6 Reasons Digital Transformations Fail and How to Overcome
6 Reasons Digital Transformations Fail and How to Overcome
There are many stats floating around (one of which I mentioned in my last blog) about how companies that attempt to digitally transform often fail. Although it is true, these stats can be misleading and should not deter your company from transforming.
There are specific reasons as to why they fail, and given that digital transformation is an essential component of any company’s future, I have outlined a few of the common fail points and how to overcome them:
1. Lack of Data
Data is arguably the most important part of any digital transformation. Without quality sources of data you won’t get very far. There are hundreds of companies selling the latest and greatest software, claiming that it will analyze your processes and create efficiencies. The problem is they fail to provide a full end-to-end solution, but rather focus on the analysis of data. If you don’t have any sensors or systems that integrate with the software it is basically useless. There needs to be large amounts of quality data pumped into it to provide any value.
To overcome this, make sure to focus on implementing systems that have the ability to extract data from your processes. A common way to do that is through building or purchasing sensors, such as temperature and pressure, to consistently collect data from your operations so that a software system can analyze it and provide actual value. This is the basis of digital transformation and one of the most important areas to tackle if you want to see real value.
2. Too Broad of an Approach
Approaching your digital transformation too broadly can create issues and ultimately an unsuccessful transformation. Broad in the sense that you are trying to solve all of your operational problems at once. Although it may seem like a good idea, it tends to become very expensive upfront and, given the size of the project, positive results are slow to surface and it becomes hard to justify the reason for the transformation as a whole.
The best approach is an iterative approach. Start by solving specific problems that will produce value and set you ahead of the competition. By starting with a small scope, it allows your company to test the waters with your tactics, as well as produce positive results within a shorter time frame. It is an especially good approach if people within the company are hesitant to buy into the idea. Starting small will decrease risk, prove its value, and allow you to iteratively build on the transformation from there.
3. Fear of Job Cuts
Bringing in new technology to take over certain tasks and processes can feel threatening to employees within your company. They fear the technology will replace them and they will be left without a job. When this happens, your team can be reluctant to adopt the new technology or push against any sort of pilot project. This creates a real road block in the project and will cause it to fail before it even begins.
The reality is, digital transformation does not often eliminate jobs. In fact, it typically just changes the jobs people have. It eliminates the mundane, repetitive, tasks and frees up valuable human resources for more complex tasks that technology cannot handle. Rather than wasting time on a monotonous task, people can be leveraged elsewhere to maximize the value of both technology and human knowledge.
4. Failure to Identify Root Cause of Problem
Companies often identify the wrong root cause when trying to solve a problem. For example, a manufacturing company that is trying to reduce downtime of workers may deploy a productivity management tool, when in reality the downtime is caused by unexpected equipment failure, which can be fixed with a predictive maintenance software. The problem that occurs here is companies invest in something they think will solve their issues, but in the end, waste money through the wrong solution.
This is one of the more difficult fail points to overcome. It requires your team to perform a deep analysis of the operational constraints and figure out what is truly causing issues and what can be used to solve it. Oftentimes, the best approach is to reach out to an expert in the digital transformation field and get their input on where to begin and how to best produce a solution that holds value.
5. No Clear Goals
Another point of failure is when a company begins its transformation without any clear goals to achieve. Simply purchasing new software or hardware tech with no plan is a recipe for disaster. There needs to be a problem you are setting out to solve that will have measurable results so you can track the success and adjust your strategy as needed.
Digital transformation is most commonly used to reach one (or more) of four main goals: increase revenue, decrease expenses, lower liability, or improve asset value. Adding a measurable value within an achievable time-frame to those goals is a great start for planning your initial project, and will ensure much greater success than going in blind.
6. Lacking Understanding of Tech
Technology can be confusing and difficult to understand, and unfortunately that contributes to the failure of some digital transformations. Lack of understanding can stem from deploying technologies based on trends you see within your industry, without a true understanding of why you are deploying it, or it can stem from a few individuals who understand and are pushing for the new tech, but the rest of the company is unsure. The danger here comes from wasting the full potential of the technology and not being able to push it to its maximum value. In the end it is a costly mistake that leads nowhere.
A great way to overcome this is to appoint a leader for the digital transformation project; someone who has a solid grasp of technology and is able to communicate in a way that a broad range of employees will understand. It is also helpful to seek out user friendly technology. Some software programs out there today require a heavy level of coding from users, which is a difficult skill to master, and therefore leads to a misunderstanding and misuse of the software; unless, of course, you have a team of coding professionals who are the main users.
There are many points of failure when trying to transform digitally, but it is such an essential component of business strategy in today’s market. Researching and understanding a few of the fail points already puts you at an advantage over others. The next most logical step is to reach out to a digital transformation specialist to learn more and get started on your path.