Тhe 7 most common digital transformation challenges companies face
In their search for greater efficiency, resilience, and sustainability, organizations are turning toward digital transformation. If successfully implemented, there are a lot of digital transformation benefits that guarantee a future-proof business model which integrates people, organizational structure, and technological architecture dynamically.
However, undergoing this change in its fullness can be an uneasy and challenging task since it requires an overhaul of a more traditional and familiar business model. Businesses face an array of difficulties along their digital transformation journey that can stop them in their tracks. These can be due to a lack of a proper digital roadmap аnd strategy, a lack of skills, financial constraints, complex digital solutions, and others.
Digital transformation is redefining how businesses operate, so it’s normal to encounter challenges and even get stuck but these can be overcome. Here are some of the digital transformation challenges that organizations usually experience and how they can overcome them!
Why is digital transformation difficult?
Various studies over the years point to the difficulty of businesses successfully undergoing digital transformation. According to the latest insights in a study by McKinsey as few as 16% of respondents say that their company’s digital transformation has improved its performance and enabled sustainable long-term changes.
Similarly, a Boston Consulting Group study established a failure rate of as many as 70% of digital transformation projects, despite being aligned with leadership. So why is it that digital transformation is so difficult?
With the evolution of digital transformation, there are many misconceptions surrounding digital transformation and the expectations that they shape. Possibly one of the most enduring myths about digital transformation is that the key to it is acquiring new digital technologies. This reduces the process to one of finding the “best” tools.
More than just a technological update
However, real digital transformation in a company is about much more than just new technologies and failure to grasp this aspect and prepare for it properly can significantly hamper progress. Instead, successful digital transformation entails an in-depth and extensive reorganization that integrates people, business, organizational structure, and technology in order to achieve a new form of functioning.
In addition to such misconceptions, businesses that venture onto this path can also expect to meet those that went before them and succeeded. Companies that have successfully implemented this model are increasingly at the top of their leagues. Facing such robust competition can put pressure on newcomers that they struggle to deal with, leading them to give up.
All of the above may make digital transformation initiatives challenging but rewarding endeavors. Here are some of the main challenges that organizations experience in this process, and that you must keep in check!
What are the biggest digital transformation challenges organizations face?
The overall difficulty of achieving a successful digital transformation is made up of specific key challenges that most organizations experience. Some of the main hurdles in this process include the following list.
Resistance within the organizational culture
Challenges to an organization’s culture and current business processes can generate significant employee pushback. This is particularly true for frontline and service delivery workforces (Gartner) and for companies still operating with legacy systems and manual processes.
The “if it’s not broken, don’t fix it” mentality of such organizations can significantly disrupt attempts to implement change and must be accounted for via transition plans and good communication. Make sure the whole employees understand why the company needs to transform its processes digitally and why is it important for everyone to also support digital culture transformation.
No adequate change management strategy
Effectively addressing pushback is part of a good change management strategy. Research indicates that projects with a good change management strategy (Prosci) are six times more likely to succeed in meeting their goals.
Conversely, a lack of an efficient release management strategy means that you will find yourself frequently surprised when challenges or difficulties arise. This often leads to using quick fixes that tend to create other problems down the line, often in a cascading fashion.
No proper digital transformation strategy
How will your digital transformation occur? Who will be impacted, and how? How to mitigate moments of turbulence and what are your short and long-term goals?
These questions, and many others, need to be addressed by a digital transformation strategy and guide your actions. Yet, a few years back, a KPMG study found that only about 41% of companies have such a strategy. But “strategy drives maturity” and having no proper end-to-end transformation strategy will leave you wondering where you’re headed, and how you’ll get there.
Use of complex digital technologies
In many organizations, introducing new technologies and software is one of the big hurdles in the digital transformation process. This is true on several levels - from the perspective of end-users and having to build new digital skills and habits, to the difficulty of integrating new and old digital solutions without disrupting workflows too much, as well as from a security perspective.
Insufficient budget allocation or constraints
A lack of proper financial planning can mislead you about the funding that is necessary to get started with digital transformations in your company. Siloed strategies will often lead to scope creep, extending deadlines and goalposts further and further out. This, in turn, quickly makes the initial budget planning balloon out of proportion.
Digital transformation investment is best understood as strategic, rather than operational, and you must have plans about what ROI you expect to get from the transformation, and how you intend to use it.
Lack of digital talent
The global digital skills gap is real and creates significant difficulty for organizations that are in the process of undergoing transformation. Specialists in the areas of cybersecurity, enterprise architecture, cloud, analytics, and more, are central to the success of your digital transformation programs but can be hard to come by.
One way to address the skill gap is by developing digital dexterity within the whole company, outside of people’s usual skill sets, and by developing career paths that build the necessary digital skills. In addition, where companies cannot compensate for the lack of talent, working with outside consultants and digital transformation professionals can help close the gap.
Uncontrolled cybersecurity risks
Given that digital transformation typically involves moving to the cloud, as well as adopting various new solutions, all of which have different levels of security, there are real cybersecurity risks associated with the process.
A security-first approach can help mitigate such risks by introducing the proper security controls, such as a zero trust model, an Identity Access Management (IAM) system, proper data protection, and more.
How to cvercome the challenges of enterprise digital transformation
Following are a few basic tips that will help you meet some of the above challenges and increase the chances for your digital transformation success.
Create a detailed digital transformation strategy
Your digital strategy will provide you with the necessary digital transformation framework to manage the change you will be undergoing and to define what you seek to achieve. It will also help you align your business goals with your vision for the business and implement the specific changes that are needed.
Involve the whole company in your digital transformation journey
While business leaders’ buy-in is important, if the whole company doesn’t back the initiative, you will have difficulty changing. For the purpose of getting everyone on board, consider creating a change leadership team that will communicate the purpose of the transformation, the steps that will be taken, and that will also address people’s difficulties and concerns.
Work with digital transformation experts
Digital transformation is a complex process, and it’s easy to lose sight of its objectives, especially when you have to manage diverse technologies. Unless you’ve already pulled off a digital transformation in the past, you should consider working with someone who knows the drill and who can help you with executing the change.
Adopt software solutions and digital tools that support the change
Look for software solutions that will streamline parts of the change process and that will empower people to take charge of their own transformation. Tools such as a digital adoption platform (DAP) can help you communicate new processes and workflows with greater ease and reduce the burden on individual people or whole teams to educate and inform.
Ready to start your digital transformation initiative?
Resolute Software has years of experience providing digital transformation consulting. Our expertise in the field has made us a trusted partner in the process, resulting in success stories all over the globe.
Are you ready to start your new digital journey? Get in touch to learn more about how Resolute Software can contribute to your organization’s digital transformation efforts.
The biggest challenges of digital transformation include a risk-averse organizational culture, a lack of change management strategy and communication, as well as a lack of an adequate transformation strategy. Budget constraints, digital skill shortages, cybersecurity threats, and too complex digital technologies can also impact the process.
structure and human capital in a dynamic process. Agile transformation enables businesses to address new challenges, increase efficiency, provide better customer experience, and altogether be aligned with the latest technological developments.
Lack of finances can significantly impact digital transformation. However, funding should not be thought of in operational terms but strategically and organizations should look for ways to make the transformation generate ROI that can be re-invested in the process.