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Why digital transformations fail - and why yours doesn't have to

Digital transformation is the process of overhauling existing processes with digital technologies and using that technology to create new ones. The aim is to modernise business processes, company culture, and the customer experience to help meet ever-changing market requirements.

Digital transformation is crucial for businesses to stay afloat in our hyper-digital landscape. Customers are now looking for seamless digital experiences, and they’re not afraid to look elsewhere when a company fails to meet their expectations. That’s just part of the reason why digital transformation is the number one priority for CIOs, alongside improving remote work capabilities.

As important as they are, digital transformations are not simple. In fact, 7 out of 10 digital transformations fail. Why? That’s what we’re going to look at today.

5 common reasons why digital transformations fail

Digital transformations happen at an organisational level, which unfortunately leaves a lot of room for failure. It’s challenging to pull off, but the value on offer is too much to leave to chance.

Before we look at ways to ensure your digital transformation succeeds, let’s look at some common reasons why digital transformations fail.

Poor communication

Even when leaders are fully aligned to the goals of your digital transformation, it can still fail if they fail to align the rest of the business.

A common misconception is that management can simply tell their employees about the transformation, and that’s enough. Yet, it’s the employees who will feel the most change. And employees often resist changes.

Businesses that fail to collaborate with their employees will fail to align them with the transformation goals and, ultimately, fail in their transformation efforts.

Lack of clearly defined goals

Digital transformation requires everyone to be on the same page across the entire organisation. Simply stating the business is undergoing a digital transformation and increasing the IT budget doesn’t help.

Despite this, businesses often fail to set clear, quantifiable goals. Setting ambiguous goals tends to result in different departments working towards their own ideas of what a digital transformation is.

No way to measure success

Digital transformation can take a long time. Without the ability to track your progress, your organisation can run out of steam long before they reach the finish line.

There needs to be some way to measure success so businesses can clearly identify when they have achieved their digital transformation. Goals need distinct metrics that can be tracked throughout the transformation process.

Plans built around technology

While it may seem logical to invest in new technology first and build transformation plans around it, it can actually detract from your efforts.

The problem with a tech-first approach to digital transformation is that everything you look at will feel new and exciting. You’ll likely end up investing in something that offers little to no value to the business. Of course, the business has already paid for it, so plans are created around technology that doesn’t truly help you meet your goals.

Plans built around technology often use a Build approach rather than Buy. Limio has often been called in to deliver our productised Subscription Commerce capabilities after a Build approach has failed.

Customer experience is ignored

Alongside your employees, your customers are most likely to feel the effects of an organisation-wide change. As the company switches to digital processes, how customers interact with you and your services will change. If you fail to address customer needs and concerns during your transformation, they’ll happily find a company that does.

How to make your digital transformation a success

Now that you know what not to do, it’s time to look at what you should do to ensure your digital transformation is successful.

Lay out clear transformation goals

Digital transformation can only succeed when plans are clearly defined and can be measured.

Why are you looking to transform the business? What do you hope to achieve? How will you measure progress? These questions need to be answered before you start planning your digital transformation. They need to both be aspirational - to inspire employees and justify the effort - but practical - to ensure people can believe in the change.

Get leadership buy-in

As digital transformation is an organisation-wide change, you need to ensure that every single organisation member is on board. This means convincing leaders from the CEO down to middle management to actively support the transformation. Leadership is unlikely to succeed if it isn’t aligned with the transformation goals. Similarly, transformation are unlikely to be succcessful if the C-suite isn't involved throughout.

Stay agile

As with any overhaul, your digital transformation will evolve as business and market needs change. For a rigid business, these shifts could completely derail digital transformation efforts.

By staying agile and adaptable, businesses can go with the flow while still working towards the transformation goals. This will enable the ability to pivot quickly in a way that adds value to the transformation and the business.

Monitor your progress

As we mentioned earlier, digital transformations take time. You need to be able to track your progress throughout the transformation to avoid straying from the path.

By using metrics, targets, and data to keep track of your progress, you can ensure that transformation efforts don’t fizzle out or get off track. This should also include regular updates to keep everyone updated.

Gear your tech stack towards your goals, not the other way around!

There is a giant range of technology available to businesses, all of which promise to improve your processes. The problem is, every business works differently. What works for one company may not work for yours. So, while many believe digital transformation is about building plans around new technology, your goals define the technology you should choose.

Start your digital transformation by identifying your or your customers' needs and which processes can be improved by technology. Once your goals are clearly defined, you can better understand what you need from any new technology you invest in.  Only then should you start looking at technology that will help you achieve them. You want to improve your time-to-market for your subscription business? Then talk to Limio! You want to automate your business processes that are unique to your company? Then invest in your development capabilities.

For example, for Limio customer the Economist, the driving force was a new customer experience. See this extract from their Annual Report 2021:

Looking for help with your digital transformation? Limio can help

As a startup in London, Limio knows how important digital transformation is for businesses that need to get an edge on the competition. Our products accelerate the digital transformations for subscription businesses, such as the Economist, GEDI Digital and Which?, so they can reach their true potential. To see how we can do the same for your business, get in touch with us today!

 

 

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