According to data from PwC, 60% of senior executives say digital transformation is their most critical growth driver in 2022. Companies are making investments to back up this claim. IDC has forecast that "Global spending on the digital transformation (DX) of business practices, products, and organizations is forecast to reach $2.8 trillion in 2025, more than double the amount allocated in 2020."
Some of this focus is deserved; many organizations that have embarked on their DX journey have cited real benefits, like increased efficiency, happier customers, and faster time-to-market with new products.
However, like most things, DX doesn’t always live up to the hype. It can even have drawbacks if risk preparedness and potential setbacks aren’t accounted for. While many of the challenges with DX rollouts are common and avoidable, many organizations don’t realize they have these issues until they’re already well into their implementation.
Here are three pieces of contrarian advice to help you, as an IT leader, think about where you are and where you hope to go with your DX initiative.
1. Breaking down silos puts a spotlight on organizational issues
One of the biggest benefits of DX is breaking down silos within an organization. No longer can sales, product, finance, and customer success operate in a vacuum. Rather, newly designed processes require transparent collaboration across the organization.
But too often, this removal of silos can increase interdepartmental friction, especially if goals are misaligned. For example, if the sales team is told to sign new customers at all costs, but the product team is primarily judged on increasing customer retention, that’s a problem.
On the bright side, a digitally transformed process makes it more difficult for misalignment to continue. But a resolution from executive leadership is required to get things back on track. While admitting the problem is the first step, this can be disruptive to workers and reduce productivity in the near term. The best way to mitigate this risk is to review and align all departmental goals before embarking on a DX project.
2. Zombie digital transformation programs will have diminishing returns
DX is a journey, not a destination. That may be a good way to look at constant organizational improvement, but it’s not an excuse for a never-ending, walking-dead “zombie” project. Most businesses will come to a point when going to the next step in the DX plan may not be worth it. Just because one path is suitable for a particular organization doesn’t make it the blueprint for all DX projects. Unfortunately, there’s no one instruction manual.
“Not every business is going to need the same level of digital transformation, so there is a point of diminishing returns when the time and cost will outweigh the benefits,” said Bernard May, CEO at National Positions. To ensure your organization doesn’t reach DX zombie status, it’s important to start the process with clear goals and decision criteria to weigh the value at every step. Don’t be afraid to pivot along the way.
3. Don't underestimate workers' resistance to change
There are many wonderful benefits to DX, but to realize them, the new processes must be accepted by the people doing the work. In fact, 70 percent of organizations do not reach their digital transformation goals, primarily due to worker resistance and lack of managerial support, according to McKinsey.
There are many reasons for trepidation, including a loss of job security, skepticism that DX tools will provide the promised value, and not being aware of the bigger picture and why these changes are happening.
Strong communication from the top down can help mitigate many of these problems. Employees who feel informed and empowered are more receptive to change and hopeful of the improvements – even if they’re not felt immediately.
It’s also important to remember that communication isn’t just about providing clear direction and being a good listener. DX is a work in progress; if new processes and tools aren’t working within a reasonable timeframe, they should be reevaluated.
The advantages of DX have been proven – just look at cloud proliferation and the advent of remote and hybrid work over the last several years. Whether your business is a DX success story or a failure has little to do with digitization and everything to do with proper business hygiene.
It’s crucial to tend to organizational silos, IT plans and expectations, and the employee experience before you bite off your piece of the DX pie. Fortunately, these are all areas leaders can address today to be a DX success story of tomorrow.
This article first appeared in The Enterprisers Project.