Digital Transformation Services – Why Most Fail to Deliver Results

Digital transformation services are far from new. The process of converting information into a digital format itself can be traced back to the late 1970s when businesses resorted to using computer-aided design and manufacturing.

Since then, there has been significant evolution in the field, especially in the past decade.

While the goals of digital transformation will not change in 2024, the stakes are high considering the ongoing economic uncertainty. Therefore, the following advantages will be highly welcomed –

• Accurate and detailed data related to important aspects such as customers’ buying journeys and staff engagement
• Improved organization-wide resource management for higher efficiency and reduced costs
• Data-driven customer insights that enable businesses to observe customer behaviors and tailor their offerings accordingly
• A digital-first culture to keep margins slim and ensure businesses remain ahead of the competition
• Better ROI considering the urgent need to improve operational efficiency, reduce human error, and boost productivity
• Reduced operational complexity which, in turn, leads to eliminating redundancies and unlocking growth potential

Realistically speaking, however, reaping these benefits is not as easy as it may seem. In fact, McKinsey, BCG, KPMG, and Bain & Company estimate the risk of failure to be between 70% and 95%.

This clearly indicates that most organizations are far from the right path to digital innovation. Instead, they are wasting resources and negatively impacting their bottom line.

Why Digital Transformation Fails

Unfortunately, even the best digital transformation services cannot prevent an organization’s digital transformation initiatives from failing. That is because of –

• Lack of alignment with business outcomes due to highlight a net present value (NPV)      
• Limited awareness across the organization, resulting in rejecting tools, apps, etc.              
• Shiny Toy Syndrome, i.e. focusing on a new, fashionable idea without a solid business case
• Lack of control over vendors which further leads to unmet expectations and delay costs     
• Internal resistance as members of the workforce fear losing their jobs in the process        
• Slow decision making due to the lack of a sense of urgency and no delay cost calculations

Most of these are well-known reasons that have been covered by almost every whitepaper written by digital transformation consulting experts.

However, there are other lesser-known culprits whose impact is even bigger than the above, namely –

• Passing Digitalization as Digital Transformation
• Skipping on the Integration of Agile Mythologies
• Skimping on Investing in the Company Culture
• Neglecting Customer Journeys
• Choosing Non-Agile Tech Partners

Passing Digitalization as Digital Transformation

Till this date, decision makers struggle to differentiate between digitization, digitalization, and digital transformation.

Digitization is the process of creating a digital representation of physical objects. To be more precise, it is the shift from analog to digital. Digitalization optimizes and improves processes via specialized software designed with business operations in mind.

Meanwhile, digital transformation services provide innovative initiatives that rethink an organization’s processes and business models. They leverage Fourth Industrial Revolution (4IR) technologies such as Internet of Things (IoT), blockchain, and artificial intelligence (AI) to discover new opportunities.

Unfortunately, there have been instances where tech organizations capitalize on this confusion, especially vendors and resellers pitching their own solutions and services. Therefore, they pass their digitalization efforts as digital transformation.

This may have been the case with MillerCoors. In 2013, the renowned alcoholic beverage company ended up losing nearly $100 million while implementing a new enterprise resource planning (ERP) system.

MillerCoors’ tech partner was entrusted with customizing different SAP modules considering its expertise. However, other aspects usually addressed in digital transformation journeys were neglected. 

The true implementation of digital transformation entails properly understanding the problem at hand. Then, with that knowledge, existing, customized, or built-from-scratch technology can be used to address it. Simply digitalizing without envisioning a solution will only lead to failure.

Skipping on the Integration of Agile Mythologies

Adaptability is the cornerstone of business success in the current digital economy. Agile methodology can help enterprises achieve this, even when faced with fierce competition and high customer expectations.

Other important benefits of digital transformation services with an Agile approach include:

• Added Flexibility – Despite very detailed requirements, many business initiatives fail to accommodate change. This is especially true when a project kicks off. However, Agile enables teams to accept change as well as expect it. Therefore, they can test, switch, and change according to new business priorities.
• Business Value Prioritization – Agile and digital transformation have one factor in common: they recognize technology is not a solution. This enables organizations to start with the ‘why’, align their approach, and respond to business’ needs.
• Delivery of Frequent Value – Solutions are built incrementally as the project evolves. This ensures the delivery of valuable outcomes even if the whole project takes one or two years, if not more.
• Complete Transparency – From daily updates to progress charts, different methods are used to track progress and manage expectations. This ensures that all stakeholders are on the same page.
• Continuous Improvement – With Agile, everyone working on a project is constantly learning, collaborating, and adapting to implement only what is best.

With these benefits, the execution of a digital transformation strategy can be more effective. However, this will require that organizations accept and implement Agile, a feat that can take time.

That is why it is vital that businesses partner with Agile digital transformation companies. To be more specific, companies that implement its methodology in their own work, and not just preach its use.  

Skimping on Investing in the Company Culture

Even if you choose the best digital transformation services, failure may be inevitable without culture change. That is because digital transformation is more than just updating or introducing new technology.

Organizations’ digital transformation journey requires employees to embrace the values these initiatives embody or else resources are truly wasted.

Cultural misalignment can also impact productivity and result in slow user adoption. Therefore, training is necessary to establish behaviors and mindsets in addition to technical knowledge.

Neglecting Customer Journeys

Not factoring in customer journeys can negatively impact companies’ digital transformation efforts. For starters, it results in the risk of developing digital solutions that don’t align with customers’ needs and preferences.

Moreover, neglecting the customer journey often results in a subpar user experience and generic solutions that don’t cater to customer preferences. These inconsistencies and disconnects in the customer experience will then negatively impact customers’ trust, potentially leading to a loss of loyalty.

Most importantly, without understanding customer journeys, organizations miss several opportunities for innovation. After all, they are unable to identify and capitalize on new and innovative solutions that could set them apart.

Choosing Non-Agile Tech Partners

One of the common mistakes organizations make while screening digital transformation consulting services is not confirming if they are Agile.

Agile is an iterative and flexible approach to project management and software development that emphasizes collaboration, adaptability, and customer feedback. With it, teams get to respond quickly to changes, delivering value continuously, and fostering a culture of continuous improvement.

Without practicing Agile, let alone knowing it, digital transformation services providers can contribute to the failure of their projects. Here are some ways how this is possible:

• Lack of Flexibility – Non-Agile tech partners tend to follow rigid project plans and timelines. Therefore, they make it difficult to adapt to changing business needs or evolving market conditions. Agile methodologies, on the other hand, thrive on flexibility and the ability to adjust priorities as necessary.
• Limited Collaboration – Agile emphasizes collaboration and frequent communication between the development team and stakeholders. Non-Agile partners may have a more traditional, siloed approach. This, in turn, leads to misalignment between the technology solutions and the business objectives.
• Slow Responsiveness to Change – Without Agility, an organization’s digital transformation partner will be unprepared for the rapid changes in technology and market trends. Therefore, they will not respond quickly to emerging opportunities or challenges, preventing the organization from staying competitive.
• Incomplete User Involvement – Agile methodologies prioritize user feedback and involvement throughout the development process. Non-Agile partners may not engage users as actively, leading to solutions that do not meet end-user expectations or requirements.
• Delayed Value Delivery – Non-Agile digital transformation services providers falter to deliver value incrementally and iteratively. Following more traditional methods leads to longer development cycles and delayed delivery of tangible benefits to clients.

How to Get the Best Digital Transformation Services

There are many digital transformation companies and consultants with great track records. However, for an organization to get the best, it needs to ensure that the above factors do not exist in their candidates.

What this means is that the ideal digital transformation partner is one that –

• Best understands the difference between simply digitalizing an organization and digitally transforming it
• Applies Agile methodologies in every aspect of the journey
• Understands the role of culture in digitally transforming the organization
• Prioritizes customer journeys and can help leverage these for success
• Practices Agile effectively within its own organization

Knowing how important and essential these are for client success, DPL has embraced these characteristics wholeheartedly. We further attribute our success and uniqueness among others to them.

Therefore, for organizations that wish to start or continue their digital transformation journeys right, we are a message away.