Digitally mature companies are 23% more profitable. Today, 40% of all technology spending is aimed at digital transformation. And yet, over eight in ten businesses execute inadequate digital transformations.
In our latest eBook – Digital Transformation: 6 Steps for Success at Data-Driven Companies – we outline what it takes to perform a successful, lasting digital transformation.
As a first step, companies planning a digital transformation need to understand what success and failure look like. Here’s what to consider.
$900 Billion in Digital Transformation Investments Fail Every Year. Yours Doesn’t Have to Be One of Them.
Digital transformation is one of the key technological challenges that businesses of all sectors face. As new technology makes customer acquisition more competitive than ever before, businesses must devote substantial resources and funding to building digital-first organizations that can compete in a crowded arena.
This is especially true of incumbent market leaders. A recent survey of board members and executives from these incumbent businesses ranked digital transformation as the top concern among them. They’re worried that “digital-first” upstarts will unseat them with their built-in digital efficiencies.
That’s why, in recent years, many companies have invested heavily in digital transformation. According to Harvard Business Review, companies spent $1.3 trillion on digital transformation in 2018. Based on just these numbers, the progress might appear significant. However, of the $1.3 trillion spent, an estimated $900 billion went to waste. That’s an astounding 70% failure rate.
This, of course, is the worst outcome: botching a necessary investment, and incinerating massive amounts of funding. So how, exactly, do companies implement successful digital transformations? First, the stakeholders must understand what digital transformation is and is not.
Digital transformation has different definitions, depending on the scenario, and no two such initiatives are identical. But in a fundamental sense, digital transformation refers to the digitization of business operations and business processes. This can cover anything from the automation of an accounting practice, to the migration of data from an on-premise database to the cloud. But the term is primarily used to indicate a broader, organization-wide push toward digitization.
A company can undergo a digital transformation for any number of reasons. Some seek to generate new efficiencies, such as reducing production time, boosting speed-to-market, and expediting internal communications. Others want to create and harness more data, such as generating new metrics or customer behavior data. Still others focus on improving the customer experience, such as automating billing processes. In short, there is no preset path. Each company will implement its own digital priorities.
This is not necessarily what executives want to hear. The more customizations, the more risks. Never mind the time and resources needed to implement a bespoke digital transformation. The deepest worry is that the transformation will do nothing, or worse, somehow diminish performance. After all, if a serviceable system is already in place, why rock the boat?
These are all valid concerns. And when $900 billion goes to waste every year, the choice of doing nothing or playing it safe starts to sound better. However, this is a false choice. Companies that refuse broad digital transformation now will become uncompetitive in the long-term. In order to achieve success, companies must approach digital transformation as a do-or-die initiative.
Follow Our 6 Steps for Success
In our time helping customers undergo digital transformations, we’ve developed our own template for a successful digital transformation. The template is broad enough to adapt to any use case. With these six steps, companies can build successful digital transformations for both today and the future.
Download Digital Transformation: 6 Steps for Success at Data-Driven Companies now for full access to our template!