KuppingerCole Report
Advisory Note
By Warwick Ashford

Why High-Profile Digital Transformation Initiatives Fail: How to do better

A growing number of organizations are adapting their products, processes and strategies to capitalize on the benefits of digital technology, but some high-profile Digital Transformation (DX) initiatives have failed despite heavy investments. This Advisory Note looks at some of the main reasons DX initiatives fail and provides recommendations for avoiding these common pitfalls to ensure DX initiatives are sustainable and deliver long-term strategic benefits as well as short-term operational efficiencies.

1 Executive Summary

Organizations of just about every size in every sector around the world are at various stages in Digital Transformation projects because of the widely ...

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2 Highlights

  • Successful DX initiatives require a thorough understanding of market needs as well as digital technologies and their application.
  • Careful preparat ...
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3 Ten Common Reasons DX Initiatives Fail

An analysis of failed DX initiatives reveals that although DX means something different for every company, the reasons for failure fall into roughly t ...

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3.1 Market forces cannot be ignored during DX

An over-reliance on DX alone to deliver commercial success together with a failure to give due consideration to the many market forces that can affect ...

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3.2 Understanding the true nature of DX is essential

Company leaders commonly fail to understand what new technologies can do and what their impact on markets, products/services, and distribution channel ...

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3.3 Every DX initiative should focus on business outcomes

Companies often focus on particular technologies/tools rather than market opportunities and desired business outcomes. As a result, they fail to set c ...

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3.4 Leadership alignment is key to success

Failure to reach agreement internally on which strategies and objectives to pursue is common among organizations with failed DX initiatives. This make ...

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3.5 Stakeholder support helps drive DX

After leadership alignment, it is important to get support of all the stakeholders, internally and externally. DX efforts could be frustrated or under ...

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3.6 Regular reviews help keep DX on track and demonstrate value gains

Companies commonly fail to implement systems to record DX investments, progress and results.
The PwC report on the BBC’s Digital Media Initiative r ...

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3.7 DX initiatives depend on the availability of required skills

Most companies often lack the skills sets or workforce composition necessary to support and sustain digital transformation initiatives, and do not dev ...

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3.8 Effective governance ensures an integrated view of risk

Failure to implement an effective governance structure will inevitably lead to failure of any DX initiative because there will be no way of assessing ...

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3.9 DX security and architectural requirements should not be overlooked

Companies commonly fail to understand the security risks of new technologies in their pursuit of DX to cut costs, improve efficiencies and enable new ...

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3.10 Finding the right mix of skills and experience is essential

The importance of having the right skills available, ensuring there is a skills development program in place and processes to transfer skills from con ...

Figure 2: Top Digital Transformation Risks
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4 Recommendations

Although the risks of a failed DX are many, following a well-designed process for implementing change that includes some key success factors can help ...

Figure 3 displays key success factors for digital transformation. Each success factor can eliminate certain risks of DX failure. A customer focused ap ...

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4.1 Planning

  • Plan DX projects in the context of all the other market forces that could affect commercial success and do not lose sight of these market forces thr ...
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4.2 Organization

  • Consider appointing a chief transformation officer to lead a transformation team to oversee and coordinate DX activities, to ensure decisions are ma ...
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4.3 Implementation

  • Implement a system to record DX investments, progress and results so that everyone in the organization has a shared understanding of actions, progre ...
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4.4 Digital Skills

  • Start upskilling staff from the start of the DX project by acquiring startups with the necessary transferable skills or ensuring skills transfer is ...
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Copyright

©2020 KuppingerCole Analysts AG all rights reserved. Reproduction and distribution of this publication in any form is forbidden unless prior written permission. All conclusions, recommendations and predictions in this document represent KuppingerCole´s initial view. Through gathering more information and performing deep analysis, positions presented in this document will be subject to refinements or even major changes. KuppingerCole disclaim all warranties as to the completeness, accuracy and/or adequacy of this information. Even if KuppingerCole research documents may discuss legal issues related to information security and technology, KuppingerCole do not provide any legal services or advice and its publications shall not be used as such. KuppingerCole shall have no liability for errors or inadequacies in the information contained in this document. Any opinion expressed may be subject to change without notice. All product and company names are trademarksTM or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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