Every click, swipe, and digital interaction contributes to business outcomes in the modern age.
Most of us do digital work to create a valuable customer experience (which may also be entirely digital) and track digital metrics to show business growth or achievement of business goals — and even the goals and growth may be primarily or entirely digital!
As businesses adjust to the realities of a digital environment, many are undertaking digital transformation programs. But just how well is the digital transformation process going?
It’s not great.
According to recent surveys by Gartner, as many as 60% of companies have failed to reach scale for their digital initiatives.
The truth is the digital transformation process is difficult. But many of the challenges businesses face in their digital transformation efforts can be overcome with proper planning and strategy.
Why is digital transformation difficult?
Successful digital transformation isn’t a small tweak to the status quo. It’s a wide-ranging process that should fundamentally shift the way a business operates and delivers value.
Many organizations have difficulty envisioning and executing a digital transformation. This might stem from multiple overlapping factors, including:
Size of business
Process and market maturity of business
Company culture
The industry the business operates in
The types of products, services, and customers involved
Current state of digital readiness or adaptability
What’s more, digital transformation doesn’t look the same for every organization. Your local window sales and installation company needs to digitally transform. So do consulting and architectural engineering firms, and so should the enterprise tech companies whose software and services you use. But the processes, scope, and outcomes for each of these probably look quite different.
What are the most common digital transformation challenges?
Every digital transformation is unique. But most of the time, the hangups and roadblocks are similar.
By the end of this section, you’ll be ready to identify which of the eight common digital transformation challenges you’re facing, plus you’ll have a clearer sense of how to overcome those obstacles.
Legacy systems integration
First, let’s discuss what to do with legacy systems. These existing systems (which could be platforms, programming languages, software tools, or even industry-specific hardware like a commercial laminator or assembly robot) can’t or won’t be upgraded as part of the digital transformation — but your business still relies on them.
The obvious answer is upgrading those legacy systems to new technologies, but if that worked in your situation, you wouldn’t worry about integrating legacy systems.
So let’s assume that question has already been discussed, and the legacy system isn’t going anywhere. Now the question becomes, “What do we do with it?”
These legacy systems must be able to communicate with your new digital technologies and ecosystem and vice versa.
Say you have an internally developed piece of software that runs some very specific, crucial function. It’s written in an older coding language that isn’t commonly supported today, but an off-the-shelf replacement is not available.
Or picture a specialized piece of equipment powered by custom software that only runs on Windows 7. The equipment manufacturer was acquired a decade ago, and newer models are either cost-prohibitive or don’t provide the functionality you need.
Either way, you may need to factor those legacy systems into your digital transformation. That might mean selecting only platforms and tools that can handle that old programming language or will still interface with a (very) old OS. It might mean building custom workarounds or working with partners who can build those connections for you.
The most important thing is this: before diving into a digital transformation, you must consider what you’ll do with any crucial legacy systems. Don’t move forward without clear answers to this question.
Data privacy and security
Digital transformation also has implications for data privacy and cybersecurity because your business holds all sorts of sensitive data. Customers trust you to keep their data secure, and internal information (like proprietary data or trade secrets) needs to stay proprietary and secret.
Most digital transformations involve some element of data shift, whether from on-premises to the cloud, public to private cloud, or any of the above back to the edge.
Anytime an organization changes the way it handles data or where it stores data, there’s the potential for vulnerabilities and exploits.
For example, imagine you’re early in your digital transformation and about to shift all your storage from an on-premises network to the cloud. A simple misconfiguration or stolen set of credentials could be all it takes for the bad guys to gain access to that data.
Let’s face it: we are who we are, and most of us don’t love change. In fact, some of you reading this article shuddered a bit at our definition of digital transformation (“a wide-ranging process that should fundamentally shift the way a business operates and delivers value”).
We understand — we can relate. This big change sounds kind of ominous, doesn’t it?
So bear in mind that it isn’t just the CIO or the board or senior stakeholders you need to convince of the value of your digital transformation initiatives. You need to change the hearts and minds of individual employees.
Fear of change is one thing, but resistance to change is another. And if that resistance seems baked into the organizational culture? Then anything that sounds remotely like “transformation” is going to be a tough sell.
The answer here isn’t an easy one. It combines change management (more on that in the next section), and lots and lots of people work. Culture is people, so changing a culture fundamentally means helping people change.
One strategy is to focus aggressively on the end state — specifically on the benefits that will come out of the transformation. Highlight these on every level, showing employees how the transformation will:
Help them individually
Improve outcomes for their department
Help the company grow and thrive
You can also point out how a thriving company tends to improve things for individual employees, leading to a sort of cyclical improvement.
Lack of change management strategy
Digital transformation is change incarnate — it means change in all kinds of ways and at every level. One reason digital transformations fail to deliver the expected results is that they lack proper change management.
“Approximately 50 percent of all organizational change initiatives are unsuccessful, highlighting why knowing how to plan for, coordinate, and carry out change is a valuable skill for managers and business leaders alike.”
Miller goes on to identify five critical change management steps:
Prepare the organization for change
Craft a vision and plan for change
Implement the changes
Embed changes within company culture and practices
Review progress and analyze results
Creating a roadmap of what will change and when and how each change will be managed is a great place to start your digital transformation journey.
There’s much more to say about change management, but we want to keep this post focused on digital transformation challenges. For further guidance on change management, consider an article Harvard University’s Professional and Executive Development group: 7 reasons why change management strategies fail and how to avoid them
Adoption of new tools and processes
As a part of your digital transformation, you will almost certainly introduce new tools and new processes.
New software tools improve efficiency and empower team members. They are the reason that your business doesn’t operate the same way today as it did in 1994.
But remember, digital transformation isn’t just about replacing old things with new things. It’s reimagining the way we do things, including the processes we use to get work done.
Perhaps this is why organizations struggle with adoption during digital transformation. Learning a new tool can be challenging for some of the workforce. Pair that new tool with a completely different workflow outside the use of that new tool, and it can be a lot to deal with.
The solution here is twofold. First, where possible, stagger the implementation of new tools and processes. Get team members extremely comfortable with the new way of doing tasks in their new software, and then change the processes surrounding those tasks.
Second, reevaluate the way you teach new tools. It can be tempting to assume everyone is as tech-savvy as you are or to make age-related assumptions (“all the younger employees definitely know how to use this stuff”). Instead, commit to methodically teaching all employees how to use new tools as they’re introduced.
Many organizations have developed organizational silos, business units that act like mini-kingdoms in a way. They do things their own way and share information only when it suits them.
The problems here are many, but let’s just take one: you can’t effectively digitally transform just one silo at a time. If you “fundamentally shift the way of working” in silo #1 while silo #2 intends to keep business as usual, well, it just doesn’t work.
Typically, a digital transformation will include breaking down that silo-ed organizational structure and building something better.
If you’re a consultant or a professional services firm helping clients digitally transform, several consulting strategies, including process mapping and data analytics can help you help your clients do this well.
Budget constraints
There’s no way around this one: digital transformation is expensive.
Let’s put it this way: you can’t “fundamentally change” anything without fundamentally spending a lot of money to do so.
An organization may go into a digital transformation with a specific budget established, only to find that certain parts of that transformation will cost more than expected. This is a sticky issue because you usually can’t just cut out part of the transformation to save money and still come out OK in the end. But if you’re out of money, you’re out of money.
The solution here is to plan for the unexpected and build some buffer funds into the budget.
Addressing skills gaps
One reason people may resist digital transformation is the fear of becoming obsolete. What if their job involves essentially performing a series of repetitive tasks that digital transformation can render irrelevant through automation?
The reality is that digital transformation will make your company more efficient and likely will eliminate some tasks and even roles. But you’ll also need to pick up skills you may not need today.
If there’s a gap between the skills your workforce has today and the ones you’ll need post-transformation, start working on that gap now. Upskilling existing staff can have massive benefits since they already know the company's products and culture. It also tends to work out well for employees since those upskilled roles often come with a heftier salary.
What is the potential ROI of digital transformation?
This one’s a bit subjective and hard to answer universally. Probably the best answer is an analogy.
If your business had existed at the turn of the 20th century, how would you have measured the return on investment of electrifying it?
Done right, it would’ve fundamentally transformed the way your business operated. (Done wrong, it might’ve burned down the building — literally.)
So, what is the ROI of completely redesigning your business in the 21st century to gain an edge and/or remain competitive? It might not be quite the same as introducing electricity or the internet, but it isn’t far away.
Think also about the consequences of not transforming: lost income, lost customers, lost time, and lost talent (as your best and brightest leave to join a company that did transform).
Successfully implement new systems and processes for your business’s digital transformation with Teamwork.com
Think about the components of your digital transformation strategy at a tactical level. You’re changing processes and implementing new digital solutions that leverage digital skills to find better ways to meet customer needs.
All of that sounds a whole lot like projects that need managing, if you ask us!
As you digitally transform, you’ll need to allocate resources, create project timelines, provide real-time feedback, deal with pushback, and much more — all activities common in project management.
As you look for solutions to manage the influx of transformation-related projects, consider Teamwork.com. Their modern cloud-based project management software lets you plan, visualize, track, and manage projects of all shapes and sizes.
The only all-in-one platform for client work
Trusted by 20,000 businesses and 6,000 agencies, Teamwork.com lets you easily manage, track, and customize multiple complex projects. Get started with a free 30-day trial.
Ben is a Senior Content Marketing Specialist at Teamwork.com. Having held content roles at agencies and SaaS companies for the past 8 years, Ben loves writing about the latest tech trends and work hacks in the agency space.
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