Increased revenue, market share, customer engagement – just some of the benefits that digitally transformed companies enjoy. As digital transformation is a change that is business-led and IT supported and enabled, it involves the entire organisation.
In our experience of helping businesses big and small with their digital transformation undertaking, we have identified 5 key challenges that they usually run into.
Organisational Resistance to Change
“If it ain’t broke, don’t fix it” is a philosophy that many people subscribe to. When people get comfortable in their processes, they are less willing to explore new avenues of efficiency – a habit that can, and usually does, hinder progress and growth of the company. This makes organisational resistance to change arguably the biggest challenge a company faces when undergoing digital transformation.
Digital transformation, at its core, is about massive change. After all, it is a transformation of your business to be more digitally relevant. Employees need to be willing to accept changes, starting from the top. Senior management of companies have been notorious for their inertia to change, due to comfort and even overconfidence in their current positions, a predicament that even market giants are not immune to.
Nokia used to be a pioneer in the mobile phone market back in the day, having a 14-year run as the world’s top mobile phone manufacturer. Nokia stuck to its strengths (hardware), but failed to follow industry trends, ignoring the importance of software for their phones. It also grossly overestimated the power of its brand and stubbornly stuck to the belief that its superior hardware designs would be sufficient for its users, even after the release of the first iPhone, and the revolution that followed. And we all know what happened next.
Resistance to change also comes about due to risk averseness. When businesses are not willing to take the leap and apply the necessary change, be it to their business model or internal processes, they, well, risk the downfall of their business.
Kodak used to be one of the top brands in the world in the 20th century, a powerhouse in the camera and photography industry. The advent of digital photography gave them the opportunity to drive the business in the right direction, e.g. they had invested in the technology for the first digital and mobile phone cameras. However, their fear of cannibalising their strongest product lines (film) prevented them from fully embracing the transition to digital. Kodak is now bankrupt.
These cases drive home the point that businesses are made of people first, and they need to be the first to change.
Lack of Company-wide Strategy
“We are all in this together”, is more than just a catchy song lyric, it is something that everyone in your organisation should internalise and believe in, for the successful digital transformation of your business.
When the different moving parts of the business are not aligned, it will eventually result in the customers missing out on the value that your product or service could have potentially brought to them.
Change management is key for the team that is leading the digital transformation efforts in your organisation. For a (relatively) smooth transition, a clear vision of the final goal that the company wishes to reach needs to be communicated to the whole business to get them moving in the same direction. This includes, and starts, from the senior management, all the way down to the 3rd party partners that you might be working with and relying on for your processes.
Hence, conducting change impact assessments, stakeholder analyses, building support and engagement from different parts of the organisations and preparing the business for new operations including new roles and responsibilities are all activities that are part of change management during the digital transformation of your business.
Inflexible Technology and Processes (Cyber Security Concerns)
The technology that you use as a company needs to transform along with your people. Digitisation and the upgrading of technology is necessary to meet the current demands of the industry, workforce and even your customers.
However, it is not just a matter of switching from typewriters to computers. As sophisticated as today’s technology has become, today’s hackers are getting just as sophisticated, if not more.
With the importance of data analysis, customer and other business-related data are hot commodities and need to be kept safe. 2017’s global WannaCry ransomware cyber-attack came as a costly reminder for businesses and other organisations who were targeted due to their outdated systems.
It is important for your business tools and processes to be regularly updated, as well as for your employees to be sufficient trained and up-to-date with the latest goings on, so as not to be taken by surprise when a cyber attack eventually strikes.
Lack of Expertise to Lead
Who does the generic ‘you’ that we keep mentioning actually refer to? Who in the organisation should lead the digital transformation of a business? What skills or qualifications should ‘you’ have?
Digital transformation done wrongly by teams without the appropriate expertise and drive leads to a waste of time, resources and even trust and morale. In worse scenarios, it might even lead to an attrition of the business’s position in the market and industry. Hence, it is important to train employees to be digitally literate and competent.
The team that leads the digital transformation of a business, first and foremost, needs to be visionary, people who can quickly identify and find ways to adapt your business to the ebbs and flows of the industry and more importantly, the changing demands of your consumers. They should also be able to suss out their competition and find ways to stay ahead of them, and adapt to any potential disruption that might take place in your industry.
Coca-Cola is one such company that has successfully adapted their marketing strategy to the changing demographics of their customers. It realised that the newer generation of millennials preferred to have “personalised experiences” with the brands that they consume, instead of just being sold to. Thus was born the wildly successful #ShareaCoke campaign, which is arguably one of the best campaigns in recent times.
Lack of Funds
Digital transformation, as we regularly emphasise, is a massive undertaking. A project this big naturally runs into high costs, from the expertise needed to the time taken and everything in between. Convincing the powers that be to allocate sufficient funds to fit the budget is not an easy task either, especially for smaller businesses.
The good thing about digital transformation is that it needs to be undertaken in stages. Developing a plan over 3 to 5 years with different phases will facilitate the planning of budgets. Pilot projects that succeed and prove the positive return on investment will also make easier to convince both the decision-makers and the organisation as a whole of the importance of digital transformation.
As with any strategy, it is important to build a stable and sturdy foundation that drives company-wide goals that can ultimately bring about value for your consumers. Having a mindset of continuous improvement and innovation is of utmost importance for your company to start enjoying the benefits of digital transformation. Digital transformation is a long journey and one that is best taken alongside someone with expertise and advice. Drop us a line to chat with our experienced team, we’d be more than happy to help!