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IMA Executive News & Views Blog

Why Digital Transformation Fails

by Stephani Alkhafaji

TADA is an IMA B2B Partner

For most companies, digital transformation feels difficult because it is difficult. Instituting a fundamental change in the way your business operates is a huge undertaking and one that requires a tremendous amount of effort, energy, and resources.

For digital savvy industries this seismic change is tough but for more traditional industries such as manufacturing, mining, and insurance, digital transformations are even more challenging. Pepper in company size and IT maturity as variables and you have additional layers of difficulty for large-scale enterprises and small to mid-size organizations.

The goal of these transformation efforts is to digitize a company’s operating model. But because of this, it’s particularly significant to note that 95% of companies fail because of internal data barriers, rising IT costs, lengthy implementation cycles, or internal sabotage.

Internal data barriers

Traditional thought suggests that companies must first look inward to clean and harmonize their data. However, this process can hugely hinder quick progress. Rather than working to create a perfect data set, what if companies could leverage a system that highlights previously unrecognized data gaps? By highlighting these gaps, users are able to quickly identify which are pertinent to solving immediate business needs and facilitating overall company transformation. These data gaps may look like missing pieces of critical information or missing links between organizational silos. Regardless of what the gap is, end-to-end visibility across the entire ecosystem of the business will help shine a light on areas for improvement. This is one of Tada’s biggest value drivers in that the platform helps customers see the missing data links they previously weren’t aware of.

Exorbitant costs

If you are one of the lucky few organizations to make it past the above-mentioned data barriers, you’ll soon be hit with exorbitant costs. According to the Internal Data Corporations Worldwide Semiannual Digital Transformation Spending Guide, spending for digital transformation initiatives is expected to reach more than $2.1 trillion by the end of 2019. Companies are existing in a time when it has never been more imperative for every strand of an operation to deliver more bang for its buck. As a result, only solutions that allow organizations to experiment without having to invest heavily up front will prove valuable.

Speed of implementation

Once companies have made it through internal data barriers and have the necessary funding to support a massive IT overhaul, they begin their race against the clock. A business must quickly adapt to rapid changes in the market in order to stay competitive. Organizations that cannot quickly adapt to updated technological demands, will find themselves left behind by competition. Most companies, however, assume a traditional approach to digital transformation that requires months (if not years) of work. By the time companies are done creating data warehouses and implementing new IT infrastructure, the window of opportunity is gone, and their implementations are obsolete.

Internal sabotage

Despite internal data barriers, exorbitant costs, and the lengthy timeframe it can take to implement meaningful digital change, organizations may still fall victim to their efforts being sabotaged. The need for effective and thoughtful change management cannot be understated when it comes to implementing digital transformation. If an employee’s duties are rooted in legacy system expertise, they are likely to feel threatened by such transformation. Digital efforts that threaten the relevance of your employees are destined to be sabotaged. By definition, digital transformation breaks down organizational silos and as a result, flattens the organizational structure. The more digital an enterprise becomes, the few middle managers it needs to function. This means that digital transformation will only be successful when it keeps the relevance of the organization’s employees in mind. Whether that is reallocating employees to more meaningful tasks or re-organizing the structure of the business to make use of internal talent, thoughtful consideration must be given to this type of organizational change.

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