To weather the storm of surging technological innovation, impulsive decision-making without any clear direction has led to mounting rates of technical debt and failed digital transformation projects.
According to McKinsey & Co, 70% of digital transformation efforts fall short of their desired targets, demonstrating a widespread inability among organizations to keep up with their own overambition when turning to the ‘latest and greatest’ tech solutions at breakneck speed. Having overindulged, moving too fast for too long, organizations are feeling the pinch of a subsequent digital hangover and are in dire need of digital detox to restore their foothold on their digital transformation journey.
So how did we get here? The proliferation of AI and hybrid cloud environments to bolster efficiency and streamline workflows across departments has set the standard for digital transformation. In line with this trend, an awareness of increasingly sophisticated cyber threats prompts fear within organizations and leaves them with a prevailing sense of vulnerability. In a rush to deploy the latest technologies, organizations tend to overcompensate and overspend – a problem made worse by the seemingly exponential rise of high-profile breaches reported in the media.
Navigating the digital hangover
Similarly, to be seen as taking a proactive approach to threat mitigation and to keep up with competitors, organizations are failing to establish a clear understanding of how certain solutions will actually protect their specific environment. By neglecting their unique risk profile and making impulsive decisions as to where investments are made, IT professionals are tasked with managing technologies and lacking an overarching strategy for effective deployment and favourable ROI. Only by establishing what improvements are needed, where they can be implemented and how success can be measured over time will an organization be able to navigate today’s digital landscape successfully.
Incremental improvements that contribute to a scalable growth model will ensure IT professionals don’t bite off more than they can chew and allow teams to adopt new technologies without becoming overwhelmed. When digital transformation projects align with business goals and take stock of where existing infrastructure can be utilised more effectively, businesses can cut out redundancies and ensure their investments deliver real value. Sometimes, less is more.
As well as soaring rates of innovation, adoption of digital technologies to meet ever-changing internal and external demands has accelerated alongside the unprecedented socio-economic implications of COVID-19. In doing this, however, organizations’ tool stacks have become bloated over time, causing wastage across the board while inadvertently endangering data security. When implementing these new technologies, organizations have long since been drinking from the bottle; now it’s time for IT professionals to stamp out bad habits and develop a clear vision and roadmap for their digital transformation.
A path to recovery
Businesses should first prioritize use cases, investing only in solutions that address a specific need, such as improving user experience or boosting efficiency, to ensure their efforts are focused and intentional. The next step is to consider the vital aspect of human intervention that is so essential to the deployment of any new tech-based solution within an organization.
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With technologies like AI frequently automating data-intensive and time-consuming tasks, leaders must remember that these innovations are not comprehensive solutions but tools to assist their human enablers.With this in mind, organizations must prepare their people for digital transformation initiatives by conducting a thorough skills gap analysis to establish areas in which a workforce is lacking necessary expertise and where they might benefit from upskilling through continuous training.
A cultural shift may also be needed across departments to leverage the right solutions in the right way. By fostering a collaborative and willing culture that understands why, where and how tools are contributing to business goals, organizations are more likely to find success with a pragmatic and staggered approach to digital transformation.
With worldwide spending on digital transformations set to reach $4 trillion by 2027 according to IDC, businesses will need to avoid the increasingly routine issue of projects failing before they have even begun. It is of course true that without the necessary infrastructure in place to support the proposed transformation, positive ROI will remain a distant possibility, but organizations should first establish KPIs to measure the ROI of planned digital transformation efforts.
A recent study suggests that $2.3 trillion is wasted globally on failed digital transformation programs, and with global spend in this area increasing year on year, this figure is likely to increase and enhance scrutiny surrounding how a business can measure its ROI. It is important to note that metrics used to measure ROI will vary depending on the size and nature of the business, as well as the scope of the transformation project itself, but organizations should not consider financial performance as a sole indicator of ROI.
Avoiding future failures
Looking at operational efficiency, employee engagement and customer experience metrics are key examples of where ROI might be determined. A clear picture of how much value is being gained relative to what was spent is an invaluable asset to any IT professional looking to scale their digital transformation project as without this, those elsewhere in the organization are less likely to sign off on future investments.
The exploding rates of technical innovation in recent years have prompted the need for a digital detox as many businesses have seen digital transformation efforts barrel out of control over time due to impulsive decision making. Moving at breakneck speed without any clear direction, technology organizations, as well as crucial providers and vendors, have no choice but to address this unsustainable growth model. With such rapid rates of innovation, digital solutions become obsolete before they are even put to production, forging a double-edged sword that prevents use of the latest and greatest tech and makes it more difficult for companies to gauge ROI.
Having moved too fast for too long, the industry doesn’t appear to be applying the breaks anytime soon. Only when innovation reaches a plateau will leaders be able to focus their efforts on stabilising their IT infrastructure, addressing emerging issues surrounding safety, security, and ethical usage.
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