Why Most Digital Transformations Fail
It’s easy enough to begin a digital transformation project. It’s much harder to see it through to completion. Digital transformations fail in nearly seven-eighths of the companies that embark upon them.
Understanding the reasons why most digital transformations fail is essential in enabling your company to beat the odds and achieve complete digital transformation.
Digital Transformation Statistics
Digital transformation refers to the process of embracing new processes, tools and philosophies that let your business switch to a modern, digital operating model that gives them a much greater competitive edge in a software-driven marketplace.
Businesses in industries of all types face strong pressure to embark on digital transformation. That pressure emanates not just from competitors, who will edge your business out if you fail to keep up with the latest technological innovations, or customers, who demand better digital service. It also arises internally, from boards that insist on digital transformation as a means of improving efficiency. Forty-seven percent of CEOs report a mandate from their boards to achieve digital transformation. More than half of those who have begun digital transformation projects report that they have already improved profitability.
Yet the fact remains that a strong majority of digital transformations (84 percent, according to Forbes) fall short of achieving their intended goals. Although some digital transformation initiatives achieve limited success, more than half fail to meet any expectations.
Explaining Digital Transformation Failure
Why is digital transformation so challenging? It’s certainly not because there is a shortage of digital technologies, or because it is hard to recognize the value of digital innovation.
Digital transformation failures are instead the result of the following factors.
Concentrating on Technology at the Expense of People and Process
Clients often struggle when they overlook the importance of combining all three pillars of DevOps: people, process and technology. They concentrate on one (almost always technology) and forget the others and then fail.
This happens because it’s much harder to spot the gaps in people and process than in technology, which is why a technique like value stream mapping can be useful. This involves tracing a product from start to finish and determining where there are bottlenecks, what is causing them and how to remove them.
Even when spreading their attention across all three pillars, enterprises can get bogged down in looking at isolated issues, rather than looking at the overall picture and ensuring that the biggest gaps are plugged first, rather than the most obvious (these are not necessarily identical!).
Lack of Buy-In
It is usually easy to see how digital technology can add efficiency and agility to a business process.
However, recognizing the value of technology in a general sense is not the same as convincing stakeholders in your organization that the time and money required to adopt that technology is worth overhauling your existing process to do it. This can lead to a lack of buy-in that, in turn, prevents the organization from adopting a new technology in the first place, or undercuts its effective implementation once a transformation is attempted.
Take Docker containers, for example. Docker has many clear benefits over traditional virtual machines. Containers are more efficient, start faster and scale more easily. However, using Docker to rebuild a data centre built with VMware or KVM is no small feat. It takes time and money, and requires your admins to master a new technology. Managers, as well as admins themselves, might question whether a switch to containers is worth it.
The answer to the buy-in challenge is to ensure that you assess and communicate the value of a new technology or process in a quantifiable way. A 12-week proof-of-concept lighthouse project, for example, is a relatively inexpensive way to demonstrate the ROI of proper transformation. Select a particular application to move to the cloud, for example, and gather data on cost savings and performance increases to make a solid business case for scaling the new operating model across other parts of the business.
Although the decision to embrace digital transformation is usually made by decision-makers at the top of the organization, implementing a successful transformation requires the participation of everyone. You can’t impose digital transformation from the top down.
The reason why? Because you need the backing of those who will actually be implementing the transformation. Transformation cannot afford to be viewed as just another project kicked off by a managerial team that are not in touch with the reality of the situation on the ground. Having empathy for the teams is key. Understand that they are in a complex environment and are dealing with complex problems...and they still need to keep the lights on! Build that empathy and trust and then talk to them about introducing some (slow!) changes. Drastic changes should be avoided; DevOps transformation is a long journey where things need to change slowly, being validated along the way.
Lack of Focus on Business Goals
There is no one-size-fits-all approach to digital transformation. The technologies and processes that are right for one organization may be a poor fit for another.
Failing to recognize this fact is one common source of digital transformation failure. Executives hear buzzwords like “the cloud” or “containers” and assume that those technologies need to be a part of their digital transformation strategy.
In reality, digital transformation is not that simple. It’s not a series of boxes to tick off. Instead, digital transformation strategies should be aligned with the goals of your particular business, using metrics-based assessment to determine whether particular tools or processes can improve business value.
For example, you are better off in general running apps and storing data in a public cloud like AWS, where both are easier to manage, and startup costs are much lower. But if your infrastructure needs are truly expansive, or you already own a large amount of server hardware, it may be more cost-effective to adopt a private cloud strategy, or a hybrid cloud architecture. In this case, it would be a mistake to move everything to the public cloud just because that is what everyone else does when attempting digital transformation.
Failure to Understand DevOps
In the simplest, theoretical sense, DevOps is about helping developers and IT Ops work better together. But in practice, DevOps is much more complicated than this. It requires marshalling many different groups (not just developers and IT Ops but also QA, security, data scientists, and so on), and achieving seamless collaboration between them in the interests of faster and better software delivery. DevOps also often means embracing new tools that can help you achieve continuous delivery of software, although tools alone are not the ticket to continuous delivery.
A lack of understanding of the true nature and complexity of DevOps can lead some organizations to treat DevOps as just another “project” to implement. They believe that they can adopt a few new tools, or rewrite some job titles, and cross “DevOps project” off their list. In fact, achieving DevOps requires the development of a complex transformation strategy, which, like the rest of the digital transformation process, should be tailored to your business’s specific needs.
Thinking Digital Transformation Has Been Achieved
The main reason why many organizations fail to meet all of their goals during digital transformation is that they fall into the trap of thinking digital transformation can be fully achieved.
In reality, digital transformation is an ongoing journey. It’s not something that you ever completely fulfill. When you’re one innovation through digital transformation, there is another that you should start to pursue.
After all, it’s not as if digital technology itself stands still. The digital tools, processes and mindsets that serve you best today will be replaced by a newer generation in the future. For this reason, truly effective digital transformation strategies are ones that are designed never to end.