Top 5 Dangers of Digital Transformation
Digital Transformation is a challenging concept for most companies. It is not just the concept that is challenging, it is also the implementation. That’s why it is often advisable to bring in outside experience and help. Still no company can do everything. We believe the most impactful place to start is with customer engagement. I will discuss the reasoning further in the future.
Digital transformation projects in the private sector currently tend to focus most often on 3 things: 1) increase revenue through new services and cross/upselling, 2) improve the customer experience and 3) reduce costs. In the public sector, increasing revenue is generally not a consideration but offering new services and cross departmental access and capabilities are. For example, creating an interactive digital billing document might: 1) allow multiple billing statements to be combined into a single electronic statement, reducing costs 2) improve customer (citizen) experience by providing self-service to resolve inquiries and 3) reduce the load and waiting times for the helpdesk function. The result, improved uptake of digital billing, thereby further reducing mailing costs and providing improved customer service (24x7 self-service). While these are not the only factors, they are often seen as the key drivers of digital transformation.
But embarking on such a journey can be a daunting task. How long will it take, where do we begin, what does success look like and what technologies do we use are just a few of the questions to be answered in the planning process. Here are 5 key dangers that I see for any digital transformation project.
1) Failure to meet expectations – It is reported that between 50 and 70% of digital transformation projects fall into this category. There are several reasons for this, but it is primarily a symptom of other flaws and failures that generally come down either to implementation issues or overly zealous and unrealistic expectations. In either case, these are often avoidable.
2) Lack of Internal Support – Digital transformation needs to be driven and supported from the executive suite. It transcends and crosses the organizational silos and requires cross-functional cooperation that is often politically challenging for internal people to accomplish.
3) Change in Culture – Digital transformation is primarily a cultural change first and a technology change to a lesser extent. Change management is critical as new functions, roles and activities are popping up to manage and deliver on the promise of DX.
4) Cost and time overruns – These again are primarily symptoms of other implementation issues. It is important to consider not only what you intend to accomplish, but the systematic order of implementation. Like constructing anything, there is an order and process to follow. The need for new skills, knowledge and functions will often delay the process as existing resources scurry to learn what is needed. Thus, an inventory of needed and available skills is essential.
5) Disruption – Perhaps the most visible and disconcerting issue is disruption – disruption of existing systems and services resulting in system and data availability issues. A well planned and phased-in transition can reduce these risks. It is often not necessary to significantly change or intrude on legacy systems and traditional systems of record to change the public’s experience and interaction.
Avoiding these pitfalls requires planning and implementation skills that many organizations don’t have enough of. Private and public-sector transformation projects, while not always done for the same reasons still face many of the same risks. The best approach is to build your strategy then implement incrementally according to that strategy. It is important for any advisors you work with to assess where you are and where you want to go, chart your path, implement incrementally and provide ongoing support for your digital transformation project - not just at the planning stage, but implementation as well.