Thought Leadership

Critical Lessons From Digital Transformation Failures

The pandemic has accelerated the digital transformation curve, with many companies rapidly moving digital. Yet, Bain & Co. research found that only 8% of global companies have successfully achieved their digital transformation goals.

Despite the dissatisfying statistics, more than half of the IT leaders polled by Workspace solutions provider Citrix agreed that they learned from previous experiences and now understand how to use that knowledge for future projects.

So what did these companies do wrong that led to these adverse outcomes? How can they avoid making the same mistakes done by other organizations previously?

Here are 3 case studies that pinpoint the three most common mistakes.


1. Not Integrating It Into The Company Entirely

Haribo, the gummy bear manufacturer, tried implementing SAP in 2018 to enhance its user experience. The company spent millions of dollars in implementation and eventually succeeded but with a few bugs integrating it into their supply chain. Soon after their digital transformation was complete, Haribo ran into terrible supply chain problems; they couldn’t track their inventory or raw materials and couldn’t get the inventory to their stores in time. Subsequently, their sales dropped roughly 25% shortly after the transformation, and gummy bears were largely unavailable for a while in 2018.

Lesson: Always integrate digital transformation efforts with the rest of the company and track progress at every stage. Digital transformation is about making the company more tech-friendly. However, the work does not end after implementing new technologies. These new technologies should then be followed by business processes that support them and employees trained to utilize them successfully.


2. No Clear Roadmap And Implementation

Hewlett Packard spent $160 million on an ERP project. However, they failed to establish it since they did not have a clear roadmap and could not implement it correctly at every stage. The damages caused to the company due to the failed implementation were nearly five times the initial amount they spent. At that time, the company’s CIO said, “We had a series of small problems, none of which, individually, would have been too much to handle.” However, combining these minor problems brewed a catastrophic storm resulting in massive financial losses for the company.

Lesson: Having a well-defined roadmap is crucial while setting up your company’s digital transformation. Research indicates that 87% of businesses believe that digital technologies will disrupt their industries, yet only 44% feel adequately prepared for those projected disruptions. Assess where your company stands and draw a roadmap based on the needs of employees and upskilling required to make the transformation a success.


3. Lack Of Commitment

To stay ahead of the curve, the BBC launched its Digital Media Initiative (DMI) in 2008, an ambitious project set to modernize production operations and change how the BBC managed data and provided content to audiences while reducing costs. German technology conglomerate Siemens was their technology partner on the DMI project without running an open procurement process. They soon lost the contract in 2009 after numerous delays and rising costs. BBC then brought DMI in-house, but problems persisted as the corporation did not have the required technical capability to deliver the challenging programme.

Consultancy firm PwC reviewed the project and found a lack of oversight as no Executive steering board was keeping DMI on track, alongside incompetence of the overall governance structure to effectively manage the project’s complexity. The report also noted that while technological advancement was prioritized, improving business practices and operations didn’t receive the same focus.

Lesson: Commitment is necessary for an organization to learn how to do anything new. Leadership must align and understand that the transition will hurt. It would help if you let your team know that it will be challenging, but the company will endure and succeed. Nurturing a good company culture also plays a significant role in adapting new processes.

In Conclusion:

As Amit Zavery, VP and Head of Platform, Google Cloud, said, “Think of digital transformation less as a technology project to be finished than as a state of perpetual agility, always ready to evolve for whatever customers want next, and you’ll be pointed down the right path.”