A survival guide for digital transformation

Digital transformation is also only worth doing if it is done right. Global consulting experts McKinsey found that 69% of digital transformation projects fail¹, with the cost of such failures not only measured by the resources wasted on such implementations but also the ongoing impact on a business’s competitive position. The hype surrounding digital transformation has seen too many executives rush to undertake such projects without a clear and strategic vision of what they want to achieve. The result? Adding their organization’s name to the long list of digital transformation failure case studies.

In a bid to avoid that fate, this survival guide will take readers inside the digital transformation world and share expert tips for tackling this important of tasks. Along with statistical evidence and clearly defined benefits, it will outline the key steps for digital transformation success and reinforce why having a clearly defined plan has never been more important.

What is digital transformation?

Digital transformation is the process of modernizing systems, operations, interfaces, products or services to allow enterprises to become more responsive to customer wants, needs and desires. Unlike business transformations that usually end once a new behaviour has been achieved, the ongoing evolution of technology means digital transformations are long-term efforts to rewire how an organization constantly improves and changes.

What are the numbers behind digital transformation?

The road to digital transformation success is one well worth taking but business leaders need to be mindful of the many potholes that line the way. While investment in digital transformation strategies has boomed in recent years, there is plenty of statistical evidence to suggest too many businesses continue to approach the process without due research, a lack of executive buy-in or failure to team with trusted tech partners.

Statistics revealing the numbers behind digital transformation:

• Global spending on digital transformation reached $1.8 trillion in 2022 and is expected to increase to $2.8 trillion by 2025²
• The World Economic Forum believes the societal and industrial value of digital transformation could reach $100 trillion by 2025³
• A Fujitsu study found that ‘strengthened competitiveness’ is the highest driver for companies embracing digital transformation (70%)⁴
• 69% of IT decision-makers primarily view digital transformation as a key to improving process efficiency⁵
• McKinsey has found 70% of digital transformations fail due to employee resistance⁶
• 28% of companies consider digital transformation as a cost center, while resistance to change (26%) and compliance or legal concerns (26%) are also barriers to success⁷
• A study of IT professionals found a lack of IT skills or transformation expertise is the biggest hurdle to digital transformation success (54%), followed by dependency on legacy systems (53%) ⁸.

Source: Digital Transformation Market Size to Hit US$ 1,692.4 Bn by (globenewswire.com)

What are the benefits of digital transformation?

Digital transformation allows organizations to reap numerous benefits including:

What are the key steps to digital transformation success?

Just as journalists traditionally aim to answer ‘The Five Ws’ when writing a story (Who? What? When? Where? Why?), businesses should ask themselves a series of key questions before undertaking a digital transformation project.

Why: digital transformation should always start with a why. Before investing untold resources and time into a project, it is essential to be clear about why the transformation needs to occur. It may be to reduce costs, increase revenue, boost productivity or simply maintain pace with competitors but the key is to have a distinct understanding of the current state of the organization and a vision of its future state. This also requires a reflection on one’s corporate strategy as it will inform the direction of the digital transformation and ultimately lead to outcomes that align with that strategy.

How: too many organizations make the mistake of pursuing digital transformation without knowing how they are going to measure its success. Without a predetermined idea of what constitutes a successful implementation, it is too easy for businesses to continue to waste resources on a project that is not actually delivering any real benefit in the areas it was designed to. Take the time to understand how you are going to measure success. Is it an improvement in Net Promoter Score? Customer experience metrics? Revenue or customer numbers? Whatever the metrics, they must be clearly aligned with the digital transformation strategy and feature KPIs to ensure the accountability that so often separates success and failure.

Who: digital transformation is more about people than technology. While innovation lies at the heart of the process, it is people that bring a strategy to life and that is why it is critical to carefully consider who will be impacted by the transformation and bring them along on the journey. It could be customers, staff or external stakeholders – or indeed a combination of all three. The key is to ensure those parties are clearly identified and kept at the forefront of mind as the process unfolds. Early adoption is a significant indicator of digital transformation success and the way to ensure it is to ensure a process that connects people and technology.

What: it is now time to consider the details of the digital transformation process. What are the operating model components that need to change? What is the technology that can best deliver transformation? What is the best process or strategy for delivering success? This is also where clear decisions need to be made about the delivery methodology to be used. Most people believe digital transformation is an agile process but that is not always the case. It all depends on context - different approaches requiring different ambitions and that once again reinforces the need for a clear vision of desired outcomes.

When: the issue of ‘when’ will arise multiple times during a digital transformation. When is a transformation required? When is the best time to launch a project? How long should a digital transformation take? These are questions that will have different answers for different businesses but the key is that they are asked. One of the major reasons for digital transformation failure is a lack of definitive timelines and putting the onus on executives and project leaders to establish them from the outset is a crucial step towards avoiding that fate.

Summary

In many ways, the lofty ambition of digital transformation is not unlike the goal of losing weight. How often do we hear people say they want to lose weight but they fail to articulate a clear plan of how they intend to make it happen? Rather than answering a few key questions – why do I want to lose weight? How am I going to measure my success? Who can help me achieve it? What is my timeframe for doing so? – they lack a clear vision and, in turn, any real direction. In a similar vein, it is when businesses become specific about digital transformation that they markedly increase their chances of digital transformation success.

Generative AI may be the talk of the business world but organizations need to tread carefully when pursuing its benefits. Step inside a three-part report that highlights why executives need to remember the bigger picture in their rush to embrace the game-changing innovation.

About the Author

Saurabh Nagpal is a Principal Consultant at Innovior, part of the Probe Group. With a background in leadership roles across telecommunications and health sectors, he has over a decade of experience in innovation, digital strategy and transformation and customer experience. Saurabh's philosophy is to stay ahead of the ever-changing digital landscape while placing a strong emphasis on delivering exceptional customer satisfaction. His talent for assembling high-performing teams has consistently contributed significant value to various business settings.