Digital transformations: Are we getting them right?
I am sure all of us have heard about organizations carrying out digital transformation, how it’s going to change how the business is done or how it’s going to drive revenues up or costs down. And a lot of times, they go nowhere or end up in a situation like this where it wasn’t cost-effective.
According to a study conducted by Everest Group, 73% of enterprises failed to provide any business value whatsoever from their “digital transformation” efforts. That’s a massive number. There’s more, 78% of such initiatives failed to meet their business objectives. At the risk of being ‘Captain Obvious’, it means only 22% of them could achieve their desired business objectives. It makes one wonder, why are the failure rates so massive. Is digital transformation just a buzz word or is it execution where organizations fail. Well, like for most things in the world, the answer is, “it depends”. Let’s delve deeper into this.
But before we get deeper into this, let’s understand what “digital transformation’ exactly means. I, of course, googled for a textbook definition and the one I liked the most goes like this: “Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.”, courtesy: Salesforce. To explain this better, let me try some examples. Digital transformation could be something as simple as ‘creating a website to collect information online instead of physical forms’ to as complex as ‘creating a data warehouse with ETL processes that are pumping data into it periodically so that the data can be further used for powering ML models to solve certain business problems’. You see it has a good range of complexity attached to it.
This is the reason why we have seen organizations trying to build new business models or transform existing ones using a long-drawn planning process. They come up with a vision, build a business case around it and then work on this long-drawn plan. This approach comes with a very high risk of failure. So why do organizations fail with this approach? Does it mean enterprises shouldn’t ‘plan’ digital transformations? And more importantly, what is the success mantra then? Well, let us analyse it further.
Firstly, some organizations lose focus of the business problem at hand and start focusing more on tech. How many times have we seen companies run after buzzwords in the name of digital transformation? Blockchain was a very hot buzzword few years back and we slowly realized that while it has its own benefits, the practical applications may be a bit restricted.
The point here is that technology is always an enabler, either making an existing business process easier or transforming it so that the transformation objective is achieved; End of the day, solving a business problem. A lot of digital transformation initiatives become this organization wide transformation, focusing more on the technology and taking the eye off from what needs to be solved.
This takes me to the second major reason due to which transformation initiatives fail — buy-in from the relevant stakeholders.
This means that such initiatives shouldn’t just be a top-down push but the stakeholders (department heads, employees etc.) need to be taken into confidence as they know the processes and accompanying challenges better and can contribute to the transformation of the processes.
The third point, which is a logical extension of the second point above : Acceptance(in some cases culture as well) or lack thereof. The new processes or technology should have acceptance from users (could be employees or customers) otherwise it’s very easy for them to fallback to older ways of doing things. While one has to ensure that the actual business problem is solved (takes us back to the 1st point), it’s imperative that it’s done in an intuitive manner. And this is where data driven design has a huge role to play. A solution deeply rooted in the right design ensures that it’s adapted easily by the users.
All of this being said, it doesn’t mean that individual departments go around taking up such transformations in silos. It always has to be connected to the broader picture of a digitally enabled organization. I suppose a middle path would be initiatives driven at appropriate lower levels with broader vision coming from the top.
At the same time, sometimes it needs to be driven from the top, I am talking about cases of “latent needs” where people may not realize that they need technology or are not aware of how tech can transform the processes for them (remember iPod, Macbook etc.). And again, design considerations become all the more important in these cases coupled with an intricate knowledge of stakeholders. I’ll probably talk about these in detail in another article some other day.
Credits:
Images from: https://marketoonist.com/ & https://dilbert.com/
