5 reasons why digital transformation projects fail

5 reasons why digital transformation projects fail

Technology is always evolving and this means most businesses are undergoing some form of digital transformation right now. However, statistics from Deloitte show that an astonishing 70% of projects fail. This digital transformation failure rate is naturally a concern for those considering making their own changes.

Transformation requires a significant investment of time, money and resources. As such, few can afford to see their efforts fall flat. But understanding how many digital transformations fail is the key to achieving success yourself.

We’re going to take you through the 5 most common reasons digital transformation projects fail, so you can be sure to avoid them. But first, let’s clarify what digital transformation means.

What is digital transformation?

Digital transformation is the incorporation of digital technologies into any and all areas of an organization. This can affect everything from business processes to the products that you sell.

The benefits of digital transformation are numerous, including cost saving, greater efficiency, better customer service and increased revenue. So no matter what your priorities are, digital transformation can greatly benefit your business.

Image of blocks on a yellow background showing four arrows pointing one way and a red one pointing the other representing conflicting priorities in digital transformation.
Conflicting priorities can be a common reason why digital transformation projects fail.

5 common reasons why digital transformation projects fail`

When you consider how wide-ranging digital transformation can be, you realize how many complications and problems you may encounter with your own project. However, we’ve narrowed it down to the five main causes of digital transformation failure.

1. Lack of defined goals

When you see your competitors making big changes and upgrades, it can be tempting to jump on the bandwagon as quickly as possible. No one wants to be left behind, but adopting digital transformation measures without a clear idea of what you want to achieve is one of the biggest reasons for failure.

You need to know what success looks like for you beyond a shiny new website or futuristic-looking technologies. Is it improved efficiency? If so, in which areas? Perhaps you’d like to increase your profits, in which case, you need to set a clear target.

This will help you avoid the trap of all-flash and no substance. More importantly, it will give you direction, inform your budget and enable you to set an actionable timeline.

2. Being unprepared for setbacks

As with any project, digital transformation is not always smooth sailing, especially when making big changes. A good example of this would be upgrading from an old legacy system to a new model, with all the data and intricacies that this involves.

Even with the greatest care and planning, there is always the possibility things can go awry e.g. migrating to a new system may take longer than expected. So before you start any project you need to anticipate the potential setbacks. Think about how you will respond to them in advance, so you’re not caught by surprise.

Most importantly, in the event a project is delayed, you need to have a contingency plan in place. This will offset any potential financial impact and keep everything afloat until you can get back on track.

3. Conflicting priorities

The reality is that within any organization, priorities on digital transformation are not going to be uniformly the same. This starts with leadership, where you may find it challenging to get the support and funding necessary to implement your plan.

What’s more, priorities from department to department can be vastly different. The finance and accounting departments may want to improve internal efficiency and improve work processes. Whilst the marketing department is focused on increasing external website traffic.

Getting the organization behind a unified vision is the goal here, which is achievable through strong leadership, cohesive management and a clear step-by-step plan for change.

4. Poor technology adoption

When it comes to selecting new software or technologies to install, the choice can be overwhelming. This is a decision worth taking your time over. Do your research and carefully consider your needs, because one of the most expensive causes of digital transformation failure is choosing the wrong technology.

Businesses are often working with ancient legacy systems and decide to install new software to improve their processes, so you don’t want to find out that it’s incompatible, fragmented or not fitting with the needs of your business. Choosing incompatible technology could mean that the whole system breaks, which defeats the object entirely. You need to confirm with your technology partners early on that any new software you adopt will work effectively with your existing systems.

5. Poor internal engagement

People can be creatures of habit. Introducing new technologies into their working lives may not always be welcome, or you may encounter some change management resistance in getting your employees to engage as they should with new technologies.

This can be frustrating when a lot of money and resources have been invested in providing these upgrades. However, more often than not, the reason for this resistance is a lack of confidence in the new system or a fear of the unknown, making it easier to fall back into the old way of doing things.

The solution to this is training. A detailed and structured training plan is essential during digital transformation and will help get your workforce fully on board.

An image of an office with people in a meeting showing how poor engagement can contribute to failing digital transformation proects.
Poor internal engagement can contribute towards digital transformation projects failing.

Transformation game plan

Now we’ve covered the main reasons why digital transformation projects fail, let’s look at how you can ensure that yours is a success. Here are the key components of a successful transformation project.

  • A clear roadmap - Outline exactly what you want to achieve to give your project direction.
  • Steps to success - Define a detailed plan of how you intend to achieve your goals.
  • Secure the necessary buy-in - Whether it’s from your staff, company leaders or board.
  • Choose the right software - Such as a platform that wraps around your tech stack and legacy systems, one that your staff will be willing to use.
  • Have a rigorous testing process - Before rolling out the changes fully, test and test again so you can be confident it works smoothly.

About Enate

No matter what stage of your digital transformation journey you are at, Enate can help you to achieve your goals. Our end-to-end platform wraps around your tech stack, can integrate with automation software for greater efficiency and enables you to track and manage all work, in one place.

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