Most digital transformation projects fail as they are complex and involve large-scale changes. Typically, transformation projects start with a software upgrade or a technology add-on rather than a holistic and platform approach so the entire workforce, partners, and eco-system can adapt to the overall transformation. As per research sources, most business executives have a digital strategy but don’t have the skills and capabilities to execute the strategy. According to a Genpact research study, two-thirds of digital transformation projects fail. A piecemeal strategy of bolting on a digital platform or tool is not enough.
In my opinion, some of the key factors that influence the success or failure of digital transformation projects are
Large-scale change: According to studies, most digital transformation projects involve large-scale changes that are distributed and involve a large and disparate application mix. It also requires changes beyond technology and involves retooling of people skills and processes, and more importantly, enterprises need to embrace digital culture supporting rapid innovation. The way organizations have been planning and managing large-scale change won’t work anymore; it needs an iterative, agile, outcome-based, and customer experience-oriented approach.
Organization-wide alignment (BizDevOps): Organizations are primarily failing to embed strategic business objectives throughout the organization by linking the business outcomes all the way to the capabilities of the digital applications in a simple and consistent manner.
Digitizing core legacy applications: Any attempts at digital transformation without involving legacy systems will only yield partial results, as most of the core business capabilities are often locked in legacy systems. However, traditional methods of modernizing legacy applications through refactoring or replacing can be costly and often do not yield the required ROI. These lift and shift methods can also disrupt productivity, so enterprises need to have the ability to control when and how these applications will be transformed.
The pace of change: Digital enterprises work in a connected world that is dynamic in nature, and hence their applications go through constant updates, upgrades, and migrations. The pace of change in the digital world is also rapid, which means that traditional manual approaches to large-scale and instant change management don’t work anymore and require an agile and automated cross-functional collaboration to manage things.
Risk Exposure: Digital enterprises face increased risk due to exposure from applications and services becoming distributed everywhere, especially outside the premises. Hence they need constant and real-time governance across the entire application footprint to mitigate risks.
Data Explosion: With businesses switching digital, entities, both corporate and individuals, are generating large pools of information from the operations and business activities. This epic rise of data is becoming both a threat and an opportunity, forcing enterprises to adopt new technologies that can handle large volumes of data to provide actionable insights for better enterprise decision-making.
I am sure some enterprises have succeeded with their transformation projects. We would love to hear any successful or not-so-successful digital transformation and enterprise modernization project stories. In subsequent posts, we will also share some critical components and aspects of successful digital transformation.