When Digital Transformation Becomes Digital Disappointment

Digital transformation is a great idea, at least until the moment a poorly-informed organization leader embraces the concept. Soon thereafter, digital transformation dissolves into a mess of confusion, unnecessary technologies, missed goals and bitter recriminations.

"Businesses have great intentions with digital transformation, but too often the hype surrounding new technologies overpowers smart decision making," explained Greg Ng, vice president of digital engagement at PointSource, a digital transformation consulting firm.

Ng noted that businesses frequently funnel their digital transformation investments into flashy technologies simply because they see other organizations doing it. "In reality, however, these purchases may not be the right fit for them, meaning they lack important capabilities or butt heads with other systems," he said.

The 2018 Digital Transformation Report, a study and survey recently released by PointSource, found that at least a quarter of companies plan to invest more than 25% of their budgets in artificial intelligence (AI), blockchain, voice-activated technologies or facial-recognition technologies. Yet over half of these organizations (53%) feel that they’re unprepared to effectively use the technologies they plan to acquire. "This disconnect is all too common for businesses that are trying to digitally transform," Ng observed.

Discontent is widespread, the study found, with 57% of senior managers and above reporting that they are unsatisfied with one or more of the technologies their organizations’ employees rely on. The study also unmasked the myth that younger companies are, by default, digital natives and therefore immune to pain. Sixty-five percent of companies with less than a decade of experience also reported technology dissatisfaction.

Multiple Challenges

The study observed that ninety-four percent of companies have increased their focus on digital growth within the last year, and 90% of respondents said digital plays a central role in their overarching business goals. Still, 60% of business leaders reported fighting with other departments over budget/resources.

Broken down by category, the top hurdles digital transformation adopters face include having to access too many systems, finding and adopting tech that actually offers real-world benefits and setting an adequate budget for tech initiatives. Driving home the importance of the first point, the survey found that 56% of companies believe that their employees have to access more systems than they should in order to earn a holistic customer view.

Overall, Ng believes that businesses themselves are their own biggest challenge. "Digital solutions and strategies exist to solve so many of the problems companies face today," he explained. “But decision makers consistently struggle to parse down to just the digital capabilities that are right for them."

Highlighting the confusion in digital transition is that fact that senior managers responding to the survey picked a different technology each time when they were asked what their biggest differentiator will be in 2018. Responses also changed over time when the managers were asked what their top initiative is, what factors will be most helpful in driving internal growth and what they’re investing the greatest amount of budget funds in.

Greg Ng, PointSource

Any organization that cannot support new technologies with cultural improvements will likely find digital transformation challenging, Ng observed. "While companies are investing in ways to effectively collect data and analyze it, many don't complement those updates with a culture that rewards and encourages employees to embrace new approaches and offerings," he said. "Adopting the technology alone won’t provide lasting benefits, and doing so actually takes focus away from the root problems the new technology was brought on to solve." Ng also suggested that company culture must support an agile methodology and team framework before any new technology investments can become sustainable.

Getting Started

To truly distinguish useful technology from flashy alternatives, businesses should learn to listen to their customers. "If the customer isn’t getting any value from the technology that an organization implements, then there’s really no point in making the investment in the first place," Ng cautioned. "Therefore, businesses need to approach tech investments with an outside-in approach, where user research informs how and when they invest." Focusing-in on useful technologies and ignoring the rest is an ongoing process, he added. "Stakeholders continually adapt their investments and make improvements based on a variety of feedback sources, users included."

"Once organizations have properly researched at-market options through the lens of their unique needs, they can then make informed, confident decisions on the emerging solutions best fit for their business model, users and goals," Ng concluded.

Technology hurdles have left business leaders:

Source: PointSource, The 2018 Digital Transformation Report