Everyone has digital transformation on their radar, but its meaning has been lost in the midst of the many different contexts in which it's used. Digital transformation originally meant an end-to-end change in the way in which an organization is serving its customers. Digital transformation should be broad in scope. It requires a change in the vision held by the organization as well as a good deal of culture change.
Because of its breadth and the number of actions required to achieve it, digital transformation isn't an easy process. According to Gartner, the transformation journey often costs twice as much as expected and takes twice as long. What aspects are companies overlooking that cause them to misjudge the required resources, and how can they be made more visible so that organizations can better anticipate the requirements?
Common Digital Transformation Pitfalls
One major pitfall is the lack of a broad vision for the transformation. In many cases, the initiative is only addressing a part of the end-to-end process. Companies may focus on just a single organizational process or a narrow slice of the customer experience or journey. When only a part of the customer journey is addressed, transformations tend not to be as successful as hoped for. That’s not to say companies should do everything at once. Evolution can be incremental. But you will need a roadmap that encompasses all of the proposed changes to help set priorities and direct resources to the efforts that will have the greatest impact.
Another pitfall is to focus solely on external processes. If the internal processes used to support external actions are not well designed, workers must engage in acts of heroics to make the customer experience go smoothly. These include manual intervention to compensate for not having the right metadata, for example. However, this approach is not sustainable.
Transformation depends on being able to capture and move data through critical enterprise processes. Organizations are trying to speed this up, by removing and replacing manual processes with a more streamlined mechanism to produce value. What many companies come to realize is they can’t automate a mess, or automate processes they don’t understand. Looking at enterprise processes from a fresh perspective can be a good catalyst to identify where efficiencies can be gained. Companies gain significant insights when they review processes and systems that have grown over time, sometimes in a sprawling way.
The technology stack in many organizations has become overly complex because of legacy systems that have evolved over time. It is hard to integrate new systems or pieces into a brittle environment. The resulting struggle of whether to start with a clean slate or update the present systems in a more coherent way follows. But in either case, technology should not be viewed as the answer. The transformation needs to be based on human judgment at every level. Software tools will not solve process issues or compensate for flawed data.
A final challenge to overcome is data quality and governance. If the data does not have proper ownership and does not get managed, it will not support the intended goals. Authors Lee Vinsel and Andrew L. Russell make this point in their great book, "The Innovation Delusion: How Our Obsession with the New Has Disrupted the Work That Matters Most." So often, the value of routine maintenance is overlooked in favor of innovation. Vinsel and Russell do not deny the contributions of innovation, but they do advocate a rebalancing of priorities.
Maintenance is often sidelined because it's difficult to directly connect data management to increased revenue. Improved metadata, for example, does not produce a visible spike in performance in the same way that a new ad campaign can. However, there is a digital chain of custody that leads from data to success: we can measure data quality, employ best practices that support a process outcome, and then connect that process to a business objective such as reducing the response time to provide a service to a customer. This in turn increases customer satisfaction. It is not too big a leap to infer a connection from customer satisfaction to improved customer retention and subsequent greater revenues.
Given the pervasive nature of a true digital transformation, organizations should be prepared to also manage a substantial culture change. Some jobs will disappear and others will be carried out differently. As with any enterprise change, getting buy-in from stakeholders and maintaining clear communication are essential ingredients for success.
Related Article: 5 Things Learned From 5 Years of Digital Transformation
Is Your Digital Transformation Vision Ready?
Digital transformations require a broad vision, prioritization of objectives, improvement in processes, and good quality data. Organizations need a clear understanding of the technology tools that are available in their enterprise, and an assessment as to whether those tools will support their mission. Finally, they need to make a commitment to not just launch the new system but to consistently maintain it, in order to ensure stability and the intended functionality as time goes on.