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5 Reasons why enterprise digital transformation fails

(Image credit: Image source: Shutterstock/Wichy)

The technological world is constantly redefining business, making it faster, smarter and more insightful. Today’s enterprise is an IT enterprise. Its information technologies are the driving force of everyday operations, and all business-critical functions inherently depend on the IT infrastructure. To thrive, enterprises need to respond to the disruptive technology shift within their organisations. 

As an architecture manager at ELEKS, I have been involved in numerous digital transformation projects for clients of various sizes across different industries such as logistics, agriculture, retail and finance. At ELEKS, we define enterprise digital transformation as a full, end-to-end overhaul of business — including operations, workflows, products, services and client interactions — by adopting a comprehensive and integrated set of digital tools. 

In my experience, the obstacles that companies meet on the path to digital transformation usually fall into five major categories:

1. No strategic outlook concerning transformation objectives and impact

It’s not rare that organisations start digital transformation following a popular trend without a proper understanding of where their journey will lead them. The implemented changes are often sporadic and chaotic, they lack a strategic outlook and produce unwanted integration challenges. Companies often fail to analyse how business or customer value will be improved or maintained when they replace traditional models with digital ones. Instead of growth and evolution, digital solutions put the business at risk of losing their existing market. 

Sometimes, organisations can even lack the ‘as-is’ picture, and this is often the case with medium to large enterprises where there is a gap between how top management thinks things are done and how middle management actually does things.

To avoid this problem, organisations should focus on designing and testing business and customer

value opportunities up front. Also, looking at the planned transformation activities through the prism of the Business Model Canvas can provide valuable insights into the potential payoffs from an investment.  

The meaningful introduction of changes is impossible without understanding the organisational context and architecture. Both architectural and managerial decisions should take this context into account for an enterprise to remain efficient. Ideally, you should be able to understand your enterprise in the context of the Zachman Framework, considering all its relations and dependencies. 

2. The financial and technological demands of IT overhaul are too high

Since a comprehensive digital transformation is associated with substantial investment, important initiatives can be slowed down or stopped halfway due to budgeting issues. Preliminary budget planning and prioritising is crucial to avoid this pitfall. 

Often, the root cause of unsuccessful transformation is an organisation’s failure to design and build a solid foundation for it — a sustainable IT architecture. Ideally, the architecture should be modular and holistic, and designed with the aim of maximising business/user value.

In some cases, an organisation’s inability to segment value pockets can affect digital transformation success. As a solution, companies should invite experienced IT architecture designers to create a vendor-independent architecture that is centred around user value. 

Alternatively, you can start with a small discovery to obtain a clear vision of where your organisation is now, in terms of its digital maturity and what level it can reach tomorrow. 

3. No proper level of ownership inside the organisation

Successful digital transformations are advocated by both the executive team and the board of an organisation. When the board is not involved in the process, otherwise effective transformation projects can drown in a constant approval and validation process. 

To avoid this pitfall, the executive team should invest time and effort in selling the idea of transformation to the board. Moreover, an entire organisation needs to be committed to the transformation strategy. Keep in mind that to help with buy-in, digital transformation implementation will require committed advocates at all levels of seniority and across a multitude of departments. 

4. No clear transformation roadmap with clear milestones 

The digital transformation game is often lost due to a lack of strategic vision, such as when the scope and level of transformation are too vague and broad. The problem arises if an organisation skips the planning stage and jumps directly to rebuilding the business. Over a short period, they are likely to lose control over deliverables as the criteria were not properly defined. 

Moreover, such abrupt efforts are likely to meet resistance inside the company because:

  • They are not aligned with the company’s culture and the pace of change it is used to; 
  • The expectations and changes are not managed properly;
  • There is no explicit focus on quick wins; no intermediary milestones are defined. 

The problems described in this chapter mostly come down to a lack of planning and unconscious incompetence. The recommendations to fix them are as follows:

  • Plan before you do, know your transformation milestones and the exact small steps you have to take to reach them; 
  • Highlight quick wins to support the high level of motivation across the teams and stakeholders;
  • Invest in educating your company about the changes that are going to happen. 

5. Lack of resources required to execute the transformation

Digital transformation has no chance of being successful if it is not done by a dedicated transformation team. Of course, there is no need to perform the software development and integration in-house. Most companies hire technology vendors to do the job and provide resources; but inside the organisation, the whole process has to be managed by a dedicated executive or team with the appropriate knowledge and decision-making authority. 

As a starting point, your technology partner needs to conduct an enterprise architecture overview by conducting interviews with management to collect information about your organisation and the environment within it operates. Based on the acquired data, a context analysis needs to be performed to indicate main pain points and areas of improvement.

Such deep and unbiased analysis of the problem areas allows you to obtain the current, ‘as is’ state of your organisation and develop the conceptual vision of the desired ‘to be’ state. Only after this stage, can you can move forward with solution design and implementation.

To sum things up, a successful move to digital requires a well-thought-out strategy and an appreciation that a smooth transformation is a gradual process. An instant overhaul is not natural for an established mature organisation. It's vital to understand that it takes time for businesses to embrace and adopt change, even when you have all the right resources and expertise in place. 

Anatoliy Lytovchenko, Solution Architect / Architecture Manager at ELEKS 

Image Credit: Wichy / Shutterstock

Anatoliy Lytovchenko is a Solution Architect / Architecture Manager at ELEKS, with over a decade of experience in software engineering, architecture, project management and R&D.