We have often heard that mantra "digitize to survive." Businesses initiate a digital transformation to drive growth, improve business processes, and enhance the customer experience. According to Gartner, digital transformation is an organizational priority for 87% of senior executives.
A number of studies from academics, consultants, and analysts indicate anywhere from 70% to 95% of organizations fail to realize the expected business benefits of their digital transformations and ERP software implementations. Some studies found that 70% of digital transformations failed due to employee resistance.
The challenges of successfully implementing ERP software or a having a successful digital transformation are daunting. The Covid-19 Pandemic made things worse. Because of Covid-19, many digital transformations were either rushed or implemented by teams working remotely. When faced with challenges, companies often cut back on change management, data integration, and training. Paradoxically, these are the exact things that help ensure the success of a digital transformation.
It is no surprise that over 90% of companies polled in a recent KPMG Global Transformation Study have completed a digital transformation in the past two years, but only 18% of the companies rate their digital technology as effective. More often than not, a failed digital transformation falls within three categories:
- Underperformance: When the digital transformation is underutilized and there is a lack of focus with investment.
- Regression: When businesses are under the impression they are transforming, but are actually lagging.
- New Digital Initiative: When companies aren't prepared and try to launch a digital initiative, but it fails, and the company is now forced to discontinue the digital initiative.
Eighty-seven percent of companies believe that digital transformation will disrupt their industry but only a mere 44% of the companies are prepared for the potential disruption. Implementing a digital transformation with a focus on the customer experience can increase customer satisfaction by 20-30% and economic gains by 20-50%. But in order for companies to reap the benefits of a digital transformation, an understanding of best practices is required. Companies should:
- Focus on delivering business results, and evaluating businesses goals to prevent disorganization.
- Be skeptical of promises that a digital transformation will be the technological equivalent of a silver bullet.
- Focus on fundamental business needs and use advanced analytics to mitigate risk.
- Focus on hiring the right talent, train your existing staff, and consider hiring talent with experience in digital transformation.
Successful digital transformations are crucial for companies to survive today. At the end of the day, the adoption of new technology is meant to increase efficiencies and drive costs down. Be cautious and aware of signs of failure and take the necessary steps to mitigate digital transformation failure.
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