Digital Transformation is not just a catchy phrase coined by marketing types.

It can be the difference between failure or success and can significantly change the way businesses operate and interact with their customers.

The world is going digital. Technology based businesses now represent just under 30% of the S&P500 index and make up the largest industry weighting, with most of the sectors 425% growth over the last 50 years, taking place since the ‘dot com’ era of the late 90’s.

Longstanding household names on the benchmark equities index are being replaced by an onslaught of digital first businesses, and with the emergence of world changing technologies such as IoT, AI, Augmented Reality and Blockchain, that trend shows little sign of slowing.

Digital transformation is therefore a necessity for survival.

It is for this reason that it is not something simply added to an IT department’s ‘to do’ list. Digital transformation should be seen as a key strategic initiative, requiring regular care and attention by the leadership of an organisation.

So why do more than 50% of digital transformation efforts fizzle out, to be placed on the shelf to collect dust alongside other failed engagements?

Business indecision.

Undergoing changes to core business systems, process and architecture should not be taken lightly. After all, businesses must still be able to operate and fulfil their contracted obligations, whilst undergoing the reinvention of business as usual.

Digital transformation requires business leaders to make big and bold decisions, sometimes in the midst of information uncertainty. A lack of vision and clarity around what being ‘digital first’ would look like can lead to over analysis of concepts and business cases before a firm decision is made.

Benefits may not be properly understood or support from key decision makers is not strong enough for the business case to carry the weight required to part with hard earned capital. Businesses can end up delaying a decision in favour of one direction or another and by the time a decision is forced, it may be rushed or too late to generate the expected ROI.

Lack of Patience.

Once a decision is made, businesses can be guilty of being too quick to expect a demonstrable return on their investment. Benefits realisation metrics that align with the business case do not get put in place to provide a realistic indication of when specific benefits are to be realised, leading to a mismanagement of expectation.

Focus swiftly turns more financially motived in order to justify the business case and support from key internal supporters starts to evaporate. This puts pressure on the delivery teams who may be forced to cut corners to save cost or expedite a return.

This can lead to businesses becoming disengaged or focussed on new projects, often at the expense of the transformation. Projects become unfashionable and vital resources end up being diverted away to work on other engagements, at which point the value of digital transformation is lost, no longer seen as the next stage of the business’s evolution.

The Customer Experience is not factored.

With two thirds of a company’s competitive edge coming from its customer experience. It is imperative that digital transformation and customer experience go hand in hand.

One of the key factors that must be considered when undergoing a transformation is understanding how the customer is going to benefit. With 70% of the buying experience being based on how a customer feels they are treated when dealing with a company, businesses who do not factor their customer requirements can fall at this hurdle.

Businesses who use digital transformation predominantly as a vehicle to improve efficiency or cost, without taking into account the customer impact, are at risk of changing the organisation in a way that is sympathetic to their own internal biases. This can potentially worsen the overall customer experience and increase the chances of customer attrition.

Undefined baseline position

Before a business can determine the end state of its digital transformation journey, it must first understand where it currently sits on the maturity curve.

A discovery exercise should be conducted to review the maturity of existing business systems and processes, in-house capabilities to deliver the transformation and specific interoperability requirements to ensure compatibility with what has already been digitalised.

Businesses need to be realistic about their digital maturity and what the deployment of new technology would do to help improve customer experience and the way the business operates. Not having a clear baseline can lead to undercooked requirements and create a false expectation on what digital ‘utopia’ could be for an organisation.

The impact is that businesses can grossly underestimate the journey of the transformation, key skills needed to execute or the budget required to reach the level of maturity intended.

Poor adoption

Seventy percent of digital transformations fail, most often due to resistance from employees.

Digital transformation can bring uncertainty for businesses and the employees it affects. Delivery teams can sometimes fall into the trap of placing too much focus on the execution of the technology itself and not the humans that interact with it.

The communication of core benefits and how working lives will be improved is not properly messaged. KPIs influencing adoption are not measured and provisions for only basic training are provided, leaving employees having to navigate multiple applications, without the proper knowledge or support required.

This has a knock on effect to user confidence and the customer experience. Without significant adoption, a business can end up in an expensive halfway position creating workflow inefficiencies, issues with data integrity and ultimately a disengaged workforce.

Sources: Forbes, The Advisor channel & QAD