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Successful digital transformation takes strategy, planning, and a commitment to not just use new technology, but to embrace new ways of working and changing the entire culture of a business. This seems to be something businesses struggle with. Research by global management consulting firm McKinsey found that 70% of digital transformations fail. There’s no denying the benefits digital transformation brings, but there will be challenges along the way, especially for businesses more locked in to legacy systems.
Having helped dozens of companies go through successful digital transformation in the past, we’ve seen the challenges that can come up first hand. In this blog, we’ll look at the challenges of digital transformation, and how to overcome them, so you can make the most of your digital transformation initiatives.
One of the most significant challenges of digital transformation is overcoming technological barriers. Organisations can struggle with outdated legacy systems, incompatible technology stacks, and a lack of technical expertise. As a result, implementing modern digital solutions can be challenging and time-consuming. Investing in modern infrastructure and platforms that can scale and adapt to evolving and growing business needs can help to overcome many of the technological barriers organisations experience with digital transformation.
To do this, a robust technology strategy is needed that aligns with IT and commercial objectives, enabling cross-functional collaboration by removing siloes or barriers between people, technology and information. For example, moving onsite servers and data into the cloud can not only reduce operational costs, but make it easier for teams to store, access and analyse data remotely, improving collaboration on projects and improving operational efficiency.
The second challenge of digital transformation is overcoming organisational resistance. Change can be difficult, especially when legacy systems or processes are deeply embedded into how a business operates or how employees work. Without proper management, this change can create anxiety, uncertainty, and resistance from employees who are comfortable with the status quo. A clear, well communicated vision is essential to overcome any organisational resistance. Teams need adequate training and support to adapt to new technology and ways of working. They also need reassurance that new technology is being adopted to either help them work more effectively, or to remove arduous tasks so they can work on more interesting projects.
Objections to change are common in projects involving automation. Employees can be resistant to this because they can view automation to mean replacing them. Instead, it should be clear that repetitive tasks are the target for automation, which ultimately gives teams more time to work on bigger value projects. By involving employees in the digital transformation process, organisations can increase buy-in and reduce resistance.
The third challenge of digital transformation is security and privacy concerns. As organisations adopt digital solutions, new risks associated with data-breaches, cyber-threats and regulatory compliance around data management emerge. Robust security, privacy policies and procedures are needed to mitigate these risks, ensuring businesses remain in compliance with the relevant laws and regulations.
A prime example is having robust policies to handle sensitive customer data in line with GDPR. Failure to meet these requirements can result in large fines, not to mention potential reputational damage from becoming the victim of a data breach. Along with security and policies, cybersecurity and awareness training are needed to promote a culture of security throughout an organisation. This is critical because human error is the main cause of 82% of data breaches, according to research. By prioritising security and privacy, organisations can build trust with their customers and stakeholders.
The fourth challenge of digital transformation is addressing skill gaps and talent shortages. This is huge problem in the UK, with 81% of bosses saying a lack of digitally skilled employees is hurting their business. Adopting digital solutions is one thing, but it requires the necessary talent to use, develop and maintain them. With a lack of talent on the market, a rethink is needed for how organisations can invest more in training and development to upskill existing employees. This brings huge potential for businesses. With internal training a priority, it allows them to focus less on recruiting for skills, and more on culture fit, which increases the chance of retaining talent in the long-run.
Overcoming the skills gap also calls for a stronger partnership between employers and educational institutions and industry associations. By understanding the needs of the market, education can focus more on the skills needed in the modern workforce, allowing students to build better careers, while plugging skills gaps. More work is also needed in encouraging a wider amount of people to take up different careers like those in technology or STEM careers.
The fifth challenge of digital transformation is addressing budget and resource constraints. Implementing digital solutions can be costly and require significant investment in infrastructure, platforms, and talent. However, many organisations operate with limited budgets and resources. This is particularly true in companies with legacy systems embedded into large areas of the business and employees who struggle to move on from the status quo. Prioritising digital initiatives based on potential to deliver value and impact is key here.
Achieving buy-in from senior management requires accurate costs and ROI projections to demonstrate value and the long-term benefits. However this is also something that can be driven from higher up the business with a more digitally savvy boardroom. By being creative and exploring new ways of working, there’s no reason organisations can’t overcome any budget or resource constraints that could hold back digital transformation projects.
If you’re interested in finding out more about the benefits a digital transformation could bring your business and customers, speak to Elite Group. Our expert consultants are highly experienced in delivering technology solutions for businesses looking to make a change and make the most of modern processes.