July 17, 2023

Barriers To Successful Digital Transformation

In today's fast-paced, digital-centric era, digital transformation is becoming vital for businesses to stay relevant, and competitive. However, it's not simply about trading old systems for new ones; it's a complex and often daunting endeavour involving organisational change, innovative strategies, and the adoption of next-generation technologies. The rewards of success can be vast, from increased productivity and customer satisfaction to brand-new revenue streams. However, the road to successful digital transformation is rarely straightforward, filled with myriad obstacles that may deter, delay, or completely derail these initiatives. In this article, we look at the barriers that businesses often encounter along their digital transformation journeys, despite following best practices, and explore potential solutions to these challenges.

We have covered the key factors in a successful digital transformation in another article which you can read here. In brief, those following best practices will have:

  • Determined their ‘North Star’ purpose, mission, and vision
  • Designed, agreed, and obtained buy-in across the business for a digital roadmap which takes account of what the most successful enterprises are doing and reflects opportunities and threats in their sector in a digital landscape
  • Initiated a migration to a hybrid cloud platform that is optimum for that business
  • Re-structured their business and IT transformation management system to a modern agile way of working, and started to work on a roadmap which incrementally transforms the business, using external applications and partnerships as far as possible

Being aware of challenges that other businesses have experienced when launching and working through their transformation can be informative and allow business and technology leaders to be better prepared to work through the issues that may well arise:

  • Business expectations
    The whole business must buy-in and understand the benefits and trade-offs of the programme. It must be understood that the transformation will take time and it will (and should) be incremental in terms of investment and change capacity, and risk. But that will require stamina.

    Similarly, there can be an expectation that the change will be an IT one – in fact, by far the greater investment in time and resources will be on the business side.
  • Scope
    The scope of the transformation will likely encompass the entire organisation. However, any single change should be small and incremental. Attempting anything larger or spanning more than one area can lead to unnecessary risk and too many moving parts.
  • Data
    For AI, the quality, completeness, and timeliness of the data are of paramount importance. Similarly, for automation, new data needs to be combined instantaneously, which can be challenging. Where previously a person could work with mismatches, an automated process may find it more difficult. Accessing and combining the data sources required may require a larger investment than at first planned for.
  • Customer Experience/User Experience/Integration
    The objective of the customer-facing transformation is to provide a compelling customer experience across the whole end-to-end process. However, if the process moves between applications with different user experiences, or indeed calls external applications to provide a specific advanced function (e.g. user authentication), it will be important that those interfaces are not only seamless in terms of data, but also in look and feel. If this isn't addressed, the outcome may appear inconsistent and disorientating to users, potentially undermining their trust.
  • Cost versus Benefit
    Any transformation project should be scrutinised to determine its cost versus benefit, at inception, deployment and on an ongoing basis. However, it can be difficult to assign a net benefit to every element of the transformation. To a certain extent, the business must (sensibly) buy into the whole programme, look at it holistically and not attempt to cherry-pick parts which look as if they might deliver cost benefits (at the expense of delivering client-facing benefits).
  • Technology Skills
    Because all the technology enabling digital transformation is developing so rapidly and is so pervasive, there is a technology skills shortage. Commentators provide mixed messages on this: perhaps that reflects the ebb and flow of vogues in framework or database preferences, new language releases, or possibly the difference in the demand for resources with a broad industry-based profile versus a particularly hot (or not so hot) technological niche.

    Wherever a business is on its transformation journey, retaining proven key talent and trusted partners is as important as it ever was.
  • Business Transformation Skills
    The burden on the business in executing successful business transformation projects should not be underestimated. As with technology resources, flexible business subject matter experts and thought leaders are absolutely critical.

    On the business side, the business Product Owner has a key role in drawing together and leading the business and technical parts of the business and therefore must have credibility with both sides and be able to understand and take decisions across business and IT.
  • Executive support
    It goes without saying that commitment to a digital transformation must be complete across all functions of the business, particularly as the business will be doing a large proportion of the heavy lifting to realise the final vision. However, given that delivery spans a significant period and effectively commits to continuous re-invention, it may be vulnerable to changes in leadership.
  • Regulatory and Legal Impediments
    Regulations such as those surrounding anti-money laundering, data privacy, and consumer duty can frustrate a digital vision. Similarly, internal legal concerns, whether unfounded or not, for example surrounding e-signing can also slow progress.
  • Data sharing and data governance
    As a digital transformation spans many business functions, the new functions typically require access to data previously owned and guarded by one business function, or possibly shared with external partners. For example, the credit function might be uneasy about sharing credit data with other parts of the business, or externally, or losing the ability to control access to that data.
  • Customer readiness
    To be successful, the digital transformation must provide a superior experience for the customer. It must not feel like an attempt to offline customer services, or get the customer to do the administration previously carried out by the business. Conversely, while personalisation is welcome, it should never feel creepy, threatening, or annoying. It should enhance the customer's experience by, for example, remembering previous options and avoiding the need for re-typing details already provided or readily available.
  • Partner and stakeholder readiness
    It is important to confirm that partners or stakeholders on which a process has a reliance, are ready and willing participants in the transformation proposed.

Conclusion

To navigate the complex landscape of digital transformation, organisations must understand and anticipate the potential barriers. While there may not be silver bullets for many of the obstacles described here, at least being aware of them up-front and having them in the list of risks being managed will increase the likelihood of a sustainably successful digital transformation.

Simon Potts Finativ
Author

Simon Potts

Simon Potts brings a wealth of expertise and experience to the field of AI and digital transformation.

With over 20 years of experience at IBM Financing, he has been the global lead on AI and digital transformation. Simon is recognised as an accomplished technology leader, holding global roles covering IT strategy and digital transformation.

Subscribe to INSIGHT

Subscribe to our newsletter to receive each issue directly in your inbox. Unsubscribe at any time. View our privacy policy here.
Subscription Form

Related Posts