According to McKinsey research, 70% of digital transformation projects fail to meet the stated goals. Depending on the reasons for launching a digital transformation project, this failure can lead to loss of productivity, security, profitability, or any other number of costly outcomes. In today’s competitive landscape, businesses cannot afford this failure – and yet it continues. Why?
Digital transformation, explains McKinsey, is the rewiring of an organization, with the goal of creating value by continuously deploying tech at scale. Digital transformation is not an outcome, but a strategy – one that requires continuous evaluation and revision. The failure to meet stated goals can originate from a mixture of many different factors, but from our observations of the IT industry, we’ve pulled together six common reasons why digital transformations fail.
1. Lack of digital skills in employee base
Five years – that’s the average shelf life of skills, or the period of time after which your digital skills become obsolete. In other words, digital skills are constantly changing and without the right awareness, guidance, and training, your employees may fail to adapt. Employees who don’t understand or can’t utilize available technologies will at best, spend too much time completing simple tasks, and at worst, fail to use the tools at all. This failure to utilize is often a key factor in the failure of digital transformation projects to deliver results.
However, there is a solution, business leaders must continue to invest in their employees for the benefit of the business. With access to continuous enablement and training, employees are empowered to utilize the tools at their disposal. When employees know how to use their technology, they spend less time learning and re-learning processes, improving their efficiency, and the efficiency of the business.
Improved employee digital literacy can also reduce the number of tickets coming into support teams. Employees who understand and are adept in their available technology are less likely to submit unnecessary tickets.
Further, technologies like digital adoption platforms can support employees in optimizing their use of new and existing technologies – helping prevent digital transformation failure. By providing in-app guidance like tool tips and quick guides, your organization can ensure employees have the knowledge they need to work as efficiently as possible – so you can realize the value of your digital transformation investment.
2. No concrete strategy
Another point of failure for digital transformation initiatives originates in the strategy. Fail to put together a coherent, data-driven, and long-term strategy, and you may find your digital transformation project is unable to achieve the desired value.
Start with the goal of the project. How will this drive value for the business? What is the outcome you’re trying to achieve? Once identified, you must understand how you will measure that outcome. What data do you need to measure success?
Make sure you have the tools you need so that you can build and execute a data-driven strategy for better likelihood success and return on investment. This data could come in many forms. You’ll certainly need technical data, such as endpoint visibility into the performance of hardware and applications. But you may also need to understand user expectations and experience to account for the human factor in your digital transformation project.
3. Budget restrictions
It’s no surprise that a limited budget is one of the barriers to a successful digital transformation. This is one of the most common issues hindering these projects: mismatched investment. Many organizations desire a particular outcome, but fail to understand the level of financial investment required to achieve it.
For teams charged with executing digital transformation projects, it may become essential to build a business case for the tools and technology required to ensure success. When building your business case, follow the same approach as is used for the overall strategy: start with the end goal and work backwards.
What is your organizational leadership hoping to achieve through this project? How will the tools you need help achieve that goal? Though they may be a large initial investment, how will they ensure better return on overall investment in future?
For example, when organizations rely on mergers and acquisitions as part of their growth strategy, the integration portion of the M&A is a massive point of potential failure. A DEX tool, like Nexthink Workplace Experience, can provide visibility into the hardware and software applications in use within your acquired environment – helping you better plan and execute your integration strategy, whether it’s standardization or a bespoke approach. DEX tools with two-way communication can also enable clear, direct, and timely communication with employees, helping you measure employee sentiment and ensure adoption.
Similarly, a DAP tool, like Nexthink Adopt, can provide insight into employee behaviors as they navigate new systems, ensuring adoption and ultimately, project success. No matter what data you need or tools you wish to invest in, aligning those tools with the stated goals of the project can help you build the business case to get the budget you need to drive digital transformation success.
4. Legacy Technology Issues
Technology is at the core of digital transformation, and as such, is a core point of failure. One of the biggest barriers to digital
transformation are legacy IT systems, as over half of the respondents in the Harvard Business Review survey noted.
When overhauling your technology systems, you must have adequate data into the performance of all systems, new and old, in order to measure and manage transformation success. Think live dashboards that show real-time data into the performance of hardware and software, allowing you to understand the scale of issues across your environment and pinpoint the root cause with accuracy. Different views that allow you to assess your data by region, device type, or other metric. Differentiate between technical and user data – compare technical device performance with feedback from employees on how they feel about their device. And then leverage this data to slowly roll out new technology in measured pilot programs that guard against risk.
Having the right tools at your fingertips, such as a DEX and DAP platform like Nexthink Infinity, can help mitigate the risks posed by technology migrations during your digital transformation project.
5. Inadequate Collaboration
Every company has a different structure. But at the enterprise level, communication by employees is very limited, if at all. This too can be a blocker to the digital transformation. Managers and employees must work in harmony, as digital adoption is not only about a single department, but an organizational objective. If the employees strive for the change jointly, they will succeed sooner than when working individually.
Leadership can support this cross-departmental communication
by making this a focus in their digital adoption and transformation strategies.
Take, for example, Nexthink customer Mars Veterinary Health (MVH), who presented on stage at our Nexthink Experience conference to share the story of incorporating Nexthink Adopt to ensure the success of their Workday roll-out.
To achieve this success, the MVH team knew they needed buy-in from leadership and associates across all departments using Workday. The team worked across levels to empower all their business partners with knowledge of the capabilities and opportunities within Nexthink Adopt through in-person road shows and easy feedback channels. Then through reporting, they kept partners and leadership informed of Workday implementation progress, ensuring they had the cross functional buy-in they needed to achieve success.
6. Lack of long-term vision
The final point of failure in digital transformation projects stems from the same origin as the first point discussed: strategy. Just as failure to articulate a data-driven strategy at the start of a digital transformation project can doom the initiative from the start, so too can the lack of a long-term vision.
Rolling out technology in and of itself is not the end goal. To achieve the desired value of your digital transformation project, you need the business to utilize your new platforms or processes. You need your employees to understand, value, and utilize the project.
To achieve this, your strategy must include guidelines for continuous feedback and improvement. Create channels, like Nexthink Engagement Campaigns, for two-way conversations between technical teams and employees.
Monitor and manage employee behavior, so you can understand potential pain points or pitfalls. Understand how employees feel and why they feel that way about your new technology, so you can adapt your strategy to improve their buy in – whether through education, better processes, or better technology.
In the end, there are many reasons digital transformation projects fail – and some of these points of failure may be unavoidable. But with the right strategy from the start, and the data required to measure and manage your execution, you’re well on your way to eliminating many of the risks of failure common to most digital transformation initiatives.