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Strategies for successful digital transformation

Most digitization initiatives fail, but the right strategy can boost your chances of success

CEOs today consider the possibility of falling behind with digital transformation their No. 1 risk factor, according to a 2018 survey by Protiviti.

They have good reason to worry: Even as digital tech investments are expected to account for 40% of all enterprise tech spending in 2020, 70% of digital transformation initiatives—the replacement of legacy technology operations and business processes with faster and more intelligent digital ones—fail to meet their goals.

70%

of digital transformation initiatives fail to meet their goals

The biggest reason digital initiatives don’t succeed is that they don’t scale adequately beyond initial pilot projects, according to research by Mike Sutcliff, Raghav Narsalay, and Aarohi Sen of Accenture. Lack of consensus among top managers is one common handicap. Another is the gap between the digital capabilities demonstrated in pilot projects and those required for a larger-scale initiative. That leaves many companies scrambling to close the gap with outside help at the 11th hour.

So how can companies hedge against some of these risk factors and give digital initiatives a fighting chance? After all, there’s compelling evidence that they’re worth the effort: 94% of IT executives at companies that have invested in digital process automation say it is already boosting productivity. Business leaders should consider a variety of digital transformation strategies to achieve those kinds of results:

Business functions like onboarding new employees or resolving everyday customer-service issues are made up of hundreds of smaller processes—discrete workflows like opening a service ticket or submitting a laptop request for approval. Companies exploring digital transformation investments should start not at the function level, but by identifying which of their existing processes would benefit from a digital overhaul.

“Digital transformation without process reinvention is like putting a jet engine on a car,” writes Chris Bedi, CIO of ServiceNow. Companies can’t apply advanced digital tools such as machine learning (ML) without first understanding the existing business process that ML can improve. The practice of process mining, a means of auditing the core elements of business processes, is a great place to start.

Using digital technology to create great employee and customer experiences takes time, money, and organizational will.

Digital initiatives can’t succeed without what Bedi calls a strong “digital foundation,” which has three core elements. Companies should consider how digital-technology projects support each area of focus:

  • Velocity is the speed of business operations and how quickly work gets done. How do you gain speed? Companies apply a range of digital technologies and tools—from machine learning to predictive analytics—to automate processes and remove human bottlenecks.
  • Intelligence is the ability of data analytics to predict, not just react. Companies have long relied on “rear view” KPIs to make guesses about the future. New tools apply machine learning to surface insights faster and spot patterns humans might miss. Leaders leverage data assets and advanced analytics to make better decisions.
  • Experience is the ability of digital tools and apps to create superior human experiences. Doing this for employees (through services like digital onboarding) can yield higher retention and engagement rates. Doing the same for customers (through services like digital self-service) can drive more revenue, customer satisfaction, and brand loyalty.

Using digital technology to create great employee and customer experiences takes time, money, and organizational will. Creating value metrics is critical to locking in that support. At ServiceNow, for example, a new digital platform for employee onboarding boosted employee satisfaction scores by 86%. The company also realized $15 million in productivity gains by digitizing key employee experiences across functions like HR, IT, legal, and finance.

Digital tools won’t replace people in most cases. Instead, they will free people up to work on more valuable and less mundane tasks. To ease that transition, companies need to identify the skills and competencies that can make employees successful long term.

Leaders should invest in change management programs that train employees to be as comfortable working with intelligent machines as they are with human colleagues. Routine tasks that currently suck up as much as 60% of an average employee’s time will disappear gradually, as automation and AI take over layers of low-level administrative work.

Last but not least, digital transformation projects require significant commitments to change management and culture-building. The most advanced digital technologies won’t make a difference if employees and leaders don’t embrace the change.

 Digital transformation examples

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FAQ

There are many challenges to implementing digital transformation, but among the most common are resistance to cultural change, existing platforms that are siloed by business function and department, and a lack of investment in digital workflows.

According to a 2019 study by HBR, there are two main reasons digital transformations fail. The first is “unspoken disagreement among top managers about goals,” and the second is “a divide between the digital capabilities supporting the pilot and the capacities available to support scaling it.”

To succeed in digital transformation, companies need to build a strong digital culture. A big reason transformation falls short is because leaders don’t properly communicate changes with employees. Make a point to develop a compelling change story, and to drive re-skilling and upskilling initiatives.

A digital transformation strategy is a roadmap for organizational realignment based on advancements in technology. Successful strategies begin by identifying major barriers to transformation, accrue buy-in from employees and stakeholders, then pilot and ultimately scale new digital initiatives.

To develop a digital transformation strategy, begin by identifying existing processes that would benefit from a digital reimagining. Use process mining, a means of auditing elements of business processes, to identify which ones are most conducive to machine learning or other digital workflows.