Digital transformations have been around for decades, and as the world becomes increasingly powered by technology and automation, they’ll only continue to become more necessary. While deciding to undergo a digital transformation is easy, successfully executing one is anything but. According to a study by Forbes, a shocking 84% of digital transformation projects fail. The problem lies not in the digital transformation strategy but in its approach and execution.
A successful transformation requires balance: focusing on the short term can limit your field of vision and restrict your agility; too much focus on the long term can make you overlook impacts on your current state. But by adopting a holistic, iterative approach and understanding that it’s not a singular technology project but a continuous journey, companies can better position themselves for a successful digital transformation and gain the competitive edge needed to pull ahead.
What Is Digital Transformation?
Before we go into why so many organizations fail in their digital transformation efforts, we need to understand what exactly a digital transformation is. On the surface, it’s leveraging digital tools to improve or holistically shift business capabilities. But much deeper than that, it’s committing to the journey of change. Digital transformations aren’t projects that span a few months and then “complete” — they’re a fundamental shift to a company’s core operations and culture: how teams communicate, what the customer experience looks like, and how organizations iterate to ensure the adoption of new experiences enabled by technology.
While technology is crucial in facilitating the change process, it can be easy to develop too narrow of a focus if you only address the digital enablement side of the endeavor. A digital transformation must consider its impact on the entire company, from the customers and front-line employees to management and stakeholders.
Why Organizations Fail at Digital Transformation
As the world becomes more dependent on technology by the day, it’s understandable why businesses that want to remain competitive are turning to digital transformation to streamline and improve their processes. According to the International Data Corporation (IDC), global spending on digital transformations is forecasted to reach an incredible $2.8 trillion by 2025 — more than double what companies spent in 2020 alone. Yet despite its obvious importance and industry-wide ubiquity, many businesses fail to make their transformations successful — why?
Digital Enablement Does Not Always Equal Digital Transformation
It may sound counterintuitive, but often the most effective (and successful) digital transformations are those where you don’t notice the tech has been introduced. Digital enablement should be a seamless transition from manual or outdated practices to an accessible, intuitive system that frees up the functions of your team. New technology should be tailored to your company’s specific needs and allow you the space to innovate by streamlining processes — not introduce ready-made solutions that exacerbate existing issues or create new problems of their own.
By taking the time to understand why processes need to change and how those changes will affect stakeholders, employees, and customers, you can improve current business models in tandem with upgrading your technology.
It’s an Ongoing Commitment, Not a Destination
Often, organizations favor short-term results and neglect to plan for scalability and flexibility as they grow into the future. A digital transformation should be viewed as a continuous journey in which your company is always engaging employees, evaluating results, and evolving to match pace with market changes and environmental impacts.
7 Steps to Digital Transformation Success
One of the most important aspects to remember is that a digital transformation for one organization will look completely different from another — and it should. Every company’s transformation journey will depend on its unique objectives, performance expectations, budget, and team. Taking a holistic approach to your company’s transformation will give you the flexibility to identify problem areas, understand your capabilities, and sustain the shift long after tech has been deployed.
Whether you’re implementing new technology to enable the functionality of a specific process or your digital transformation requires a significant overhaul of your organization that will shift your customer experience, these seven steps will be your north star. Use these tips as a guide while you embark on your transformation journey:
- Understand the drivers for change (internal and external): What’s the reason for wanting to undergo a digital transformation? Do ineffective tool sets bog down your employees? Have your operating expenses been steadily climbing over the past few years? Knowing all the factors driving your transformation will help you keep it on track.
- Identify all stakeholders that will be impacted: Stakeholders want to know exactly how digital enablement will affect their roles and duties. Setting clear expectations from the beginning and maintaining clear and consistent communication throughout the process will help ensure that you have a more aligned outcome and can keep this crucial group’s priorities top of mind.
- Identify the scope of change and impacts on the current state: One of the most important factors of a digital transformation is identifying the scope of change and how certain actions will immediately affect the current state of operations. Too narrow of a focus can hinder you from adopting practices that influence long-term success, and too broad can lead you away from focusing on critical near-term objectives to ensure business continuity while enacting change.
- Envision the future state and identify activities required: Imagine where you want your company to be six months from now, then a year, then five years from now. Your technology enablement efforts shouldn’t just be a bandage that addresses current issues; they should be able to help you scale and adapt as your needs change far into the future. If it can’t, is it the right solution for you?
- Prioritize features and create a roadmap: Companies that center their vision on a few key priorities are 1.7 times more likely to have a transformation that exceeds expectations. Defining how you measure success can help you visualize your path and develop a roadmap that will keep you on track while leaving flexibility to engage in new opportunities as they arise.
- Highlight key dependencies and roadblocks: What processes are mandatory for functionality — can they be improved with advanced technology? Pinpointing the processes your company depends on can help you predict potential roadblocks that may appear once you begin integrating new solutions. Once identified, develop mitigation strategies to ensure you have options when forging a path forward. Challenges such as competing priorities or not being able to execute the required activities in the right sequence can bog down or completely shut down a transformation if not carefully planned.
- Align capabilities required to execute strategy
A digital transformation is a multi-faceted process that requires lift from several different capabilities to execute effectively. From design thinking and process decomposition to change management, weaving a collaborative fabric is critical to driving success. At SEI, this is what we live for. Our unique model allows us to draw upon our collective resources and leverage capabilities in an agile manner. We apply our skills when and where they’re needed to be the impetus for change and weave the intricate mosaic necessary to champion a digital transformation successfully.
Case Study: SEI’s Matrixed Approach to Digital Transformations
When a higher education client approached SEI, they wanted to improve operations for work and asset management. Most of their processes were manual, with many dependencies and complex business logic supporting functions from work orders and procurement of materials to managing payroll. These practices created significant delays that would cascade into other business areas, creating a negative feedback loop that diminished the organization’s ability to maintain value with services being delivered. By using the seven-step guide and leveraging our extensive network of talented consultants, SEI was able to help our client successfully navigate a comprehensive digital transformation. We started with process decompositions which quickly highlighted needs from capabilities such as change management, technology enablement, and design thinking to name a few.
Our unique structure allows us to bring value to every project by utilizing the capabilities offered by our different communities of practice. In this instance, we aligned technology partners with business capabilities and coached the users who needed to interface with these new systems to perform critical functions. By doing so, our client seamlessly transitioned from restrictive legacy practices to digitally-enabled processes that empowered their teams with functionality when and where they needed it.
Take Charge of Your Digital Transformation
A digital transformation is a massive undertaking, and it can quickly become overwhelming if you’re not sure where to start or how to continue to build on progress. Our team at SEI has helped clients across various industries take charge of their digital transformations by making strategic and timely decisions to ensure successful outcomes over the long term. Our communities of practice and collective value model give us access to a wide range of necessary skills and capabilities to act based on when our clients need help and continue to deliver value throughout the digital transformation journey.
Partnering with SEI can mean the difference between skeptics who reject new solutions and advocates who are invested in sustaining your organization’s digital transformation for the long haul. Learn more about how SEI can help you by reaching out to us today.
