We were able to put these learnings into a best practices matrix or what we refer to as a “digital helix,” because all seven drivers are distinct, but inextricably interconnected like DNA. The digital transformation market is expected to grow at a CAGR (compound annual growth rate) of 22.7 percent from 2019 to $3,294 billion by 2025. So we actually ended up writing a chapter on culture and optimal high performance because all of the winners said that was one of the underlying secrets in the success process. : Digital transformation for its own sake won’t work. Although it’s a staggering number, the rate of digital transformation failure hasn’t altered the belief that such efforts are crucial to the future of organizations across the spectrum of industries — and for, We know the ‘why,’ so it’s time for the ‘how.’. And now we’ve identified the core seven driver of digital transformation and created an algorithm to help companies assess where they are in the process. Related reading: Why it’s not too late for your digital transformation journey. Reskilling and upskilling on the part of businesses, and “incentives and regulations to infrastructure projects and taxation” for governments. So why is the failure rate so high? This also includes a plan to skill approximately 100,000 people in Greece in digital technologies by 2025. “Business-savvy CIOs who deploy highly adaptive strategies and technology to rapidly respond to the impact on their firm’s operations and customers will lead from the front,” explains Forrester’s recent, As two World Bank economists argue in Harvard Business Review. We know this isn't perfect and more importantly if you believe in the idea of a digitally transformed world where we actually look through a digital lens to do things more immediately in a more satisfying way and cheaper you can help other people do this. So that's an issue of focus and there’s still a lot of work to do. Michael Gale: Yeah, the underlying tonality is that you can do a strategy once, you can borrow the technology once. Digital transformation is having a moment. This also includes a plan to s. kill approximately 100,000 people in Greece in digital technologies by 2025. is a look at the progress of organizations in their investment towards digital resilience. A plan. I think the analogy we took on it, is that this is like the industrial revolution. Making them “, among the most sustainably designed and operated in the world.”. But to get to the heart of why transformation fails, we need to understand feedback loops. The standard of permanent and full-time work has given way to a gig economy. First Communication Problem Surfaces In Covid-19 Vaccination Campaign; General Takes Responsibility For Snafu, What Leaders Can Expect In 2021 And How To Best Prepare, How The Navajo Nation Is Transforming Math Education. The Two Big Reasons That Digital Transformations Fail Results from a study of 1,350 companies. Let’s go a bit deeper. Firms every year spend $1.3 trillion on digital transformation programs to improve efficiency because digital leaders outperform their peers in nearly every industry. The economists laid out three foundational truths about the pre-COVID state of technology: Simply put, “it is likely that the pandemic will reinforce these pre-existing trends and increase the urgency of corresponding policy responses,” explain Saliola and Islam. “Building on Microsoft’s 35-year history in Sweden and strong partnerships across the energy, manufacturing and retail sectors, we are looking forward to delivering the Microsoft Cloud from this new datacenter region in 2021,” said Jean-Philippe Courtois, Executive VP and President of Microsoft Global Sales, Marketing and Operations. Another impo… DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries. three cases of initial digital transformation failure. EY & Citi On The Importance Of Resilience And Innovation, How Digital Workflows Helped Save Basketball During The Pandemic, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation With Forbes Insights, How Ambition Can Torpedo Your Career And How To Prevent It. They think they can have strategy and technology and it just doesn't get them there fast enough or in a good enough way. We know this isn't easy. Prior to that I was Forbes staff writer, Chief. As Morgan advises, “Digital transformations are often done best with a handful of passionate people leading the charge instead of thousands of employees.”. Can the momentum keep going? Thanks to tech, the very nature of work has been changing over the last few years. Michael Gale: We built a set of questions about these challenges and drivers and I was really shocked to some extent how complete they were after we completed the interviews. Why 84% of Digital Transformations are Failing Everywhere I look these days, companies are showing off their digital transformations. “With the right steps and actions, businesses and governments can take the crisis as an opportunity to build for the future.”, 4 ways to plan for the post-pandemic normal, Five key trends shaping the application landscape, The irony of industry disruption and digital transformation ROI, Mary Anne Moser aiming to put Calgary Science Centre in global top 10, Precision agriculture sowing the seeds for Canadian economic prosperity. Translating business goals into digital strategy is a key task that leaders cannot delegate. Tech has been “challenging the traditional boundaries of firms, changing global value chains and the geography of jobs.”. Takeaway: Quality over quantity. I am the SVP of Marketing at G/O Media. However, digital transformations that are intended to improve efficiency (e.g., ERP, CRM, Analytics, etc.) A new business unit called GE Digital followed in 2015, with the goal of turning GE into a technology powerhouse. “With the right steps and actions, businesses and governments can take the crisis as an opportunity to build for the future,” explain two World Bank economists. Just 16 percent of executives say their company’s digital transformation efforts are succeeding. “Instead of ramping up quickly, only to ramp down painfully,” explained, , “it would be much better if companies can make steady progress toward the right end state without making such costly mistakes.”. Redressing the failure rate of Digital Transformations webinar Synaptek. Without strategic focus, “the company was simply too large to transform all at once, especially without a true vision of what it was trying to achieve,” explains Morgan. Digital transformation projects do not fail because there is a shortage of AI. We’ve been talking about it for 15 years. Despite being expensive and embarrassing, digital transformation failure happens, and it’s often because of common mistakes. They forced us to sort it out. © 2020 Forbes Media LLC. Most Digital Transformations Fail, Here’s How to Change That. (Lead Economist in the Jobs Group of the World Bank and co-Director of the World Development Report 2019), (Senior Economist for the Middle East and North Africa Region of the World Bank Group), “to reshape technology as a job creator, it’s important to understand what, exactly, the current wave of technology is changing, and how policymakers and businesses can adapt to it.”, It has always been a disruptor. Over and over, widespread reports and surveys show that — in the wake of the COVID-19 pandemic — DX efforts have accelerated. In terms of geography, digital resiliency investment had the fastest growth in the Asia/Pacific region. All Rights Reserved, This is a BETA experience. “Technology can be a boon to society if businesses and governments prepare and adapt,” they write. Basically, one in eight got it right and then there were ranges of failure to really whereby more than 50 percent just didn't go right at all. As two World Bank economists argue in Harvard Business Review, “technological advancements were already changing the world over the past two decades,” and that in the midst of threats from automation and offshoring, it’s important to realize that tech can act as a job creator for economic recovery. The news comes on the heels of Microsoft’s announcement of a significant digital transformation investment in Greece, involving the construction of new datacenters. faced troubles from the start of its initial digital transformation journey back in 2012. have a high failure rate (up to 90%), resulting in adverse impact to firms' operations and intent to further innovate. One: The business or organisation never defined what ‘digital transformation’ means to them All businesses are unique and ‘Digital transformation’ means different things to different people. Bruce Rogers:  What are the common challenges to getting it right for these companies? He is a recognized industry expert in integrated technology marketing, having founded Strategic Oxygen in 2001, which is widely seen as one of the technology industry’s primary data toolset for marketers. Understand what it took to change culture, what it took to make things more high performance and empowering people to make decisions on their own was the number one truth that people really struggled with. have a high failure rate (up to 90%), resulting in adverse impact to firms' operations and intent to further innovate. Microsoft is investing in Sweden thanks to the Scandinavian country’s strong commitment to sustainability and innovation. This may take 15 years. In other words, keep an eye on your competitors. Business transformation is almost always a technology problem. Related Article: Failure to Launch: 5 Causes of Digital Transformation Failure Pitfalls on the Road to Digital Transformation: What to Avoid . Some are getting it right and others struggle. How can DX be leveraged so everyone can be better off, post-COVID? “The next several months may put increased pressure on some organizations to respond to second waves of COVID infections and economic lockdowns, which will be reflected in our monthly surveys throughout the winter,” adds Minton. ... Have you wondered why so many digital transformations fail? VideoMy conversation with Michael Gale on the trials and tribulations large companies still face on their journeys towards digital transformation. Estimates vary, but failure rates range from 60 to 80 percent and don’t seem to improve over time. Digital-first companies are thriving, the gig economy certainly isn’t going anywhere, and “firms may also have more incentive to invest in automation and reshore production to shield against value chain disruption.”. Making them “among the most sustainably designed and operated in the world.”, The company is now making good on their pledge with a press release from November 24, confirming they’ll launch a “world-class, sustainable datacenter region in Sweden in 2021 with presence in Gävle Sandviken and Staffanstorp.”, Today, we’re announcing plans to launch a new, sustainable cloud region in Sweden next year. Michael is a partner at PulsePoint group. P&G wanted to become the world’s most digital company, but its goals and initiatives were too broad — especially since the economy was in a slump at the time, and they were already industry leaders. In fact, according to KPMG’s Global Transformation Study, over 90% of polled companies have completed a transformation in the last two years. Strategy must be a component. Companies are beginning to report high failure rates for digital transformation, similar to failure rates for large-scale transformation in general.There are too many legacy systems, too much technical debt, and too many functional and business unit data silos to overcome. Most change programs fail … and for predictable reasons 5 30 70 Employee resistance to change Management behavior does not support change Inadequate resources or budget Other obstacles 39 33 14 14 % of efforts failing to achieve target impact Change program failure rate Reasons for failure SOURCE: McKinsey Quarterly Transformation Executive Survey, 2008; Next Generation PMO KIP Team Saliola and Islam reference World Bank and World Economic Forum reports that show (unsurprisingly) positions and organizations that have put WFH measures in place are more prevalent in wealthier countries and regions, and that women and young people are more likely to hold positions where WFH isn’t feasible. Unfortunately, most digital transformations are still run with IT project management methodology, which misses the need to completely change the culture of the organizations themselves. James Macaulay Executive Education March 30, 2019. The company is now making good on their pledge with a press release from November 24, a “world-class, sustainable datacenter region in Sweden in 2021 with presence in Gävle Sandviken and Staffanstorp.”, The news comes on the heels of Microsoft’s, announcement of a significant digital transformation investment in Greece, , involving the construction of new datacenters. It's that dramatic. Takeaway: Digital transformation for its own sake won’t work. , “technological advancements were already changing the world over the past two decades,” and that in the midst of threats from automation and offshoring, it’s important to realize that tech can act as a job creator for economic recovery. The datacenters will be powered by 100% renewable energy + @Microsoft’s hyperscale cloud will be the first with hourly matching for renewable energy consumption. Digital transformation failure taught brand importance of planning Sportswear giant Nike is now a leader in digital business, but the retailer faced digital transformation failure. This is especially important now with this year’s digital transformation acceleration. Formerly I founded the SITO Institute for Consumer Behavior and Location Sciences. Prior to that I was Forbes staff writer, Chief Insights Officer and founder of Forbes Insights and the CMO Practice. Nike launched a new business unit called Nike Digital Sport in 2010 to take the lead on digital initiatives and create new technological capabilities across the company. As Morgan advises, “Digital transformations are often done best with a handful of passionate people leading the charge instead of thousands of employees.”. Elaborating further, Hélène Barnekow — General Manager of Microsoft Sweden — explained that Sweden is an ideal environment for such an investment because of its renowned leadership in sustainability, innovation, and gender equality: “It is one of the places in the world where IT and tech have the greatest potential to create new opportunities for the individual, the organization and society, she said. Bruce Rogers: What surprised you? I think we started with two or three questions but we added more and more questions about what works and what doesn't. In fact their expectations were neither met nor exceeded and the gap between expectation and meeting were so enormous it was considered a failure. Understanding systems gives us a clear insight into why we see such a high digital transformation failure rate. Thanks to the pandemic-related shift to work-from-home and the aforementioned increase in cloud adoption, significant investments have been made in security. According to Federica Saliola (Lead Economist in the Jobs Group of the World Bank and co-Director of the World Development Report 2019) Asif Islam (Senior Economist for the Middle East and North Africa Region of the World Bank Group), “to reshape technology as a job creator, it’s important to understand what, exactly, the current wave of technology is changing, and how policymakers and businesses can adapt to it.”. The second thing is everybody said this is a fundamental shift in how people had to think about how they interact, how they collaborate and work and if you don't spend time changing people's behaviors, you don't spend time changing culture and how people make decisions, all of this falls flat. “What we have learned already this year is that the organizations which were among the early adopters of cloud, digital, and collaborative technologies were best-positioned for a crisis no one could have predicted.”. The difference between rapid adaptation and simply responding to disruption? In this case, digital transformation as less of an actual transformation and more of a pivot into a new business area,” writes Morgan. “Digital resiliency refers to an organization’s ability to rapidly adapt to business disruptions by leveraging digital capabilities to not only restore business operations, but also capitalize on the changed conditions,” explains Stephen Minton, VP in IDC’s Customer Insights & Analysis group. That may have taken 85 years. (Research and Markets) Are there digital transformation failure statistics? The evidence is piling up that organization-wide digital transformation is challenging for many organizations. P&G wanted to become the world’s most digital company, but its goals and initiatives were too broad — especially since the economy was in a slump at the time, and they were already industry leaders. A year or two ago, I thought that failure rates might actually be declining. I am the SVP of Marketing at G/O Media. It’s similar to the approach of the recent OECD report showing that DX is critical for recovery in Latin America and the Caribbean — but on a global scale. Why it’s not too late for your digital transformation journey. He has worked directly on over 500 global programs and campaigns for major technology brands since 2001. “Business-savvy CIOs who deploy highly adaptive strategies and technology to rapidly respond to the impact on their firm’s operations and customers will lead from the front,” explains Forrester’s recent Predictions 2021 report. According to a new study from Genpact, more than two thirds of digital transformation projects entered into fail to meet expectations. But it is never just a technology problem. The vast majority of organizational change efforts fail. “The premium for skills that cannot be replaced by robots has been increasing,” they explain. Michael is a partner at PulsePoint group. As it’s frequently said: We know the ‘why,’ so it’s time for the ‘how.’. Estimates of digital transformation failures range from 66% to 84%. Plenty, apparently. A new business unit called GE Digital followed in 2015, with the goal of turning GE into a technology powerhouse. Stock prices dropped as other areas of the company saw a drop in quality. “Investments in digital capabilities not only enable an organization to adapt to the current crisis but also to capitalize on the changed conditions.”. So it became sort of a co-created process, much quicker than I ever would have expected which actually surprised me. While US investment increased in October, Europe’s had a slight decline in the same period — as the continent was experiencing a significant surge in COVID cases and restrictions. Here’s a quick round-up of some of the key reasons. While billions of dollars were being spent, GE stock price kept dropping and other areas of the business took the hit. As it’s frequently said: We know the ‘why,’ so it’s time for the ‘how.’ For Forbes, customer experience futurist […] Michael Gale: For most of the people we interviewed, it was easier than we thought, once we helped them understand the data from our research showing that most companies fail at it in some fashion. I try to bring in checklist simplicity to this topic as a way to improve the 70% failure rate of digital transformation. show that — in the wake of the COVID-19 pandemic — DX efforts have accelerated. 7. Subscribe to the Banking Transformed Podcast What digital transformation will look like in 2020, Connecting with ‘US:’ The necessity and value of the Internet of Things, The importance of data access for digital initiatives, “Digitization is not a panacea for everything”, Sustainable datacenter region coming to Sweden in 2021, accelerating the country’s digital transformation, Where is the financial value in AI? In other words, I believe digital transformation and ERP failures are on the rise – and will continue to be for the foreseeable future. Companies also often perceive the cost of the transformation program to be the cost of bringing technology in, but they fail to account for the far-reaching impact these programs have. And people seem to respond to that emotional appeal because they want to try and change the world. Although it’s a staggering number, the rate of digital transformation failure hasn’t altered the belief that such efforts are crucial to the future of organizations across the spectrum of industries — and for a variety of reasons. Loading... Unsubscribe from Synaptek? Bruce Rogers: You have done a lot of research and analysis on the topic of Digital Transformation within the Enterprise, tell us what you are seeing? IDC’s new Digital Resiliency Investment Index is a look at the progress of organizations in their investment towards digital resilience. http://amzn.to/OETmMz. Copyright © 2020 Digital Journal Inc. All Rights Reserved. The simple answer is, of course it is. Firms every year spend $1.3 trillion on digital transformation programs to improve efficiency because digital leaders outperform their peers in nearly every industry. Better integration. I am the co-author of "Profitable Brilliance: How Professional Services Firms Become Thought Leaders" now available on Amazon. Companies with successful digital strategies (for example, the Washington Postturnaround) and countries such as Singapore (which is a leader in digital) are a testament to this. So what we actually got was people collaboratively building the content in the book for best practices which was really cool. Michael Gale: I wouldn't say generations. “We believe that digital transformation should always be both inclusive and sustainable.”. How Does Europe Remember The Arab Spring 10 Years On? Bruce Rogers:  I'm surprised we're still talking about digital transformation. 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