Why do digital transformations fail?

Why do digital transformations fail?

In this world, nothing is certain except death, taxes and digital transformation.

Statista's latest report this year predicts that by 2025, global digital transformation technology and service market spending will reach US$2.8 trillion. When this forecast was made, 70% of digital transformation projects still failed to achieve their goals.

Every organization will adapt to the times and embark on its own unique digital transformation path. But how can you ensure that you invest in the right things and avoid becoming part of the transformation failure?

Why digital transformation fails

Digital transformation projects will fail without the right change management strategy in place. A change management strategy is a structured process that focuses on the people affected by the change and enables them to participate, adopt, and use the change.

Research shows that organizations are six times more likely to achieve their digital transformation goals if they follow a change management strategy. Based on past failures, most projects go off track at the start. The most common mistakes are:

• Make digital transformation a complete IT department responsibility

Digital transformation is not just the IT department’s job, and this inherent thinking is one of the biggest reasons for project failure.

Whether it is the digitization of human resources operations, the modernization of traditional accounting systems, or the automation of workshops, companies often focus all their attention on the IT department, making rapid and high investments in various isolated technologies, which ultimately makes digital transformation more difficult to implement and incurs a high cost.

Try the following ideas

For example, if your company needs to digitize its HR department, your first thought is to contact IT to ask for a new software solution, or to ask IT, which already has a backlog of projects, to develop it internally.

In fact, this problem should be solved from a holistic level, and it is best to use the 4P perspective of digital transformation:

o People: Who should be involved in this project? (Build a cross-functional team of developers, stakeholders, business users, and people who can bring value.)

o Portfolio: How will this project fit into your portfolio of software solutions?

o Process: How will the project affect the user experience? What other areas of the company will it affect?

o Platform: What technologies are needed to drive digitalization?

• Want to “get rich overnight”

Digital transformation cannot be achieved overnight and requires patience to succeed, but stakeholders, leaders, and customers want to see benefits quickly to prove that the project is worth their investment. Therefore, the transformation team needs to provide various solutions for the entire organization as soon as possible, which makes them take on too many projects at the same time and face tremendous pressure.

Try the following ideas

Rather than having transformation teams work on multiple complex projects simultaneously, they can prioritize tasks using an agile approach that starts with a specific business case, followed by feedback, experimentation, iteration, and delivery.

For example, the HR department wants to automate the leave process. Updating this process is not complicated but can bring immediate results. Stakeholders and other users can also participate in testing and provide feedback during the development process. Agile methods rely on feedback and continuous improvement, which makes it easier for others to participate in the project.

Planning for digital transformation

Before you start your digital transformation, you need to understand your company's digital maturity. The digital maturity assessment looks at your company's technology, people, culture, and processes, and measures your company's ability to execute its digital transformation strategy. You can use Siemens' low-code digital maturity assessment to give your company a simple "physical examination."

Digital transformation affects the digital maturity of enterprises from four aspects: legacy systems, operational processes, user experience and business models. In order to more clearly understand the impact of digital transformation, it is necessary to pay attention to these four aspects at the same time.

• Legacy systems and applications

What is the current state of your core systems and applications? Are they working as they should, or is it time to modernize your legacy systems?

In many organizations, outdated systems and tools are often the catalyst for digital transformation. But depending on your business’s digital transformation goals, you may not have to replace your legacy systems right away, or even at all.

There are different levels of modernization for legacy systems, and they should be determined based on the specific circumstances of your organization. Here are some examples of how to update legacy systems using a low-code application development platform:

oBuild modern applications and capabilities on existing systems

oBuild new core applications and migrate from legacy systems

o Start with key components and gradually replace outdated technologies

• Operational procedures

Where can you improve efficiency in your processes to show early results? What manual processes can be digitized, or workflows can be optimized? For example, you can automate manual processes, such as converting spreadsheets into apps, or use intelligent automation to completely change the way your team works.

• User experience

One of the main reasons for enterprises to undergo digital transformation is to digitize and improve customer experience. User expectations are constantly changing, and they want to get a good integrated experience on both mobile devices and PCs.

Think about how easily your business currently interacts with potential customers, current customers, and vendors. Can you digitally transform or enhance the current experience, or introduce new ways to interact?

• New business model

Through digital transformation, the efficiency of the entire organization will be improved and some existing business models will be changed for the better.

Entertainment production company WRSTBND (Solomon Group) is one of them. They used Siemens low-code to digitize back-end processes and customer experience. After comprehensively improving the process, WRSTBND solved the headache of venue capacity management in an innovative way by integrating Siemens low-code applications, IoT technology and turnstile equipment to provide real-time in and out number of people and remaining total capacity. This innovation also increased ticket sales by 50%.

Changing your results by changing your priorities

In short, digital transformation is not a pure IT task that can be completed in a few weeks, but a long-term and continuous evolution process that relies on the right people, the right platform, and most importantly, the right change management strategy. If you can focus on these aspects, the probability of success will be much greater and countless valuable opportunities will be obtained.

To learn more about how to digitally transform, please refer to Siemens Low Code’s Digital Execution Playbook.