The Top 6 Digital Transformation Challenges Businesses Face
Digital transformation is critical for business, but it isn't always successful. Learn about the top 6 digital transformation challenges.
Digital transformation is taking over the business world. By 2025, the global digital transformation market size is expected to grow at a CAGR of 16.5%.
With the adaptation of digital tools, businesses are undergoing rapid change and achieving more success than ever.
But implementing digital methods into the workplace isn’t easy. Why is rapid transformation difficult? And what are the barriers to rapid digital transformation?
In the following guide, we’ll explain six reasons why digital transformation fails. We’ll discuss key digital transformation failure statistics that will give you insight.
Six reasons why digital transformation fails
1. Lack of a Strategy
To succeed with digital transformation initiatives executives need to create a clear strategy. Investments in digital transformation should aim to deliver clear targets.
Setting targets will help to create an ideal of what the technology will deliver. For instance, people may not be willing to accept the new way of doing things.
They may be more receptive once they have a clear understanding of what the new technology will accomplish.
Strategies also need to include external benchmarks that signify the process toward a goal. Even companies who succeed with starting their strategy may have may face digital transformation challenges later in the process. Benchmarks will help to identify what needs to be fixed along the way.
2. Lack of Commitment From Executives
No transformation will make it past the initial stages if the commitment of the CEO and leadership team does not exist. When company leaders show they are committed to change, they show their team that it is a change with their support. But when they don’t seem excited about digital transformation, why would their team be?
One of the most important digital transformation tips to remember is that it is essential to show commitment from top-level members of a company.
Only after this can they implement change successfully. They should explain why the change is valuable and what it could mean for the company.
Once the CEO and top members emphasize the importance of digital transformation, the rest of the company will be more inclined to follow.
After a vision is set, top-level members should engage daily with their goals. Digital transformation is a major step for a company – it can’t be accomplished successfully without complete dedication.
3. Poor Team Culture Mindset
That being said, the executives can’t be solely responsible for implementing digital transformation. The rest of the team needs to share the desire for change.
And many executives understand this. 71% of executives say the workforce is either very essential or essential to their digital transformation strategy.
But one of the reasons why digital transformation fails is the inability of top-level executives to get their team invited in the change.
This may partly be due to the structure of the organization. Those with legacy systems and an old-school mentality often will have a team that is more resistant to change.
Digital transformation is as much as cultural change as it is a technical one. Everyone must be on the same page and accepting of new technology. Team members will have to learn to embrace change.
4. Budget Constraints
Digital transformation is no small undertaking. It will require significant investments of time and money.
Many executives make the mistake of not investing sufficient funds or resources into their digital transformation strategies.
Unfortunately, this will result in project stalling. Worst case, it means shutting down a digital transformation initiative altogether.
For a successful digital transformation process, company leaders need to set aside adequate resources. They should be prepared for costs to exceed what they had planned for.
And what do these costs look like? Expect them to be high. Research from McKinsey says that in IT alone, companies may have to double their current spending over five years.
While higher spending on digital transformation may initially result in lower profits, it will help companies stay competitive in the long run.
5. Lack of Technical Skills
Along with budget difficulties, companies also have trouble with rapid digital transformation because they don’t have employees with the skillsets to make the changes.
Statistics show that over 50% of organizations say they can’t accomplish their digital transformation goals. Why? Because they don’t have employees with the technical skills.
Without employees who can accomplish the company’s goals, digital transformation efforts will stagnate. To combat this, companies may outsource the work to professionals.
Digital transformation professionals will be able to mitigate challenges as they arise and help companies stay within their budgets.
6. Evolution of Employee & Customer Needs
Lastly, the continuous needs of customers and employees may make it difficult to succeed with a digital transformation strategy. The changing needs and expectations of both groups of people require a strategy that is dynamic and responsive.
In light of Covid-19, the entire workforce is shifting. Millions of employees have quit their job in the fall of 2021 and early 2022 in search of better opportunities.
Companies will need to adapt quickly to survive. But the recent high levels of turnover may make it difficult to adapt a digital transformation strategy in an organization that constantly has new faces coming in and out.
In addition, digital transformation aims to help the customer and increase revenue. But what does the customer want? A digital transformation won’t be effective if it doesn’t respond to customer pain points.
This answer is always changing as customer preferences continually evolve. A digital transformation strategy needs to leverage changes in consumer preferences.
Understanding Digital Transformation Failure Statistics
Becoming familiar with digital transformation failure statistics helps to point out not only why digital transformation is so important, but just how easy it can go wrong.
Digital transformation can make your company more successful than ever, but it can also cost you dearly. Working with professionals will help you minimize risks and receive more benefits.
Interested in learning more? Contact us for details.
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