Why Companies Are Failing at Digital Transformation

In the aftermath of recent supply chain disruptions, many businesses have launched digital transformation initiatives. Their objectives are multifold — leverage advanced technology and tools, automate manual work, mitigate risks, and build resilience. 

However, not all of them are succeeding in this initiative. Many of the transformation initiatives aren’t making sufficiently deep enterprise-wide impact.

In fact, there is high probability of the project failing to meet the desired outcomes. 

Where Are Companies Getting It Wrong

The key problem lies in their ‘technology for technology’s sake’ approach. 

In other words, companies are adopting latest technology just for the sake of it, says Ryan Gianni, senior director of supply chain consulting at GEP. They aren’t making any effort to understand the key issues that plague their businesses. 

Instead, they are randomly adopting technology hoping that it would act like a magic wand and solve all issues on its own. 

Gianni explains: “So many companies try to lead with technology that they end up failing. The technology actually becomes a reason to change versus solving a specific business problem like increasing revenue or reducing costs.”

“In this situation, the broader organization is then not fully onboard and committed to the change. And because of the length of time some of these transformations take, the organization loses sight of why they are doing this. The result is that the project either gets scrapped or does not achieve what was originally expected,” he adds.

What Companies Should Do Instead

At the outset, the approach must change. A firm understanding of the key organizational issues is vital for the success of the project. 

Before adopting technology, a business must do some homework and identify the specific issues that it’s trying to solve. For instance, is communicating with suppliers the key issue? Or is it related to process or timely delivery or a lack of collaboration?

Identifying the key issue is also critical for choosing and deploying an appropriate solution.

In some cases, organizations identify the key issues but merely attempt to use technology to address these issues. 

Gianni says: “Although the organization may understand the value they are going after, many fail to understand the root cause of the issue and how to effectively circumvent that root cause and capture the value.” 

If technology does not address the root cause of the issue, it’s not going to give you the desired results.

Companies must also understand that the deployment of technology is by no means the final step. Once the technology is deployed, it should be aligned with the people and processes. Unless this alignment is done effectively, there is a high possibility of the project failing to achieve what was intended.

Finally, companies also need to ensure that they include data transformation in the solution. The master data as well as transactional data must support the technology outcomes.

The Takeaway

The entire exercise of digital transformation is not just about leveraging technology but a larger business transformation. Technology is only one component of the project, says Gianni. It is vital to build this vision into the overall plan and the digital transformation activity.