Digital Transformation: What Does It Mean for Enterprise Organizations?

Spencer Nguyen - December 18, 2020

From tiny startups to massive Fortune 500 firms, businesses of all sizes and industries are making heavier investments in digital transformation initiatives. Yet despite this increased awareness and effort, too many large enterprises are still struggling to adapt to a rapidly changing business landscape.

A 2018 survey, for example, found that digital transformation risk is the #1 concern of CEOs, executives, and directors. What’s more, research has shown that as many as 70 percent of digital transformation initiatives fail to reach their stated objectives. Regardless of the high failure rate, however, enterprises remain committed to the cause of digital transformation, with 90 percent maintaining or increasing their IT budgets amid the COVID-19 pandemic.

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Digital transformation is an essential tool for large, unwieldy organizations who are facing a sudden onset of competition from their smaller, nimbler, and more disruptive rivals. Below, we’ll discuss what digital transformation means for large enterprises and how these businesses can successfully adopt digital transformation initiatives. Please use the following links to navigate this article:

Why Enterprise Digital Transformations Fail
3 Secrets to Success for Enterprise Digital Transformations
The Emergence of the CDO

Why Enterprise Digital Transformations Fail

Enterprise digital transformations fail for a variety of reasons, not all of them apparent to the organization itself. Just a few of the reasons why enterprise digital transformations fail include:

Organizational inertia: It’s been frequently said that digital transformation isn’t just about the technologies themselves—it’s also about adopting the organizational mindset necessary to enact change, rethinking the people, processes, and technology that you depend on. Without a widespread commitment from the top down, digital transformation initiatives often fail after the conceptual stage, where business leaders are enamored with the possibilities but unwilling to carry out the necessary steps.
“Shiny new toy syndrome”: Technology has advanced rapidly in the past few years, which means that enterprises have more digital transformation options than ever. However, it also means that organizations have more potential to get distracted by a shiny new piece of technology that won’t actually deliver much value for your bottom line.
Talent shortages: Enterprise digital transformations require a great deal of technical knowledge and talent, but these capabilities aren’t always available in-house. 9 out of 10 organizations believe that they need at least some new talent for their digital initiatives, while 37 percent believe that they need “extensive talent structure changes.”

3 Secrets to Success for Enterprise Digital Transformations

In the face of these challenges for enterprise digital transformations, how can organizations hope to beat the odds and make their next initiative a success? Below, we’ll discuss 3 concepts to eliminate friction and reduce risk when starting your own digital transformation.

1. Be customer-oriented

It’s easy for large enterprises to lose sight of the fact that the ultimate goal of digital transformation should be to recruit and retain more customers. Modern customers are more fickle and demanding than ever before, with high expectations for quality from start to finish. Digital transformation initiatives should focus on how to deliver a top-notch customer experience, whether that means lower costs, better products, or more user-friendliness.

2. Work to improve adoption

Building an excellent new tool for digital transformation is practically useless if you can’t get people to incorporate it in their day-to-day workflows. Many such projects fail because they prioritize the technology over employees’ human behaviors and needs. Digital transformation initiatives need to be paired with adoption and training programs that emphasize the benefits of switching and help employees get used to the new setup.

3. Consider scalability

It’s often said that digital transformation is not a destination, but a journey. As such, you can’t merely build and design tools for your current organization—you also need to consider how they’ll evolve alongside your future organization as well.

Digital transformation initiatives that can’t grow and change in a constantly shifting business landscape are doomed to fail. Of course, scalability is important when you’re just starting out as well: enterprise digital transformations often fail when organizations try to bite off more than they can chew or choose a pilot project that’s too ambitious.

The Emergence of the CDO

Yet another reason why digital transformation projects fail: key stakeholders such as managers and executives depart the company, and their replacements decide to discard the current initiative in favor of making their own mark on the organization. To give digital transformations more staying power, the Chief Digital Officer (CDO) role has emerged with who’s tasked with ensuring the strategic alignment of digital/technology focussed projects and provides executive level sponsorship of these types of initiatives.

Of course, for the best chance at success, digital transformations should be an organization-wide endeavor, with everyone from employees in the trenches to the CEO taking part. According to McKinsey, 8 in 10 companies working on digital transformation said that the project’s scope involved either multiple business units or the organization as a whole.

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Conclusion

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