27 Jul Signs of a weak return on digital transformation investment
by Amy Cook
Digital transformation is a buzzword that’s tossed around so often that it seems like every organization must be on top of it. The reality, however, is that few organizations are transforming in a way that meets the actual definition of digital transformation—and even fewer are achieving success with digital transformation. The consulting firm McKinsey estimates that 70% of all large-scale digital transformation initiatives fail, wasting precious internal resources and eroding a company’s competitiveness in a crowded marketplace.
A successful digital transformation uses best-practice methods and technologies to fundamentally change business operations and employee competencies across an organization. Digital transformation involves the successful implementation of two main elements:
– Create organizational alignment around an ambitious, encompassing vision for change
– Roll out next-generation technology solutions to operationalize that vision
If your COO treats digital transformation as a short-term strategy for boosting productivity or profitability, it’s not digital transformation. If your CFO relegates digital transformation to a siloed exercise separate from the core business, it’s not digital transformation. And if your entire organization doesn’t buy into change and isn’t moving in lockstep toward change, it’s not digital transformation.
To avoid becoming part of the 70% failure statistic, it’s your responsibility to understand what digital transformation looks like. The sooner you can identify and diagnose problems with your change initiative, the faster you can get it back on track. Let’s explore five telltale signs your organization is failing to get a strong return on your digital transformation investment:
1. Your C-suite struggles to articulate goals and roles
Digital transformation only works when senior leadership is 100% committed to the initiative. The most basic test of this commitment is whether your C-suite can accurately articulate the goals of your digital transformation initiative, as well as the role they are supposed to be playing in it. Go ahead and quiz them; anyone who’s truly invested in digital transformation will have no hesitancy providing cohesive answers. Unfortunately, it’s far more common to hear members of the C-suite articulate competing visions for digital transformation that don’t really tie back to the organization’s overall goals. These vague vision statements tend to come out like a buzzword bingo card.
2. Front-line employees aren’t engaged or bought in
The success of digital transformation depends on the front-line employees who are tasked with implementing digital transformation. These employees must adapt to new workflows, learn new software systems, and collaborate effectively. If employees are having trouble with their transformed job responsibilities, or if they’re displaying subtle signs of resistance to change, you won’t get the results you seek. A 2017 study by the Harvey Nash and KPMG consulting firms found that an organization’s biggest impediment to digital transformation is resistance to change.
3. You can’t point to a budget line item
Organizations commonly misclassify their digital transformation initiatives, treating them as a one-time technology upgrade or a talent realignment initiative or a process improvement plan. Consequently, digital transformation doesn’t get a budget line item, and various executives and managers become free to “realign” digital transformation efforts to serve their own pet projects and interests. Unless digital transformation has its own line item in the company’s budget, the goals of the initiative will become distorted and buried over time. When digital transformation has a line item in your budget, you are sending a clear message that it’s a priority that cannot be morphed or absorbed into another initiative.
4. Your organization is proactively avoiding any disruptions
If your organization thinks that operational disruptions and inconveniences to employees can be avoided, your digital transformation is destined to fall flat on its face. For digital transformation to completely reshape how you do business, you must be prepared for a transition period that is uncomfortable and challenging at times. Furthermore, if your organization has delegated primary responsibility for digital transformation to your IT department, you are almost certainly heading down a path of zero disruptions. After all, one of your IT department’s central missions is to avoid operational disruption at all costs; digital transformation is wholly incompatible with what IT departments do.
5. Your customers don’t notice any improvements
The endgame of digital transformation is to create seemingly effortless service experiences for your customers that drive loyalty and ultimately profits. If your digital transformation initiative isn’t resulting in a noticeable uptick in customer satisfaction, your initiative hasn’t truly transformed the organization. You should be seeing higher customer service satisfaction scores, more customer compliments, increased customer loyalty, and ideally higher customer spending.
Digital transformation initiatives are constantly at risk of failure, and it’s crucial that you learn to recognize the warning signs. You’re likely to be heading toward a weak return on your digital transformation investment if your C-suite cannot accurately articulate goals and its role, if your front-line employees aren’t engaged or bought into the initiative, and if there’s no line item for digital transformation in your company’s budget. You’re also likely headed for failure if your organization is actively trying to avoid operational disruptions, and if your customers aren’t noticing any improvements. But by partnering with Simplus, we can make sure none of that happens.
This is Part 1 of a new, 10-part Simplus blog series on how to reap the full benefits of digital transformation. In Part 2, we’ll explore the key reasons that Salesforce should be at the heart of your digital transformation strategy.
Amy Cook is the VP of Marketing at Simplus. She works with the executive team to provide a comprehensive marketing strategy for Simplus and is a creative hard worker, a problem solver, and a great multitasker.