Organizations that adopt digital-first systems across operations, sales, marketing, and more can realize significant cost savings — by reducing staffing requirements, leveraging data and business intelligence tools, and even speeding time to market. However, the fact is that 70% of complex, large-scale digital transformation projects fail.
Why? Lack of employee buy-in, insufficient management understanding of what they are getting into, IT systems falling short, enterprise resource planning vendors over-promising and failing to deliver, scope creep, and the list goes on. Businesses worldwide are expected to spend nearly $2.8 trillion annually on digital transformation by 2025, so these failures represent a significant amount of waste piling up on corporate balance sheets.
This reality leads to what I call a kind of “tech debt”. Although typically used to describe outdated technology holding a company back, this type of technology debt is more about the fear that can build up within a company after failed technology projects. This form of tech debt can make it difficult for management to invest in the right solutions to move the company forward next time.
take transformation seriously
Too often, digital transformation projects fail not because of underlying structural issues, but simply because the organization approached the task with unrealistic expectations in terms of time, budget, and human resources.
The entire organization needs to understand the magnitude of the changes that will come with it, not just in implementation, but in how much they transform the business. Every functional area of a company uses technology in some way. If misused or incompletely used by one or more lines of business, the organization may not be able to take full advantage of the technology. Getting this fact across during implementation is critical – the organization needs to understand how much is at stake beyond cost in order to get it right.
These projects also require a lot of staff time. Mid-market vendors can fall short when it comes to project management, change management, and project execution. As a result, the business customer who buys the solution often has to allocate resources for implementation. That can mean that you have to devote up to 60% of the working hours of your best and brightest to implementation.
Yes, you must create this capacity. Yes, you need to top up existing employee responsibilities. Yes, you must create a thoughtful plan for executing the project with the expectation that schedules and budgets can and will change—as often happens with large technology projects.
Other questions to consider are: What will our weekly cadence be? How do we track our progress? How will we address any issues that arise? Many organizations aren’t used to managing projects of this size or complexity, so it’s important to structure the endeavor in a way that makes sense for your team and skill set.
A roadmap to success
The fact is that every digital transformation is different for every organization. These projects can vary greatly depending on the needs, people and systems involved. Success also depends on several different areas of expertise inside and outside the organization.
The team can set up a perfectly effective project management and organizational change structure only to fail in execution due to flawed processes. Or the data analysis is well configured, but the collected data is full of errors. Or, worst of all, the team fails to align the rest of the organization to use the new systems, causing the entire project to grind to a halt.
For this reason, successful digital transformations must function like a three-legged stool: organizational change management to understand the project’s impact on the organization, a project management plan to provide structure and ensure alignment of goals for the new technology initiative, and an execution team that project into reality. If all three don’t function effectively, large-scale technology implementations can collapse.
Few experiences can be a better motivation for success than a previous, failed digital transformation project. Knowing that failure is not an option is a powerful reminder to learn from past mistakes. That way, the company’s chances of success in the next technological overhaul are all the better.
Alex Nekritz is Senior Manager in Technology Consulting at Plante Moran.