Digital transformation churn: Why the digital transformation fail rate is so high
The digitisation of the global economy has had many effects on global enterprises but few are more significant than the overwhelming desire to undergo digital transformation. Modern companies are under tremendous pressure to undergo this process lest they be left in the past, but digital transformation failure rates have become a major problem.
Unfortunately the pressure placed on companies to update their operations has lead to companies rushing to incorporate new technologies without fully understanding how they will improve their daily operations. In the past it has been noted that a whopping84% of companies fail to achieve digital transformation.
The reason for this astronomical digital transformation failure rate has been attributed to everything from complexity to poor organisational structure. While these factors have their place in explaining the high rate of failure amongst modern enterprises there is a more simple explanation; unrealistic expectations.
Approaching this process with unrealistic expectations is one of the main reasons why digital transformation can fail. Not only are companies are under constant pressure to position themselves as ‘thought leaders’ but there is no universally agreed route to implementation.
Over the past few years this digital metamorphosis has become synonymous with adopting new technologies. The term itself provides little guidance for CTOs and decision makers when setting the technological agenda in an enterprise. On the other hand, the same few technologies come up time and time again: cloud services,artificial intelligence,big dataand theInternet of Things(IoT).
While all of these technologies are useful they aren’t relevant to most organisations. Therein lies the problem which could partly explain the digital transformation failure rate.. No two organisations run the same, and there are no technologies that will mesh with every business process. By looking at each of these technologies individually we see that they aren’t a one-size fits all solution.
Firstly we have cloud services. Cloud services are a popular method of digital transformation because they offer a decentralised way for companies to connect to centralised services that are accessible onsite and remotely. Thus many organizations have been encouraged to create private cloud services to stay with the times.
The problem is that private clouds aren’t relevant to most organisations. AsSubbu Allamaraju, Vice President of Technology at Expedia puts it, “unless you’ve at least 200,000 servers in multiple locations, or you’re in specific technology industries like communications, networking, media deliver power etc, you shouldn’t be in the data centre and private cloud business”.
No less important is that by designing a cloud platform you take on a whole host of software management concerns. As Subbu notes, “resiliency remains a pipe dream” because “most private clouds are not resilient to common infrastructure or software failures”.
Unfortunately the story isn’t much better for big data either. The idea of hoarding data to mine out undiscovered insights has caught out many an unsuspecting decision maker. Many companies spend thousands deploying and maintaining data collection platforms for data that they fail to use.
