Challenges of Digital Transformation
Digital transformation isn’t merely about integrating technologies. Instead, it is a much broader phenomenon, encompassing a company’s strategic viewpoint and approach toward building organizational agility, excellence, and success. Hence, a company’s journey towards digital transformation would be dotted with several challenges of varying nature and intensities. If you also have embarked on your journey to digital transformation, knowing what challenges you may encounter can help you prepare for them better. So, let’s look at ten of the most common digital transformation challenges.
1. Evolving Business Models
One of the most crucial digital transformation challenges that companies face is adapting their existing business model and aligning it with the overall digital change. Theoretically, it is pretty easy to use words like business transformation and operational transformation. However, it requires a comprehensive workaround concerning the existing business model and aligning it with the change the company envisions in the long run.
It isn’t that companies are necessarily living with these challenges. These days they are using data to optimize the value of their assets and historic operational efficiencies. Data is the new oil and propelling force powering these transformation efforts. It provides enterprises insights to help them enhance their operational efficiency and identify and leverage new business avenues and revenue sources.
2. Inadequate Management Support
Digital transformation is an organizational decision and not a tactical or a departmental one. Embarking on the journey to digital transformation successfully requires the company’s decision-making team to provide support, guidance, and resources to the mid-and senior-level management team to execute digital transformation at the ground level.
Remember, digital transformation is an approach covering a company’s technological aspect as well as cultural dimension. With nearly 70 percent of digital transformation endeavors failing due to a lack of management support, the participation of decision-makers in driving the approach and instilling a culture of agility, flexibility, and adaptability can play a crucial role.
3. Absence of a Change Management Strategy
Did you know that companies with a comprehensive and visionary change management strategy are five to six times more likely to fulfill their digital transformation objectives? Of course, you cannot build a change management culture in a day or two. It is a gradual process that gets entrenched in a company’s inherent culture with time. Hence, it takes years to grow and nurture such a culture. Companies with a solid change management strategy stand a thicker chance of survival and success. However, those with no such vision are most likely to face critical failures detrimental to the organization’s existence.
Building an effective change management strategy involves planning a project by determining the root cause of a particular issue and building sound relationships with all of the company’s stakeholders and employees.
4. Intricate Software and Technology
Another significant digital transformation challenge is the complex and sophisticated nature of various software and technologies. While dealing with new technologies could be intimidating, keeping up with the continuously evolving ones could prove even more daunting! Companies undergoing digital transformation could confront such challenges from the implementation, data integration, and user experience perspective. Digital transformation leaders should factor in these challenges in the initial stages of the transformation and look for the most integrated systems.
5. Evolving Customer Needs
With everything around dynamic and constantly changing, how can you expect customer expectations to remain constant? Along with continuously changing technologies, companies also have to deal with changing and evolving client needs and expectations.
Companies plan for something and see it morph into something else by the time they execute it. But does that mean enterprises give up on digital transformation? Absolutely not! Evolving customer needs and expectations are inevitable amidst the changing environment. Accordingly, businesses should stay proactive and factor in the changing business environment while devising a digital transformation strategy.
6. Lack of a Digital Transformation Strategy
That’s precisely the next point! Although broad, digital transformation is a highly specific phenomenon. What applies to one organization may not necessarily apply to the other. Accordingly, companies should have a very specific vision of their digital transformation needs and thus have a digital transformation strategy specifically designed to fulfill their digital transformation needs.
For instance, a company should assess whether digital transformation for them is replacing legacy applications with digital systems or whether is it integrating data analytics into the existing decision-making workflow to make more informed decisions. These decisions and the consequent strategy should stem from a comprehensive assessment of the company’s digital transformation needs. Not having a specific transformation strategy and vision may put all the effort down the drain. Let alone the loss of money.
7. Cybersecurity Concerns
Digital transformation proves advantageous in various ways. But it brings a host of cybersecurity concerns to deal with. For example, for many organizations, digital transformation refers to moving from legacy systems to modern applications or moving everything to a centralized cloud repository. While proving beneficial, these bring various cybersecurity issues to the table. The move from on-premise to the cloud increases the threat of cybersecurity. Bad actors can target system susceptibilities, less alert users, etc., to enter a particular ecosystem and inflict it.
Of course, one cannot secure a particular network fully. However, businesses should be aware of such potential threats and prepare for them in advance to mitigate the risks associated with them. In many cases, alertness and awareness can thwart a particular attack and prevent bigger damage from taking place.
8. Organizational Structural Gaps
As mentioned earlier, digital transformation is an organizational strategy and not confined to a particular department. In fact, it cannot work the latter way. However, in many organizations, departments or teams may work in isolation. Working disparately results in communication gaps, poor collaboration, inadequate resource allocation, etc. Such an organizational structure and absence of interaction between teams can hamper innovations and affect the decision-making process.
9. A Dearth of Technology Talent
Finding technology talent may seem very straightforward. However, companies are often found floundering with finding the right technology talent for their digital transformation endeavors. 53-55 percent of companies cite the lack of technically skilled employees as one of the reasons for the failure of their digital transformation initiatives.
The challenges include the shortage of skill sets in application architecture, cybersecurity, software integrations, data migration, and data analytics. Some companies may straight away outsource digital transformation solutions and services. While that may seem right, companies with a broader digital transformation vision should emphasize building in-house resources and talent.
10. Calculating Return on Investments
Digital transformation isn’t something that skyrockets growth and has millions flowing the very next day of technology integration. It takes time for digital transformation returns to be realized. While prudent organizations continue making efforts, many short-sighted businesses hurry up withdrawing their investments and refraining from making any further ones, as they fail to realize the long-term commercial and strategic advantages.
If you too feel digital transformation isn’t worth the investment, measure the ROI in terms of increased employee productivity, enhanced customer experience, reduced customer complaints, increased business agility, etc. Keep a constant check and focus on continuous improvements to achieve more and more value from your investments.
Expedite your journey and embark on a more organized voyage to digital transformation with Fidel Softech! One of the most trusted names in digital transformation services, Fidel Softech serves as the comprehensive digital transformation partner, helping enterprises of varying sizes overcome digital transformation challenges and devise a strategy specific to their business needs. Our experts thoroughly assess your digital transformation needs and identify areas where your business requires a transformation to achieve a competitive edge. Please email us at firstname.lastname@example.org to explore more about our digital transformation solutions and services.
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