Digital Transformation Failure Rate: Why So High?

The digital transformation failure rate is so high. It comes to about 70% of all companies doing digital transformation efforts. Why is this so?

Read on to know more.

Digital Transformation Failure Rate

According to a survey, 73% of companies failed to give business value to their digital efforts. Further, 78% failed to meet their objectives.

Meaning, only 22% of companies reached their digital transformation and business goals. And this does not sound good at all.

What happened? We’ll see some key reasons why most companies fail their digital transformation efforts.

Up-front Commitment is Lacking

Some companies make it to the end of phase 1 of their digital transformation. And they are succeeding in this.

But, when it comes to phase 2 of their efforts, some won’t continue. Usually, phase 2 is where the bigger part of the digital transformation is.

As compared to phase 1 which focuses more on internal changes, phase 2 is more. It is where the customer-facing changes are.

But even though companies see the benefits of moving forward, they cower. With reasoning such as there might be a disorder from the big changes they are doing.

Or there might be resistance that will arise because of these. Thus, showing the lack of commitment on their side.

So, if their plan and vision are already set but aren’t committed to doing it, then failure is sure.

Thus, leaders need to make sure everyone wholly commits to doing these changes. Also, managers and employees need to own up to their roles to make this journey successful.

This may mean making a vision of how they can improve their position in the market. Or any other tasks.

But building commitment takes time so they need to go slow at first. Making everyone understand the whys and hows of the change is the key.

Failing to Take and Iterative Sprint Approach

Most companies use a waterfall approach in planning their digital transformation. But, this has a high rate of failure.

And it proved to be so. Why?

This is because they did not change the budgeting process. It should focus on giving the wanted result versus focusing on a business case.

Also, this approach can cause fatigue and resistance. As workers are forced to move faster and take high risks.

So, companies need to take an iterative sprint approach. And break down their journey into short-term projects and goals that meet their vision as a whole. And these are what sprints or phases are.

Sprints make the changes more manageable, maintains momentum, and lessens fatigue. Thus, the company can get faster in its digital transformation journey.

Technology-first Approach

Yes, digital transformation includes the digitization of traditional processes. But it does mean to only focus and start on that part.

And this is where some companies fail to realize. They started buying big and expensive techs. Versus knowing first what needs to change to give a better customer experience.

So, companies need to focus on a sprint for adding a smaller tech-enabled project. One that can help them give better customer experience.

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