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Why digital transformations fail: 3 exhausting reasons
Fatigue from continuous change is a top reason why more than 70 percent of digital transformations fail. Let's examine the three factors that cause exhaustion – and how to avoid them
3. Taking a technology-first approach
Consider the company that undertook a major, complex, ERP implementation to build new capabilities and scale. It also undertook IT modernization and moved its data center to the cloud. It took longer than three years for this first part of journey, and it consumed too much capital and people resources, let alone time. It was costly and achieved little value. Digital exhaustion was rampant, and it caused a roadblock in decision making. Simple technology investments that should have taken only months to implement wound up taking years.
Another company halted its ERP rollout because of the cultural change that came with it; the cascading process and mindset changes proved too much to handle. It left the company with only a few plants upgraded and people resistant to future technology-enabled improvements.
A third example of this debilitating approach is a company that went through IT modernization successfully in Phase 1 and planned in Phase 2 to leverage its data (enabled by the new technologies) to create new value and market-leading capabilities. The executives did not understand that they would have to change their operating model and way of doing business to achieve the objectives in the strategic intent. Furthermore, the political culture and the continual rapid implementation of new technologies led to fatigue.
How to avoid this digital transformation failure
Starting a digital transformation by big, expensive legacy-replacement activities is starting from the wrong place. It will use up too much money and people resources, and it will distract from delivering the transformation benefits. Keep in mind that digital transformation necessitates change in business processes to support the technology. Policies, procedures and often talent resources will need to change. All this prolonged change in a technology-first approach will become a roadblock and drag progress backwards.
The better approach is to start with understanding how the business needs to change to deliver improved experiences to customers and employees and then focus on implementing technologies that will deliver a part of that value early on. Focus on a sprint for implementing a smaller technology-enabled project that quickly delivers measurable value to customers. Thereafter, take an iterative approach and move on to the next value-adding project.
Counteritutive thinking required
All three solutions to enterprise digital exhaustion outlined above may be counterintuitive in typical decision-making. But your digital transformation may depend on them. Get the buy-in you need up front, use sprints, and take a balanced approach to technology and business changes. These steps will set you up for success.
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