Tips to make digital transformation succeed
Digital transformation, widely touted as a business imperative in the 21st century, is an often misunderstood and misused term, meaning different things to different people.
And because of this confusion, a disconcertingly high proportion of digital transformation projects fail. Consultancies such as KPMG, BCG, McKinsey and Bain have variously put the failure rate at between 70% and 95%.
One of the key reasons for this, says Tristan Dennis, Mint’s ProActive Sales Enablement Lead, is that most organisations approach digital transformation from a technology perspective when it should be a strategic initiative.
This focus on technology is hardly surprising given that the most common definition of digital transformation is the adoption of digital technology in all areas of business, in order to fundamentally change the way the business operates and delivers value to customers.
“Because of this technology focus, many organisations purchase a technology because it is the latest, greatest must-have – and then try to find a way to leverage it in their organisation. That’s a recipe for failure,” Dennis maintains.
Rather, he says, an organisation should approach digital transformation by identifying the business and strategic challenges it is facing. However, mere identification of a problem is not enough: it should be measured and quantified in order to establish how much it is actually costing the business.
“This approach helps to align the business strategy because they start listing their challenges and put them in priority order. That tells them where to start focusing instead of just getting the next big thing,” Dennis explains.
However, having identified the problem and what they believe will fix it, they need to determine what success will look like. How will they know if the problem is solved – and whether the technology they think will address the issue is really the best solution?
“It's not just about implementing a new technology thinking it’s going to solve everything. You need to understand what it is you are solving and why. And then everything you plan must contribute towards solving that challenge.
“In some instances, the solution may not be digital at all,” he cautions.
Another common digital transformation pitfall some businesses make is to start investing in new technology, but without ensuring that all stakeholders have bought into the coming changes.
“Because the default position for most people is to resist change – particularly when they don’t understand it or how it will impact them – people enablement and effective change management is as much a requisite for digital transformation success as the selection and implementation of the technology,” Dennis says.
Much resistance to digital transformation has its roots in the “if it’s not broke don’t fix it” syndrome, which is a fair position to take.
However, Dennis believes that even systems that are not broken could always be improved and improvement may or may not require a technology solution.
“What’s needed is to examine the business case: how much is this issue costing the organisation in terms of revenue loss or lack of performance; and how much will the proposed solution cost to implement? If the cost is higher than the estimated loss, then it’s probably best to find a different solution.
“That solution may or may not require an investment in new technology. It may be nothing more than using existing technology more effectively. Understand the technology that you already have in your organisation and see if it can be leveraged to do more than you are currently using it for,” he says.
One of the most difficult aspects of digital transformation is obtaining objective advice. CIOs and organisations really need to take their time and do their homework. But how?
According to Dennis, there are tools that can help expedite this, by helping to unpack what the requirements are for a solution. These tools can help identify not only what is required by asking probing, business-related questions, but also the potential project costs.
A danger today, however, is that organisation may drag their heels in making a decision and thus, by the time they get around to solving that particular problem, the goalposts may have moved. It’s therefore important to act quickly to resolve an identified problem.
However, it’s also important to identify where small, quick and meaningful gains can be made and to start the digital transformation process there. Projects that are likely to have the least impact or the highest cost should be put on the back burner.
“Develop a timeline of when and how the business – or parts of the business – will be systematically changed in line with the business strategy. But this should not be written in stone: conditions change, the economy changes – and technology changes too.
“The transformation strategy should be reviewed at regular intervals to ensure it continues to make sense and that the correct projects are being undertaken at the correct time,” Dennis concludes.