The 5 main pitfalls and challenges of digital transformation

Digital transformations pose a bit of a dilemma to businesses: on the one hand they are vital to ensure that a business stays competitive during times of rapid change; on the either hand, they also carry a risk of failure that makes hesitancy understandable.

As far back as 2016, Forbes was already talking about how 84% of companies fail in their digital transformations, while a more recent study - from right before the pandemic - by Everest Group found that a mite over 20% of businesses achieved their desired business results after a transformation: a worryingly low stat.

Fast forward to the post-pandemic world, and the pressure to be digitally competitive is higher than ever, with COVID-19 “pushing companies over the technology tipping point”, according to McKinsey; the digital transformation industry is now projected to exceed $3.3 trillion by 2025.

Since its foundation, CloudSense has always been involved in large transformation programs; very rarely do we perform standalone tech replatforms. 

This means that the projects we deploy typically involve organizations creating an entirely new foundation for their business, recognizing they need to compete in a very rapidly changing marketplace. As a result, the agility of their processes and robustness of their architecture is paramount. 

This also requires reimagining everything in light of the current digital age, both of customers and also business users:

• Seamless experience across all channels
• Single view of all products, service, accounts, orders and holdings
• Transparency of all transactions

Additionally, speed-to-market is critical, as businesses expect not only to experience minimal disruption during the transformation process, but to be left with a platform agile enough to allow changes, innovations and new product sets to be introduced seamlessly to respond to a rapidly-changing marketplace.

This poses great challenges, and there is plenty that can go wrong. But we’ve gleaned a great deal of experience in the 80+ digital transformations we have undertaken in the past 12 years, and want to share what we think are the common pitfalls, challenges and some of the mitigation strategies that CloudSense has evolved over the years.

Pitfalls and Challenges of Digital Transformation

We have identified 5 key pitfalls that cause problems for businesses undergoing transformation: 

1. Recreating the past

Many businesses have experienced transformation programs where too much emphasis is placed on recapitulating legacy or existing capabilities that are no longer relevant, without progressing their processes, products or catalog. 

This inevitably leads to inheriting the same pain points and constraints that were the reason for the transformation in the first place, with a lot of added customization and technical debt. This hurts the overall benefit of the program, particularly the agility and operational efficiency both from an IT and business perspective.

2. Technology-centric delivery

A common mistake in IT strategy is focussing on sourcing the best solutions and stitching them together in a bottom up fashion. This kind of tunnel vision usually results in a sub-optimal end-to-end journey.

If you build things bottom up and hope that things will magically stick together across CRM, self-service channels, CPQ, order-management and downstream fulfillment, the impact is that, while the platform delivers okay and you hit your milestones, the resulting processes and user-journey remain disjointed. Adoption often becomes a challenge, and customer experience becomes an issue later on.

3. Tracking feature vs value

Although most organizations start their transformation with a business case, over time the original case for investment and core business drivers end up forgotten in the heat of battle. 

Instead they focus on a back-log of features, requirements, user stories and just continue to work down the list across many releases. That means that potential prioritization is often based upon who screams the loudest, with business benefit and realization as an afterthought, in favor of through the motion of delivering the features.

4. Single-speed delivery

This is a common pitfall across media and telecommunications transformation. Each platform and layer of architecture has its own natural pace for change. When you have a lot of these myriad of technology pieces that you're trying to work together on, the program often gravitates to align with the lowest common denominator, and you end up with a single delivery methodology that everyone has to abide by. 

As a result, you do not achieve the pace layering to allow each team and each platform to develop at their own pace, and you end up with a program plan full of critical part dependencies. 

5. Committee decision-making

With any major transformation, you have multiple important stakeholders, all of whom are used to taking the reins on the decision-making process. Sales, product management, pricing, legal, fulfillment, and ad ops teams all have critical decisions to make that impact across business units.

If we don’t have the right structure, the impact is that you will delay your decision making process, you’ll have suboptimal decisions,  often organizations avoid making those decisions simply because it touches so many business units, and we don’t want to start the debate. As a result you get a sub-optimal outcome in your transformation program.

On 27 May this year, CloudSense’s VPs of Services for APAC and EMEA, Rama Syahrul and Gary Smith explored these pitfalls in detail, and explained how to avoid them, in the webinar “Insights from the CloudSense delivery methodology”, which you can view on-demand by following the link below.