Why Digital Transformations Fail
Many source-to-pay organizations decide to undergo digital transformations, seeking to update their legacy systems and launch their operations into the modern digital age. Despite these intentions, many digital transformations fall short of expectations. Keep reading to learn why digital transformations fail and how you can ensure your business can perform a successful digital transformation.
Digital Transformation Goals
Before we dive into the specific challenges businesses face when undergoing digital transformation, it’s essential to understand why many companies choose to overhaul their operations and integrate new digital technologies from top to bottom.
Here are some of the common reasons that businesses seek digital solutions:
- Increasing Efficiency and Productivity: Digital transformations typically automate redundant manual processes, which streamlines your business’s operations, reduces costs, and bolsters overall productivity.
- Improving User Experience: Digital technologies can be used to provide personalized, convenient, and seamless experiences for end users, helping to build adoption and drive productivity.
- Gaining a Competitive Advantage: Digital transformation helps you stay ahead of the curve and adjust your business model to the fast-moving digital world by providing access to holistic, accurate data spanning the entire source-to-pay process.
- Meeting Business Goals: Digital transformation can help your organization drive savings, increase ROI, build a stronger procurement culture, and become more agile in addressing changing market conditions.
- Improving Data Visibility: Digital transformation allows you to collect and analyze data from multiple stages of the source-to-pay process, enabling you to make more strategic, informed decisions that drive better business outcomes.
Pitfalls of Digital Transformation
When performed successfully, digital transformation can significantly improve your entire business operation. However, many businesses struggle to perform the transformation process effectively.
Below, we’ll explore some of the most common digital transformation issues businesses face when implementing new digital initiatives. However, having an expert team guide you through the digital transformation journey can avoid many of these pitfalls.
Lack of Executive Sponsorship
Digital transformation requires strong leadership to drive the process and enforce change. Without the support of top leadership, it can be challenging to gain the necessary buy-in and resources to succeed.
Your organization’s leadership needs to be aligned with the long-term vision and goals of the digital transformation, as well as the strategy that helps you achieve these goals. In addition, they must advocate for the transformation and communicate their vision from the top down to all of the company’s stakeholders, including management, end users, and IT. Otherwise, there may be significant resistance to change throughout your organization.
Furthermore, your digital transformation journey may be fragmented without clear communication and support from your organization’s leadership. Without proper executive sponsorship, only a few teams or departments may feel compelled to implement and use new technology.
Failure to Consider Needs
If the needs and goals of individual business units or departments are not taken into consideration, it can cause your digital transformation to fail. It can generate a lack of buy-in and support for the transformation from those teams, lead to inefficient or unnecessary processes, create misaligned goals, and result in unforeseen consequences or unintended negative impacts on those teams.
Ignoring the needs of your business’s individual departments can undermine the success of the transformation, stir up resistance to change, and negatively impact system adoption. Because of this, it’s essential to consider the needs and goals of individual business units and departments when planning a digital transformation initiative. This ensures the transformation is aligned with the organization’s overall goals and avoids any negative impacts on specific teams.
If your business has been struggling to perform a successful digital transformation, Velocity Procurement can help. Explore our digital transformation services and find out how we can support your business today.
Unaligned People, Processes, and Technology
Another reason why digital transformations fail is that businesses don’t properly align people, processes, and technology within their organization. For your digital transformation strategy to be successful, you must recognize that these factors are all interconnected.
For example, process automation improvements made possible through digital technologies can lead to increased efficiency and productivity. However, if these improvements automate an ineffective process, it will negatively impact your productivity gains. These improvements may also require changes to how work is structured and performed, which can impact people. Digital transformation can also lead to changes in roles and responsibilities for employees, requiring them to learn new skills or take on new tasks. It is essential to consider how these changes will impact people and provide the necessary support and training to help them adapt.
Considering people, processes, and technology at once ensures that your digital transformation is holistic and takes into account every element of your business that is affected.
Not Anticipating the Stakeholder Resources Required
One reason why digital transformations fail is that businesses don’t consider the required resources and how long they’ll need them. For example, if the transformation effort is underestimated or schedules and competing projects are not considered, there may not be sufficient resources to support the transformation in the planned timeframe. This can hinder progress and make it difficult to sustain momentum.
Unexpected challenges or setbacks that require additional resources to overcome, such as change requests, can also arise during the transformation process. If these are not anticipated, and the necessary resources are not in place, it can cause the transformation to fail.
Digital transformation is a complex and ongoing process that requires sustained effort throughout your organization. If the transformation takes longer than expected due to a lack of resources, it can delay the realization of your desired benefits, impacting your expected ROI for the initiative. As such, you need to anticipate the resource requirements of a digital transformation and allocate the necessary budget and support to ensure the success of your digital initiative.
Improper Scoping of Project
Improper scoping is one of the biggest reasons why digital transformations fail. Many of the digital transformation issues mentioned above are related to project scoping. If a digital initiative isn’t scoped properly, you may find that your project lacks focus, resources, or the foresight to anticipate challenges like change requests down the road.
Oftentimes, change management is not fully considered when scoping the project. Change management helps prepare the business for the changes ahead and significantly improves the adoption of the transformation. Failure to properly account for change management may result in a struggle to have end users adopt the new processes and technology, reducing the impact the transformation can have on the organization
These issues can lead to delays and additional costs. Improper scoping also makes it challenging to ensure that your project goals are aligned with your organization’s overall goals. This can lead to confusion and a lack of focus.
To ensure you avoid these frustrating digital transformation issues, you must define clear goals and objectives, allocate resources effectively, anticipate and address potential challenges before they cause disruptions, and align your project’s scope with your organization’s overarching goals.
Start Your Digital Transformation Journey With Velocity Procurement
Digital transformation can be a long and complex process, so it’s no surprise that many of these projects fail. In fact, according to recent studies, more than 70% of digital transformations fail in some capacity.
At Velocity Procurement, we strive to provide the tools to make your digital transformation successful and help you avoid these common pitfalls. Our team works closely with you to understand where your organization is at and where you want to go. Then, we help you determine the logical steps in between. This not only ensures that your digital transformation runs smoothly but that it sticks.
As your partner, we also help you mature your processes over time, ensuring your employees and executives are satisfied, your technology is used properly, and your processes are as efficient as possible. Contact us today and discover how we can guide you through your digital transformation journey.