Digital Transformation Strategies Are Failing. Here's Why.

Every organization has had to react to COVID-19 impacts. Before the pandemic hit, organizations were executing digital transformation strategies that were created in response to digital disruption. Then, in 2020, the pandemic hit making digital disruption seem comparatively tame. For one thing, digital disruption takes a couple or a few years whereas pandemic emergency response needed to be executed within days or weeks.

Now digital transformation has evolved into yet another stage. This third stage combines the thought processes of the previous two phases. Specifically, it contemplates an organization's original digital transformation plans to determine which pieces are still relevant. It also considers the pandemics effects on several levels including business continuity, business operations and customer relationships. Importantly, this new phase emphasizes business continuity, innovation, rapid adaptation, resilience and continuous improvement. It also leverages scenario planning so the business can adapt to several possible scenarios.

"In February, when businesses realized something unprecedented was happening, their leaders' minds went straight to continuity," said Eric Dynowski, CTO colocation, cloud, and disaster recovery service provider ServerCentral Turing Group (SCTG). "How do I keep my business running? We’re now months in, and companies realized the import of a continuity plan, and they are investing and preparing."

Eric Dynowski, ServerCentral Turing Group

Lost momentum proves costly

Some organizations were unable to adapt to the pandemic quickly enough. In the worst cases, business owners and some senior leaders hoped the situation was temporary and that things would return to normal in a few weeks. Their mistake was viewing the situation as temporary instead of transformative. The lost momentum created opportunities for competitors who reimagined their existence within the context of a dystopian reality.

"Business continuity plans have frequently been addressed solely in the context of information technology, but this year has proved at how far-reaching these plans need to be," said Mike Vance, VP of technology services at technology and business consulting firm KSM Consulting. "Accounting for personnel (where will they work, what equipment or software do they need, how will they stay connected), management of resources (what happens when we cannot go onsite to fix a problem), and unavailability of key personnel, vendors, or other people are all factors in building a business continuity plan that will actually assist your organization to thrive during a crisis."

Time and cost overruns shake confidence

Businesses have had different philosophies when it comes to budget allocation in 2020. Some shuffled priorities or funneled additional money into becoming more digital because it was viewed as an investment rather than a cost. Others turned instead to cost control in response to the lower revenue levels caused by the pandemic.

Mike Vance, KSM Consulting

More generally, digital transformation time and cost overruns are problematic. A recent survey of 3,000 IT decision makers by enterprise software vendor IFS found that one-third of respondents had exceeded the planned timeline. Twenty-eight percent had exceeded budget limitations. When digital transformation projects exceed the budget or take more time than planned, management may hesitate to invest in future projects.

Bad vendor advice derails digital transformation plans

Let's face it. Vendors are in business to sell their products and services. While the CTOs of vendor companies tend to be more candid about the limitations of their company's offerings, marketing, sales and service arms tend to paint a different picture.

According to the IFS report, the impacts of poor advice from vendors is most pronounced among middle market companies with revenues between $500 million and $1 billion. Those companies have a global footprint like larger companies but they don't have the same level of resources to validate vendors' claims.

They're ill-prepared for an "intelligent" future

Digital transformation involves many things, although some of the hottest topics are AI, machine learning, intelligent automation, augmented analytics and IoT. Organizations are racing to implement these technologies, but in many cases, there are piecemeal implementations occurring in different departments or lines of business when an enterprise-level strategy is essential for successful digital transformation.

Another issue is competence. Organizations are struggling to find and keep the talent that can help them meet their intelligent enterprise goals. However, they also need to upskill everyone else since most jobs will be assisted by some form of AI whether embedded in applications, physical devices or equipment. Training and education help quell fears about AI stealing jobs, but more importantly, training helps ensure that the workforce can use intelligent forms of digital transformation to drive value more effectively.

A culture of continuous improvement is essential

Social, commercial and technological change continue to accelerate. Meanwhile, digital disruption is rampant and disaster planning has taken on new meaning. In the face of all this change, organizations must become increasingly nimble and experimental, trying and testing ideas as situations change and customer expectations evolve.

Meanwhile, IT leadership has an important role to play that goes beyond technological enablement and "having a seat at the table." While both of those things are important, some CIOs and CTOs are helping others in their organization understand what it means to be agile, from breaking projects down into smaller, more manageable pieces to adopting an ethos of experimentation and continuous improvement.

Bottom line

Digital transformation isn't a technology fashion statement. It's an operational state that enables organizations to develop deeper relationships with customers, improve operational efficiencies and innovate. To get there, businesses need to align their thinking and actions as well as their technology and culture.

Now is the time to engage in long-term strategic thinking, if it hasn't happened already, because the emergency response efforts of earlier in 2020, while heroic, are not sustainable. In the interest of speed, organizations were forced into making tradeoffs between business continuity and things that take time to get right such as governance and security. Regardless of whether there is or is not a second pandemic wave, there is an opportunity now to do the kind of thinking and planning that just wasn't practical earlier this year.

For more on digital transformation in the enterprise, follow up with these articles:

Digital Transformation: Business Leaders Still Struggling to Cope

Digital Transformation Falling Flat? Bring in the Pirates

5 Critical IT Roles for Rapid Digital Transformation