your transformation scenarios. Consolidate technologies as much as possible. Many digital transformation efforts have failed due to the Digital Transformation initiatives which didn't consider the existing software, hardware, infrastructure or resources but rather tried to replace all with newer technologies. Co-op bank is an example of this where it sunk ￡300M before the bank decided to cancel its transformation initiative.

Lack of project management rigor and oversight

While having a great vision and strategy is important to have, not having a good execution plan will not move the initiative forward along with not leading to the desired deliverables. All digital transformation initiatives should have proper checkpoints, milestones, communication plan and deliverables clearly defined. Along with that there should be proper oversight of the initiatives to make sure that the desired goals are being achieved and deliverable are being produced on time. Again, according to Shane

 "Assigning an executive-level Program Manager from the customer needs to be in place, to compliment the vendor(s) assigned Project Management role(s). This role is vital to the success of the program to ensure that appropriate executive-level sponsorship is maintained throughout the delivery of the program as well as to ensure vendor commitments are being met"

 Not having proper oversight led to BBC scrapping their Digital Media Initiative (DMI) and they had to write off around ￡100 million. They had chosen Siemens as the vendor for this transformation initiative and let it continue without proper executive oversight.

If you are interested in learning more about Digital Transformation, then check out my E-book on Amazon: Enterprise Digital Transformation. It will help you understand the What, Why, How and Who of Enterprise Digital Transformation. You will learn about key factors, issues, challenges and pitfalls along with recommendations on how to successfully lead the transformation in your organization.

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Liked my article? Then, check out my e-Book on Amazon to understand the What, Why, How and Who of Digital Transformation. Are you interested in Digital Transformation, Cloud, AI, ML, IoT, Blockchain, Emerging Technologies, Education, Training, Leadership and other related topics? Then subscribe to OR read my daily newsletter online. Let's also connect on LinkedIn and/or Twitter.