5 Reasons Digital Transformation Projects Fail

Digital transformation is the process of implementing digital technologies into all areas of a business. It is not a separate, one-off strategy for implementing new technologies in one department or area. It’s an organization-wide strategy for reinventing all or most of your business processes and procedures. 

According to a McKinsey study, 70% of all digital transformation efforts fail. One of the biggest challenges of implementing a successful digital transformation is not having an enterprise-wide strategy. Only about 41% of companies have a company-wide digital transformation strategy, according to a Harvey Nash/KMPG CIO survey. Knowing how to avoid implementation failures maximizes your return on investment while reducing overhead costs and improving the processes within your business. 

Five Top Reasons Digital Transformation Projects Fail

1. Failure to Understand Digital Transformation

A lack of understanding about what digital transformation is and isn’t can lead to costly mistakes. Some assume it has to do with various information technology (IT) tasks, while others think it’s a set of digital marketing activities. Misinformation leads to ineffective strategies that don’t focus on the core concepts of digital transformation, including scalability, flexibility, and cultural transformation. 

2. Lack of Planning

Successful digital implementation begins with careful planning. Overlooking or shortchanging the planning phase can result in delays and increased costs. Lack of planning prevents employees from understanding the processes being put into place and causes confusion, errors, and system failures. Developing a comprehensive implementation plan, including enabling technology, training employees, and measuring the effectiveness of the ongoing implementation, is necessary for success. 

3. Unclear Goals or Priorities 

A lack of clear goals is a recipe for disaster. Not establishing clear goals means your organization will end up with people going in different directions, ultimately leading to failure. Without a shared understanding of objectives and priorities, your employees can spend a lot of time and resources trying to manage multiple tasks, slowing down productivity. Establishing clear goals and priorities allows issues to be resolved quickly and reduces the time needed to complete the implementation process.

4. Lack of Experience

Your employees are a critical factor for a successful digital transformation. If they lack the experience or skills, they will ultimately make mistakes that could undermine your entire strategy. Companies often fail to hire people with a digital understanding and expertise in implementing transformations. This is especially true for non-digital companies. Ongoing employee training is essential to ensure that new integrated technologies empower and bridge the skills gap. Never assume that new technologies will be easy to understand and implement without training. 

5. Not Having the Right Culture

Your organization’s inherent culture can make or break any new initiative. Resistance to change is an issue that often prevents businesses from succeeding when going digital. You need people who can accept and support changes and can lead your organization to success. Cultural change is at the heart of digital transformation, and the most successful organizations have a culture that embraces change, collaboration, and innovation. Effective change management can identify people most resistant to change and provide them with the proper training and tools to turn them into digital transformation leaders.

The Key to Successful Digital Transformations

Understanding how to avoid digital transformation failure is the best way to reap the benefits that an integrated system can bring to your organization. Developing a comprehensive implementation plan begins with assessing your existing system, including the policies and operational procedures relevant to resource management. This evaluation can be handled by internal team members or a third-party consultant with the skills to optimize your digital transformation. 

Implementing significant changes is impossible without the right tools, techniques, and experience. Launching a digital transformation initiative without the right personnel is guaranteed to be a frustrating and costly decision. Many companies find that hiring an experienced consultant to assist with planning and implementing their digital transformation is money well spent. 

Why Work with E3 Consulting

Working with an experienced consultant who can help you select the right tools and create a plan that meets your company’s unique needs and goals is essential. With over 35 years of experience, E3 Consulting can help your business implement digital transformation initiatives and create sustainable growth. We’ve helped Microsoft, Sony, Wastequip, Paramount Cosmetics, and more than 150 manufacturing companies achieve growth while reducing costs. We deliver solutions that increase efficiency and revenue by implementing better processes and technology. Book online or call (732) 334-3995 to schedule a consultation.