Why 70% of Digital Transformation Projects Fail and How to Avoid It

Have you heard about this new thing called digital transformation?

Just trying to be humorous here. Unless you spent the last decade “living under a rock” without any means of communication with the world, it’s a lot more plausible that you hear about digital transformation a little bit too often, just because it’s objectively hard not to.

For a number of years now, digital transformation has been on everyone’s lips. It is one of the hottest buzzwords in the technology industry, next to artificial intelligence (AI), Big Data and some of the other promising trends. The technology and business media cannot stop talking about it, constantly reminding business leaders and regular consumers about the need to keep up with the latest tech innovations. Naturally, this makes companies feel anxious to be a part of the Fourth Industrial Revolution (Industry 4.0) before competition leaves them in the dust.

What business leaders don’t understand about digital transformation

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Bearing that in mind, it is particularly surprising that, despite all this media attention, the concept of digital transformation still remains largely misunderstood. And not just by the general public but also by business leaders and IT decision makers who are responsible for approving digitization efforts in their organizations.

That’s why, and this may sound a little bit counter-intuitive, early 2022 seems like a perfect time to talk about the concept of digital transformation.?The need to transform did not fade over the last several years. If anything, it became even more relevant and pressing, especially for companies that are falling behind. But having more and more new data, and being able to learn from real-life experiences of an increasingly large number of companies, has to incline and procure businesses to develop a deeper and more advanced understanding of the concept of digital transformation. It also seems to be crucial if you want to avoid failing this process.

At least 70% digital transformation project fail

Flawed and one-sided understanding of digital transformation as a strictly technological issue is a major misconception that remains widespread as years pass and has a subtle but very real effect on the results of digitization initiatives implemented by organizations across industries.

According to a recent study, the digital transformation market size is projected to grow from $521.5 bln in 2021 to $1247.5 bln by 2026. And even though market size estimates vary from source to source, the projections of rapid growth over the next several years are something analysts seem to universally agree upon.

This makes sense if you research how all the digitization processes unfold in a real business environment, and how successful the implementation of new projects is in terms of measurable business value.

87% of companies around the globe have not yet realized the full impact of their investments in digital transformation, according to a report by Accenture. A number of studies—for example, a 2020 report by Boston Consulting Group as one of recent sources—found that a whopping 70% of digital transformation projects fall short of their stated goals, even when company leadership is fully onboard with the idea.

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Why do companies fail at digitization initiatives?

It is easy to see why failures are so predominant; and why having the support of top management and financial resources doesn’t guarantee success. One fundamentally important reason is the mistake of perceiving digital transformation as purely a technological issue that can be solved by implementing a new set of tools.

If digitization is not just about technology, then what is it about? Not to oversimplify something as complex and all-encompassing as this process, and not to say that technology has no importance here at all, let us share some thoughts on what it is or should be, based on recent data and personal observations of the activity in this field.

1. Technology is the enabler of transformation, not the driving force.

A wide range of tools and technologies that are a part of digitization initiatives, assuming they are implemented right, are there to enable the changes and capabilities for automation, optimization and efficiency gains. But tools don’t deliver results, people do. And having no appropriate practices, approaches and strategic changes in place can easily offset all the benefits of the new tech.

2. Operational processes have to transform alongside technologies.?

As a result, if an organization addresses digitization as solely a technological requirement, without actively working on optimizing its operational processes across business layers, the tools can easily lose their power to deliver value. And in most cases, they do.

In this light, it should be increasingly obvious that adopting new instruments is not the main challenge on the way to automation of business processes and reaching Industry 4.0 level of efficiency. Changing people’s mindsets is.

?3. Adopting the latest technologies is not a key to success.

?Another very common misconception, deriving from the main one, is that digital transformation can only be enabled by the latest technological solutions, and newer tools are always better than older ones. Of course, adopting new tools and modernizing applications is a part of this process, and it shouldn’t be neglected. But integrating IT solutions with other tools and network components, enabling easy cross-platform support and orchestrating enterprise apps to present a seamless user experience to the customer journey cycle is just as important. Arguably, it should be prioritised as Industry 4.0 is essentially about interconnecting IT tools, platforms and humans to allow easy access to tools and data exchange, not simply about switching legacy tools to new ones.

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4. Digital transformation is a journey, not a destination.

?Lastly, due to the precise and practical nature of the IT field, digital transformation projects are most typically viewed by the decision makers and approached by companies as a task, consisting of a number of milestones, that gets completed upon the delivery of the solution. Not to say that planning, scheduling and defining a timeline for digitization isn’t necessary, it absolutely is. Perceiving the technology deployment as the final goal and destination, however, is a mistake.

A much healthier, and effective, perception would be to view it as an ongoing process. Even though it certainly provides plenty of opportunities for measurable goals and achievements along the way, you can never truly complete the digital transformation or claim a victory in this race. The recipe to success is in constant improvement and never-ending commitment to staying ahead of the process optimization and technology curve.

Final words

As you can see, even though over the time digital transformation as a concept has spread in the minds of the business and IT community, we still have a long way to go before organizations will master this element of the Fourth Industrial Revolution and learn how not to repeat the mistakes of pioneers in this field.?

Here is where WAU has been making an impact helping organizations succeed in their Digital Transformation Journey.?We know by experience that this is a constant process.?Our methodology follows your Customers’ Journey cycle to ensure a seamless digital experience, whenever they interact with your business.?

If you want to positively impact your customers' digital experience and start your transformation process, we will be delighted to show you our methodology and services.

You can schedule a free consultation with us here.