Strategies for avoiding digital transformation failures

The continued shift to as-a-service business models in an increasingly globalised economy has created a highly competitive world in which digital transformation (DX) efforts can and will fail without the right strategy.

While technology may be at the heart of every DX project, IT modernisation is not a magic wand for DX. The success of any project ultimately relies on a multitude of factors. One of the most important is buy-in from stakeholders, who must understand how the transformation will directly benefit them. The human element cannot be neglected by organisations aspiring to future-proof their operations.

Speaking to more than 100 CIOs and DX project heads in leadership forums across Australia and New Zealand (ANZ), we have heard numerous stories of projects going over budget, taking too long and, in some cases, being shelved altogether. These projects fall far short of the agility needed for successful DX, especially important given the speed of today's business world.

However, speed and agility in projects hinge on the human factor, which is often overlooked at the onset of a DX project. Projects are delivered by people for people. Therefore, managing expectations for a mindset shift across the organisation and providing people with tools to help them become more productive is a critical factor in a project's success.

The cultural transformation paradox

A survey of 130 ANZ digital leaders conducted by ADAPT found that business silos and lack of collaboration are the primary barriers to business agility, cited by 54 per cent of respondents. In fact, this scored higher than the barrier of legacy systems and processes, which was nominated by 49 per cent.

The prominence of cultural issues as a critical barrier to transformation does not bode well for those professionals who are already grappling with an increasingly complex DX agenda. The challenge is complicated if a cultural transformation roadmap with proper change management measures isn't embedded in DX projects from the start. Attempting to manage change once a transformation project has commenced is a recipe for failure.

Stakeholder buy-in also depends on minimising or even eliminating "shadow IT", by which business units deploy their own applications, typically without IT's knowledge or control. Instead, business units should be empowered to pursue and purchase their own as-a-service solutions, in collaboration with IT. Success increases with integration technology that allows various applications to talk to each other quickly and easily, breaking silos to create a connected business that drives productivity and innovation.

The afterthought of agile integration

In the ADAPT survey, digital leaders nominated their top investment priorities as being customer journey solutions, and website content and experience. This is the reason application integration is being viewed in a new light. Historically an afterthought, application integration was nominated as a top priority by 88 per cent of respondents. But application integration across an organisation has little chance of succeeding if the culture of the organisation is working against it.

The ADAPT findings align with earlier research conducted by Vanson Bourne. The study found that 91 per cent of IT decision makers in ANZ recognised the need to improve connectivity within their organisations, but also found that 50 per cent were having trouble doing so.

Furthermore, 89 per cent had experienced drawbacks as a result of poor integration, in the form of unreliable applications, financial loss and efficiency downturns, and poor workflow efficiency. The impact of these failures was demonstrated by the 59 per cent of respondents who admitted they knew their organisation had missed opportunities due to poor integration.

Keys to ensuring the success of your DX project

In working with organisations around the world across all verticals, the following strategies stand out as key to developing and implementing successful DX initiatives.

1. Effective management of change

While change is an inseparable element of transformation, it is worth remembering that for many stakeholders change can be uncomfortable, especially if they cannot envision their role in the transformed organisation. It's vital that DX leaders engage in effective and constant communications across the organisation, with clear messaging that stakeholders can understand and relate to.

Importantly, the likelihood of resistance is reduced when individuals understand why change is necessary and how they will benefit. This can impact the culture of the organisation, making it not only more accepting of change but also more collaborative, especially across different functions. Collaborating with stakeholders from the start is also an opportunity for DX leaders to capture valuable frontline input that can help shape a DX project.

2. Effective management of data

For an organisation to gain the greatest benefit from the data it holds, it must reduce the barriers that exist between that data and the functions that seek access to it. In addition, it's critical to address the incomplete, incorrect or obsolete records are likely to exist in your disparate applications. Bad data means bad business.

Using data quality management tools helps create consistent, reliable data shared across applications and business units, driving effective data flows and application performance. The "single source of truth" becomes more important as organisations grow, especially as hybrid IT creates an even greater diversity of data sources.

The importance of this master data is increasingly recognised by IT and business leaders. In fact, a focus on master data increases data accuracy and efficiency, and can lead to more effective data analysis. Accounting for master data should be an essential prerequisite in embarking on application integration and DX.

3. Effective management of speed and scope

Data is the lifeblood of modern organisations and needs to be made easily available to business applications, and ultimately to the end users who rely on it to make decisions. But moving data between applications can be a point of major inefficiency. Legacy systems and processes were consistently ranked in the ADAPT study as a key factor inhibiting business agility.

So, it is not surprising to find that many organisations are turning to cloud-based technology such as integration platform-as-a-service (iPaaS), which offers significantly better speed and flexibility for application and data integration compared to custom-coding or legacy on-premise middleware. That speed is especially important as organisations in today's digital era look for applications that can be deployed in weeks or even days.

As research has found, iPaaS is being rapidly adopted and is delivering significant benefits. The Vanson Bourne study found that 50 per cent of organisations in ANZ have already completely adopted iPaaS, with another 30 per cent in the process of doing so. Among those using iPaaS, 49 per cent reported that maintenance is easier and developer collaboration is increasing, while 33 per cent reported faster time to market.

Transformation into a connected business: The ultimate goal

DX is not just about deploying new systems or modernising IT — it's also about changing the business. Success comes from looking holistically across an organisation's people, processes and technologies. With strategies to engage each of those elements, you can create DX initiatives to create a connected business.

With effective data management, business users can interact with the data and applications they need to work effectively. Freed from the limitations of the traditional organisational chart, organisations can deliver results for customers as quickly, easily and effectively as possible. And ultimately, that is the transformation that matters most.