Digital transformation touches many areas of an organization — from interactions with customers to the company's vision, operations and culture.

In a webinar last week hosted by St. Louis, Mo.-based Perficient, Michael Porter, Perficient’s principal strategic advisor, discussed five barriers to digital transformation with Forrester analyst Nigel Fenwick.

Perficient is a digital transformation consulting firm serving Global 2000 and enterprises in North America. The conversation was also tweeted at #PerficientDigital.

Kicking Off Digital Transformation

According to Perficient's research and conversations with clients, businesses can follow three steps to help facilitate their transition to digital:

  1. Understand your customers and the experiences they want.
  2. Determine your company’s strengths and weaknesses in achieving great customer experience. Focus on more than technology.
  3. Make a plan for the holistic approach to transformation. Remember that the transformation will be more of a marathon than a sprint.

“When you look at the five barriers to digital transformation, they all focus on those three areas,” Porter told CMSWire.

5 Barriers to Transformation

Barrier No. 1: Functional Silos Compete for Scarce Resources

Different teams compete for funding and resources in a company, especially in shared services groups like marketing and IT, Fenwick said.

The varying metrics on measuring employees results in competing behaviors. To overcome this barrier, Fenwick suggests using journey maps to set priorities and break down barriers in company silos. Assign staff to cross-functional CX teams rather than keep them competing for scarce resources.

Barrier No. 2: Customer Data Segregated Across Silos

The same customer data is often collected in each business unit in different ways, Fenwick said. According to a Forrester survey in 2015, 49 percent of companies have yet to implement a strategy to get to a single view.

To combat this segregation, Fenwick suggests looking outside-in rather than inside-out. “Look outside-in to create a complete view of customer that’s easy to digest,” he said.

Porter gave an example of Perficient’s client, a hospital in Southern California with data in a few locations: its Electronic Medical Records, patients’ post-discharge information and campaign management. And it had problems accessing all this data in different places. Perficient worked with the hospital to give its marketing team one roadmap, cutting down silos with one patient experience.

Barrier No. 3: Technical Budgets in Downward Spiral

When companies face pressures to cut costs in technical budgets, they often turn to using cloud or stretching their technical teams thin. Fenwick said 60 percent of executives believe the technology architecture is a critical gap.

According to Forrester, US firms will increase their business technology spending by 9.6 percent in 2016.

digital transformation

To overcome this barrier, prioritize business technology and focus those investments on continuously improving the customer experience, Fenwick suggests.

A distribution company Perficient worked with tried to be cost-conscious, but in order to move from a digital dinosaur to a digital master, they had to invest in business technology like a responsive website and a mobile counterpart. They were missing a holistic approach, Porter said.

“They become digital preys,” Fenwick said. “because they aren’t doing anything new.”

Barrier No. 4: Pushing Products, Not Outcomes

People buy because of emotions, so customer customer desires, Fenwick said. Customers now expect highly personalized services.

To target this problem, create customer groups that focus on desires of specific types of customers. Then create experiences that deliver these outcomes to the customer, rather than pushing your products and services on them.

The difference between digital prey and digital predators, is the focus on products and services versus the focus on experiences and desires. “Customer expectations will evolve, so get to those outcomes as they evolve,” Fenwick said.

Barrier No. 5: Gaps Between IT and the Business

Keeping a wall between the IT and business side can, for instance, result in problems scaling and maintaining customer-facing applications. Businesses lose agility and the ability to fully leverage their technology, Fenwick said.

Understand the difference between business partners and service providers. “Your business is not IT,” Fenwick said. The solution is to create a flexible, scalable portfolio to focus on business technology, and then put the right leadership in place, Fenwick suggested.