Five real-life digital transformation mistakes
According to Gartner research, 82 percent of CEOs have a digital transformation program or initiative in place, up from 62 per cent last year. But how many of these projects are likely to succeed?
Recent history suggests not many. Estimates vary, but digital transformation failure rates range from between 60 to 80 percent and show no signs of improving. We look at five common pitfalls and how to overcome them to achieve digital transformation success.
# 1 | Doomed from the start
Often, digital transformation programs are destined to fail from the start, simply because they lack a clear purpose.
Many organizations see a shiny, new IT system as the answer to all their problems, without truly understanding what their problems are and what the most effective solution is likely to be. Before embarking on your digital transformation, consider what the business really needs and define a clear set of outcomes for your program, with KPIs to enable you to measure your success.
# 2 | Myopic in scope
Another common issue at the critical scoping stage is technology shortsightedness— focusing on current solutions without considering emerging innovations.
The result is digital transformation programs that are quickly out-of-date – the government’s Verify ID scheme being a case in point. Take time to research the art of the possible, investigating technologies on the horizon, not just those available today, and seek insight from the wider industry. Time and money invested upfront will avoid costly mistakes later.
# 3 | Too big, too ambitious
Business and government alike have fallen in love with the idea of ‘grands projets’ – long, ambitious and designed to be future-proof.
In reality, these large-scale projects are costly and cumbersome and, if they ever reach the light of day, they are often over-budget and out of date. Think Airbus, HS2 and GE’s ambitious digital strategy. To avoid the overambition trap, break down large projects into smaller, incremental steps. This allows you to iron out issues as you go along.
It also builds in flexibility to keep pace with the changing needs of the business and to exploit the latest technological innovation.
# 4 | Lack of control
Many digital transformation projects plod on even when they are failing, wasting more time and money.
Often the problems are not visible to the executive board– and what they don’t know they can’t fix. Poor control mechanisms can lead to a lack of real understanding of what is being achieved against time and budget – and what still needs to be done. Mitigate the risk of this happening in your organization by setting clear milestones and KPIs in advance, and apply the same rigorous analysis to internal progress and costs as you would external delivery and spend.
And rather than continuing down the wrong path, be prepared to change the direction of the program, scope and objectives to accommodate the changing needs of the business and to stop delivering things that are no longer needed or realistically achievable.
# 5 | Procurement mismatch
The way government departments and many large organizations work with their suppliers can impede digital transformation progress. Contracts are typically tied to pre-agreed deliverables, with little flexibility to respond in partnership to change, whether in client requirements or in available technologies.
More flexible contracts can lead to better results, with a fixed outcome to provide a clear direction of travel and provision to review activity on a periodic basis. After all, if a program lasts several years, what is agreed on day 1 is likely to change— and your way of working needs to reflect this.
Take a moment
Many of these pitfalls are compounded by the fact that organizations often lack the courage to stop or recalibrate their digital transformation programs when problems arise.
That is why businesses need to break the pattern of large-scale, long-term projects where failure can easily be pushed to one side in the hope that all will be resolved in the final stretch.
Dividing digital transformation programs into smaller steps can deliver value for the business more quickly, ironing out any issues quickly, too. It also builds in flexibility to pivot, change and experiment.
When it comes to digital transformation, smaller is better and more likely to lead to bigger results.
This article was contributed by Jim Berrisford, COO, Step5.
30 March 2023