Tuesday, May 24, 2022

The Primary Reasons Digital Transformation Efforts Fail

A recent report by IDG showcases that while 90% of digital transformation efforts have accelerated over the last 18 months, 89% of IT leaders said these efforts are constrained by existing infrastructure (poor user experience), operations (a leader’s constant input), and culture (people don’t like change).  

Let’s talk about digital transformation in the context of IDG’s report:  

Pandemic and digital transformation

It shouldn’t come as a surprise that the pandemic has driven a massive acceleration toward digital technology that can, and is, being used to reduce vulnerable employee load and increase remote employee capabilities. With 90% of respondents showcasing this acceleration, I wonder more how the 10% who didn’t accelerate will survive in the post-pandemic world. Companies optimizing machine learning (ML)/artificial intelligence (AI) and the Internet of Things (IoT) were only 48%, suggesting most respondents aren’t acting quickly enough. And in a few short years, as often happens when you are having an industrial revolution, they will likely fail or become uncompetitive. Digital transformation, when done right, can be a massive force multiplier.

However, on the negative side, the barriers to adoption are significant, suggesting many attempting to do digital transformation poorly may be in worse shape than companies that aren’t trying to do it at all.  One troubling statistic is that only 20% of respondents are implementing platform teams in cooperating with DevSecOps/Agile teams. This suggests that 80% of existing efforts will either fail outright or fail to meet expectations.  

As with all major transformations, this report also showcases a significant problem with the skills/knowledge gap and poor data analysis: 44% of respondents highlighted this skills gap as a significant problem; and 39% reported a lack of infrastructure optimization and inadequate data analysis. Together, this suggests that around half of the digital transformation projects have been poorly planned and not strategically executed. Adverse impacts will likely range from timeline and budget failures to an inability to meet program objectives, resulting in the perceived failure of the effort.

Looking across the stats, it appears that speed (90% accelerating) took precedence over quality, with around half of the companies reporting significant failures in skills and cross-company coordination. As with a race where you accelerate before you know where you are going, executing a digital acceleration effort without a solid plan that includes education and collaboration will typically cause the company to go in the wrong direction more quickly.  

Given that around half the companies appear to be going in the wrong direction at an accelerated pace, there may be substantial blow back for failed digital acceleration efforts across the industry shortly.

Wrapping up: Trouble in paradise

This report, unlike others I’ve seen in the past, doesn’t suggest that digital acceleration efforts are pointless. They do clearly have value. But that value can’t be achieved if speed is prioritized over quality, which seems to be the problem with around half of the companies sampled. We need to make sure any major company transformation is properly founded with adequate training. Of course, an effort to both match the solution with the company and existing support network and assure the employees are well trained for the effort and motivated to collaborate to remove conflicts and assure dependencies should be part of the program, as well.  

The IDG report also showcases that there are a significant number of companies not only moving quickly, but also moving in the right direction with the right foundation. We need to use these companies as examples because the ones that are speeding up before they are ready are far more likely to end badly and shouldn’t be used as examples of good project management.  

In the end, digital transformation will be critical to the success of most companies, but only if they lay a proper foundation and execute quickly after the best direction has been properly identified.  

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