6 Digital Transformation Challenges Enterprises Need To Overcome
Digital transformation strategies have so many moving parts. And as a moving target, it's pretty difficult to pin down, which makes it unsurprising how much attention the process actually gets.
In a piece in the Harvard Business Review last year on why so many digital transformation projects fail, Thomas H. Davenport and George Westerman defined digital transformation as follows, "Digital transformation is an ongoing process of changing the way you do business. It requires foundational investments in skills, projects, infrastructure, and often, in cleaning up IT systems. It requires mixing people, machines and business processes, with all of the messiness that entails.”
Identifying Digital Transformation Problems
Herein lies the problem. There are so many technologies, so many processes, so many departments and people to pull into the process that somewhere along the line it's all going to break down. Despite this, Eric Hanson, VP of market intelligence at Fuze, said that transformation is a challenge that IT leaders want to take on not only because of its wide-ranging tech benefits, but also because of the impact it could have for their organizations as they usher in the next generation of workers.
However, throughout the integration of a new technology and its impact on a changing workforce, CIOs and other IT decision-makers are faced with the challenge of tech adoption, which goes beyond being solely an IT initiative. They are business transformation projects that require executive sponsorship and cross-functional execution from HR to facilities to marketing and IT. This is not a change that affects a small group of workers; it impacts everyone.
Adoption requires buy-in from every single employee, each with different work and learning preferences, and includes those working outside of the company’s physical space. In today’s increasingly distributed workforce, implementing this roll-out of digital technologies becomes an even larger challenge as leaders face offices with different corporate cultures and processes.
In order to minimize friction around change and accelerate business outcomes, organizations should identify ways to internally promote the benefits of change, set clear expectations, and provide access to ongoing training with options for self-service and live sessions. So what are the challenges? After contacting a number or organizations we were able to identify six major challenges.
Related Article: Change Management: The Key to Successful Digital Transformations
1. ‘Blind’ Challenge
Rob Maille, co-founder and head of strategy and customer experience at CommerceCX, argues that when people think about a digital transformation there are three common challenges enterprises must overcome, which impact the planning and cost of the transformation. The first is starting the digital transformation blindly, the second is adding unnecessary technology and the third is believing it is a one-and-done process.
However, starting blindly will kill the process from the start. The digital transformation process is often overlooked by an eager team looking to improve their business. Enterprises must remember to identify where the company currently is in the transformation journey and what is needed before starting. A good place to start is with customer journey maps and collecting user or customer data through observation, research and interviews. The journey maps are meant to help with design thinking and overall business strategy.
2. Short-Term View Challenge
For Michael Graham, CEO of Epilogue Systems, one of the most enduring challenges is ensuring that planning for digital transformation adoption goes beyond planning for the first three to five months. In these cases adoption becomes simply a project task, which threatens to undermine the years of work, millions of dollars invested and organizational disruption endured.
As they near the end of a digital transformation initiatives, many enterprises also make the mistake of not planning for project fatigue. Digital transformation projects involve so many people (internal and external) over such a long period of time that exhaustion — staff exhaustion, budget exhaustion, time exhaustion — is inevitable. Once key internal players reach exhaustion, and external players like systems integrators and project management consultants are gone, end users are left to live with the changes when a company reaches the go-live date. “Without the dedicated resources in place before go-live to ensure end users are properly equipped…adoption will be irrevocably hurt,” warns Graham.
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3. Culture Challenge
Shaping organizational culture is a crucial-and often undervalued-factor in enabling successful digital transformation, said Melissa Henley, director of customer experience at Laserfiche.
Changing culture will always be more difficult than changing technology, and that's why it's important to proactively address the changes needed to instill a digital culture. Digital transformation affects every area of the business and requires teams to coordinate and collaborate like never before. To successfully lead digital transformation, leaders must be intentional in building a digital culture, including changing legacy technology and structures that hinder transformation.
4. Aligning Business and IT Challenge
However, no project should begin until the goals of both IT and business have been aligned, said John Mullen, North America CEO at Capgemini. One of the biggest obstacles companies face is the lack of connectivity between business and technology — the two are now indistinguishable. Businesses need to understand that it’s no longer a question of if businesses are going to use technology to transform for their customers, but rather how and when and how quickly can they do it at scale.
Another issue that plagues businesses is the fear factor of the transformation process. Companies need leadership who will embrace the risk-taking required to transform their operations and adopt an ongoing culture of innovation. While companies are making progress on evolving their customer experience, they are struggling to transform their back-end operations. "It’s imperative that organizations gain alignment between IT and the business. It is no longer possible for the CIO and the IT organization to operate separately from other C-Suite leaders," he said.
In addition to alignment at the top, companies also need to include and engage their employees every step of the way in the transformation agenda. Companies will achieve digital leadership if they succeed in balancing the technology with retraining their workforce to realize new skills.
5. Technology Integration Challenge
Culturally, organizations have been built around certain technologies, with specific policies and procedures developed to support them, said Jeff Looman, vice president of engineering at FileShadow. The integration process for new technologies causes delays as employees face acceptance, training and getting accustomed to new data management techniques. Having multiple data silos may result in redundancy of work and confusion between disparate groups with regards to effective collaboration. Different approaches to data storage make cohesive blending laborious.
6. The Data Challenge
For MemSQL CEO Nikita Shamgunov, data is the principal challenge. The data economy has shifted into a “decision economy” where the business that makes the best insight-driven decisions faster than its peers will gain a competitive edge. There are two data challenges in digital transformation journeys:
- Infrastructure - No matter what the next digital initiative is — AI, multi-cloud, streaming analytics or other emerging technologies — having the right infrastructure built to scale these modern applications will be key to digital transformation success.
- Information Management and Security - As enterprises advance in their digital transformation journeys, data centralization will be key to ensuring that the enterprise’s digital foundation is scalable for its business without compromising data management simplicity and security.