By Tjaart Malan, Head of Cloud Success Services Africa at SAP
For many organizations, the last few years have been the most disruptive in living memory.
Organizations and their IT teams have had to accommodate huge changes to the way people work and deploy new technology tools to support their teams while unlocking new capabilities to meet changing customer demands.
Since the start of the pandemic, organizations have had to enable remote and hybrid work environments, digitize their supply chains to better deal with disruptions, and utilize technology to develop new business processes and revenue streams, all the while delivering an exceptional customer experience.
Despite the worst of the global pandemic seemingly over, spending on digital transformation continues apace. Global investment into digital transformation is expected to reach $ 1.8 trillion in 2022, a 17.6% increase over 2021. By 2024, it is expected that direct digital transformation investments will account for 55% of all ICT investments.
Despite this abundance of digital transformation initiatives, few companies achieve the outcomes they seek. One survey found that only 14% of companies that have begun digital transformation projects have seen sustained performance enhancements as a result.
For technology companies and their partners, this poses a serious challenge. Every digital transformation project that falls short of expectations is a wasted opportunity for innovation, not to mention the sunk costs and time.
The customer expectations of what their digital transformation should achieve have also changed. Common expectations for modern business transformation initiatives include clear, positive business outcomes, an exceptional customer experience, and a high level of engagement velocity to ensure the project runs smoothly and can achieve its milestones according to strict timelines.
The reasons for failure can vary. Typically, digital transformation projects fail because of a lack of clear goals, poor leadership support, and ineffective change management which may lead to internal resistance, lack of suitable skills, and poor understanding of the current state of the business and how the digital transformation is meant to enable new capabilities.
However, common digital transformation challenges can be overcome. In our experience working with organizations across the continent and the world, the following four methods can greatly improve the chances of digital transformation success:
One of the biggest obstacles to a successful digital transformation initiative is a lack of clarity over what the transformation is meant to achieve.
Is the business seeking efficiency gains in high-priority business processes? Does the business need new capabilities for managing its workforce, or is it a matter of meeting changing customer expectations?
Without a solid business case, digital transformation initiatives will fail to illustrate value since there’s no clear way to measure progress.
Technology companies and their implementation partners have well-developed tools and processes to help organizations measure their present level of digital transformation maturity, identify clear areas for improvement, and then provide input on a transformation plan that aims to deliver gains in the priority areas.
One of the biggest changes in how organizations adopt and consume new technologies and associated capabilities is in the concept of continuous value generation.
Digital transformation projects are no longer only measured by the immediate outcomes, but also by how the organization can continuously generate greater or different forms of value from their investment.
For example, a retailer that invested in a new customer loyalty system may want to use the data from that system to deliver hyper-personalized offers, or even launch new products and services tailored to customer preferences.
Rather than start an entire transformation project from scratch, the retailer would benefit from simply building on what has been done to date, ably supported by expert partners that can guide the project to a successful outcome.
Technology companies and implementation partners, therefore, need to look beyond just one successful project and take an approach of continuous value generation. It’s less a case of knock-and-drop and more a case of partnering for the long term.
A lack of appropriate skills can undermine the success of any digital transformation initiative. The IDC estimates that IT skills shortages will affect 90% of organizations by 2025, at a cost of over $ 6.5 trillion.
Without access to the correct skills, organizations will fail to successfully complete digital transformation initiatives, and will not generate the desired value through new digital capabilities.
In response, organizations should invest in programs and partnerships that can ensure a steady mix of relevant skills. This can be done through internal skills development initiatives, collaboration with partners that have the correct skills mix, or other skills development programs.
Initiatives such as SAP Skills for Africa, for example, provide African organizations an opportunity to secure SAP-trained graduates that have gone through a months-long work readiness and skills development program and can make an immediate impact on digital transformation efforts.
No digital transformation initiative can succeed when end-users don’t adopt the new capabilities to drive the desired outcomes. In fact, a poor change management program can undermine the entire project’s success at the last mile, scuppering months of work and leaving the organization with lower levels of competitiveness.
However, the opposite is also true. From internal resistance to change to poor adoption of new capabilities, several common challenges with successful transformation initiatives can be addressed through an effective change management program.
And yet, only 34% of change management initiatives are a clear success, and half fail outright.
Here, technology partners can play a vital supporting role. By providing insight into common obstacles and best practices from similar projects elsewhere, technology partners can help organizations identify high-impact areas for effective change management and ensure business users are supported and enabled all along the way.
This can drive greater adoption of the new capabilities that resulted from the digital transformation project, and help the business drive positive outcomes that can boost competitiveness, unlock new revenue streams, drive innovation and achieve efficiency gains in the project’s priority areas.