Why companies fail at digital transformation?

Digital transformation is a hot topic amongst most small business owners in 2019. Companies are starting to understand that they need to implement digital technologies to enhance and develop business processes – or shape a new corporate culture. On the face of it, digital transformation should be simple; you introduce new digital ideas, and it improves your business. 

However, a lot of companies fail at digitization. It’s harder than it seems, and there are a few fundamental issues that lead to this failure. Below, we’ll explain some of the key reasons that businesses struggle with digital transformations. 

What is a digital transformation?

Essentially, digital transformation is the process of using new digital technologies to create new – or modify existing – business processes, culture, and customer experiences to meet changing business and market requirements. 

A simple and common example is using cloud software to store data files, as opposed to keeping physical copies of the data. Another example is the use of artificial intelligence to automate certain business processes – and so on. 

Now that you have a deeper understanding of a digital transformation, we can look at why they frequently fail:

Poor preparations

Most of the time, small businesses fail because they’re poorly prepared for digitization. It seems like such a simple and obvious thing to do; bringing more technology into an organization. As such, there’s an element of naivety at play here. You don’t realize how much of an impact this has throughout the company, and it can create issues that you weren’t ready for. 

Consequently, your business struggles to cope with the change as there wasn’t a plan in place from the start. You must create a detailed plan of action that tells you how you will start implementing these new digital technologies and software. It’s not something that should – or can – be rushed; you have to take your time and consider the knock-on effect that introducing so much new technology can have on your business. 

A lack of awareness

Following on from the idea of poor preparations, digital transformations fail when there’s a lack of awareness throughout the business. As the owner, you’re in the know. Some of your top executives or managers may also be aware of the upcoming changes, but what about everyone else? 

A digital transformation will only be successful if everyone is on-board with it. Ensure that all of your employees are aware of what’s going to happen and how it will affect their daily work processes. You need to make everyone aware of how their life will change and any challenges they might face. If you spring this change on them right away – with no prior warning – then what do you think will happen?

Realistically, your employees won’t know how to adjust to the digitization right away. They’ll come across challenges that they weren’t aware of, which leads to poor work performance. Your business starts to slow down as you spend most of your time addressing these issues and helping everyone come to terms with the new software and business processes. 

By contrast, if you spent time making people aware of this before you implemented the changes, then it leads to a smoother transition. People will know what to expect, so there will be fewer stumbling blocks in the way. 

No clear direction

Again, this also falls under the category of not being prepared or having control over the digital disruption your business faces. The fact is that some companies are different from others. As such, what works for one business may not work for others. This is where many small business owners fail as they look at digital transformations with a blanket approach. They assume that they can just copy what another organization has done because it worked for them. 

You can take inspiration from others, but don’t look at their digital ideas as this framework that you must follow. Instead, you need to look internally at your own company. Think about your corporate culture and business processes, then consider the main challenges you face in the current climate. Is there an issue with service delivery for your customers? Are you struggling to meet the rising demands because you’re doing specific things manually? Is there an issue with communication in your business? 

Identify all of your sticking points and where you’re perhaps being held back. From here, you’ll soon realize where you should start introducing new digital technologies to modify your business processes and make them better. It gives you a clear sense of direction, which helps in two ways. 

Firstly, if you just try and implement popular digital technologies for the sake of it, then you’ll run into more disruptions and issues. You’ll spend time training your employees to use software that really doesn’t improve your company in any way. It’s a waste of employee time and effort, damaging your business. Pinpoint what’s worth spending time and attention on, and you avoid wasting time and actually spend time training employees to use things that will benefit your business. 

Secondly, if you have no clear direction, then you just waste money. You invest in digital technologies that bring very little to the table – but might cost a lot to implement. In turn, your ROI is very poor, and you’ve wasted some hard-earned cash. Again, by looking at your business and seeing where you can improve, you will invest wisely in software/technologies that provide clear benefits. 

As an overall summary, we can say that most digital transformations fail because there are poor preparations and businesses have little control over the digital disruptions they face. Make no mistake about it; digitization is something you have to be aware of. But, the key is planning your approach before you jump into it. Consider what digital technologies will benefit your business, make your employees aware of the changes, and spend time getting people accustomed to the new introductions before you deploy them. This should decrease your chances of failure and allow your business to enter digital transformation with more success.