70% of Digital Transformations Fail — How to Make Sure Yours Doesn’t

Thoughts September 23, 2020 By: Jenn Consitt

Companies that didn’t view digital transformation as necessary in their industry now recognize it as mission-critical.

We all have our comfort zones. It’s the reason 20% of your wardrobe ends up in the laundry every week and the other 80% rarely sees the light of day. Why you cook the same meals over and over. Why you can recite every word of your favourite song. It’s tempting to cling to the classics, the stuff that works. Especially when trying something new has no guarantee of panning out. In fact, leaving your comfort zone comes with a significant risk of failure. Change is absolutely terrifying. At least, it is until you contrast it with the much greater risk of standing still. This was a lesson hard learned for many companies all over the world when the COVID-19 pandemic turned tried and true playbooks into kindling seemingly overnight. Companies that didn’t view digital transformation as necessary in their industry now recognize it as mission-critical, and companies that planned for slow, incremental change had to figure out how to implement a 5-year plan all at once. With additional waves of COVID-19 looming — and any number of other business continuity threats for that matter — it can feel like the sky is falling. But the truth is, you have the power to build adaptability into the core of your business, even if it means walking away from long-term business processes. And with a little smart planning, you can future-proof yourself against whatever comes next. Interested? Keep reading.

What Is Digital Transformation, Really?

Ask 5 IT professionals what digital transformation means, and you’ll get 6 different answers. Like most business terms that become keywords, digital transformation has been stuffed into so many contexts that it’s been deformed beyond recognition. At a basic level, digital transformation is the process of replacing or modifying existing manual processes with digital alternatives to meet evolving expectations and demand in the market. And this can feel like a satisfying answer until you actually need to do it and are left wondering how. There is a common misconception that it’s as simple as moving things into the cloud or buying the right digital tools. These things can help, sure, but it’s kind of like putting a band-aid over a leak in the Hoover Dam. Patch solutions rarely give you the ability to adapt and scale. And once you put a technology in place, you either have to find a way to integrate with it in the future or start the process over. To do digital transformation right, you need to custom-design a technology plan through interdepartmental collaboration based on your goals. It takes time, company-wide buy-in, and a deep understanding of your current processes. Doing it this way isn’t easy, but the payoff is enormous. Executives say successful digital transformation has helped them improve operational efficiency, get to market faster, and better meet their customers’ expectations.

Where to Start

Before the pandemic, 70% of companies were already working on digital transformation strategies, but their motivations and focus looked very different. Business leaders saw taxi companies being swallowed whole by Uber, hotel rooms collecting dust while vacationers around the world booked Airbnbs, and the behemoth that was cable television slowly wasting away in Netflix’s shadow. Forward-thinking companies were looking for ways to become the disruptor in their industry before it happened to them. Those things are still important, but things have changed. COVID-19 has no-doubt shone a light into even the tiniest cracks in the foundation of your business processes. Those cracks need to be considered in your approach. It may feel like one more thing to add to your to-do list, but it’s an opportunity to intelligently address potential problems in addition to creating innovative customer solutions. Even if you think you’ve already fixed the cracks, take another look. This is a unique chance to look at your business comprehensively, design key integrations, and break down silos before they have a chance to solidify. To start, make an exhaustive list of everything that failed or nearly failed during the initial pandemic lockdown.

Were there certain files no one could access?
Did employees struggle to communicate?
Could some tasks no longer be completed?

You can make sure the list is complete by asking for feedback from different departments about their pain points. While your IT team are the experts, all employees should have a voice in the solution, because even the best technology is useless if people can’t or won’t use it. Next, consider your overall business goals.

Does anything on your list conflict with where the company is going?
What are the top 3-5 priorities?
What outcomes do you want for your customers?

Explicitly stating how digital transformation can support your business goals will ensure your final strategy actually adds to what you’re trying to achieve. Finally, plan for the next disruption. Set recovery time objectives for your existing systems and those you want to implement. Make sure everyone knows what has to be recovered first for business operations to continue.

Understand Why It Goes Wrong

Over 70% of large-scale business transformations fail, wasting an estimated $900 billion dollars of digital transformation budget every year. You should also note that these statistics were collected in the relatively optimal conditions that existed before the pandemic. So how do you make it into the successful 30%? Learn from the companies that have failed. Most failures come down to communication. This could be disconnections between IT and the rest of the business, low employee engagement with the project, or information silos. Of course, these communication issues could be what you’re trying to solve by implementing new technologies, in which case, you’ll need to create temporary solutions. This could be as simple as scheduling an all-hands meeting to ensure everyone has the same information. Whatever you do, be sure to emphasize why the initiative matters to get that all-important employee buy in. You will also need to carefully consider timing. Move too fast and you risk spinning your wheels. Move too slow and you risk sinking under the weight of another disruption. Making bold moves quickly only works when you give yourself enough time to collect the information needed to iterate. So plan this first. And yes, you need to iterate. Digital transformation isn’t a one and done initiative. Plan to experiment with new and emerging technologies as the pressures you face continue to change. As you plan, consider the number of employees available to work on the initiative. Digital transformations fail when companies focus on cost-cutting and try to get by with their existing team that is also running day-to-day operations. Your digital transformation initiative is too big and too important to leave to a team that will need to cut corners to complete all of their tasks. You’re going to need some help.

Consult the Experts

It’s easy to tell you that you need to do adequate planning to ensure your digital transformation initiative is a success. It’s much harder to carve out time in your already chaotic day to do it. And if this is the first time you’re undertaking a project like this, there is no amount of planning that can prevent you from making the natural mistakes that come with being a newbie. If you take one thing away from this article, let it be to get people involved with this project who have seen it all before. Whether that means hiring new team members or outsourcing, make sure you have experts on your side. That’s what we did. At Iversoft, we’re used to strategically designing forward-thinking digital solutions. But as we’ve already discussed, the success of tech has a lot to do with the people who use it. They need to be in the right mindset, be clear on objectives, and understand how they can plan to make future adaptability easier. That’s why we partnered with the business transformation experts at Brydges & Associates. Together, we’ve created comprehensive service packages, covering custom planning, design, and implementation of digital transformation and solutions. We’re proud to offer a unique combination of expertise to better help our clients face ongoing challenges and operate with greater agility, resiliency, and effectiveness. Need help making your digital transformation initiative better than the competition’s? Contact us to learn how we can make it happen.

Jenn Consitt