What are the Biggest Challenges to Digital Transformation?

What are the Biggest Challenges to Digital Transformation?

What are the Biggest Challenges to Digital Transformation?

  • circle-user-regular
    Softude
  • Calendar Solid Icon
    February 3, 2022
What are the Biggest Challenges to Digital Transformation?

Companies across different industry verticals are rapidly investing in high-end digital transformations for improving productivity and delivering innovative customer-centric software solutions. Digital native companies continue reshaping existing markets, leaving conventional incumbents susceptible to significant disruption. As enterprises all around start exploring the digital transformation pathway, they should understand specific industry-centric challenges along the way. 

Digital Transformation in 2021

The challenges associated with digital transformation in 2021 were quite new and exciting while coming along with some obstacles. The COVID-19 pandemic has only accelerated the process of digital evolution across all industry verticals. The ongoing global pandemic has only highlighted the challenges associated with digital transformation services previously. 

The Impact of COVID-19 on Digital Transformation

The concept of digital imperative is not even entirely new. This is because several organizations were planning out the digitization of different aspects of the respective business quite before the advent of the global pandemic. In this manner, digital transformation no longer just serves to be a pathway towards attaining competitive benefit. On the other hand, it also depicts an essential process for keeping up with the trends of the modern era. 

The fact that is new is the rapid acceleration of the all-new digital imperative. After the implementation of the global lockdown measures, the world suddenly has suddenly been flooded with a myriad of digital adopters. For instance, we observed the following:

  • Workforce going remote
  • Conventional brick-and-mortar buyers heading towards online shops
  • Businesses offering their customers advanced VR and AR experiences

A number of businesses had been forced to deliver experiences across newer platforms. This resulted in the transformation of businesses in new ways. However, the pandemic has made it clearers that overcoming a global crisis with rapid digital transformation is just the starting as far as the entire range of benefits is concerned. Some of the new challenges that have been laid out by the COVID-19 pandemic are:

  • Development of a comprehensive rollout plan
  • Obtaining line-of-business buy-in
  • Dealing with different vendors
  • Integration of workflow across different departments
  • Training of the workforce
  • Moving the entire organizational culture to a digital-first concept
  • Monitoring projects throughout business units
  • Integration of digital and physical processes

An Insight into Digital Transformation

In simpler terms, digital transformation can be regarded as the application of high-end digital technologies for the creation of new business models. In most cases, the ultimate motive is to solve specific pinpoints of businesses, increase efficiencies, and deliver a highly customized user experience. To understand digital transformation in detail, you can get relevant Data Science consulting from the experts. 

Digital transformation depends on the concept that revolutionary digital tools or services –including ERP solutions, are capable of revolutionizing every core of a business enterprise. Additionally, it can be said that the given set of tools can help organizations in improving the respective culture and processes such that they remain relevant and competitive throughout.

For most organizations out there, digital transformation is essential for ensuring long-term survival in a highly competitive market. With the passage of time, companies tend to become highly data-driven and well-connected. As businesses will move in the respective direction, they can look forward to obtaining the following benefits:

  • An enriched customer experience
  • Relevant, more actionable data
  • Improved innovation, flexibility, and agility

Why is Digital Transformation Difficult?

Digital transformation is not just about the adoption of top-class software or digital solutions, processes, or technologies (including IoT development) that are automated and more efficient when compared with conventional processes and practices. On the other hand, it is a totally new and innovative way of executing something that remains core to the business enterprise.

This implies that organizations should consider all possible aspects of the digital transformation initiative –right from how people will be reacting to customer relations; the total cost, how it will be aligned to business goals, and so forth. Digital transformation empowers organizations to take the business into the future. At the same time, it also helps in positioning companies to bear with competition while growing into new areas.

However, all of this is quite easier said than done. As per leading statistics, it is observed that around 70 percent of all digital transformation programs fail due to increased employee resistance. There is also a lack of ample support from management. Only 16 percent of employees revealed that the digital transformation efforts of their companies are sustainable or help in improving performance.

Top Digital Transformation Challenges 2022 to Know About

#Culture

As per a recent survey report, one of the major obstacles to achieving digital goals is behavioral and cultural challenges. Digital transformation has the requirement of major process and structural changes. However, conventional incumbents deliver a strong organizational culture while being capable of facing resistance to the implementation of new workflows. From risk-averse company managers to long-term employees to even corporate politics, there are several cultural factors that might hinder the digital initiative of any organization.

Organizations can look forward to confronting the existing cultural barriers through the creation of a workforce transition plan as an integral part of the digital transformation initiative. The plan is expected to include communication to the employees about core aspects like the digital transformation strategy, timing, and objectives. It should also feature identified skill gaps. Once the objectives are identified, organizations can move ahead with creating opportunities for upskilling existing employees towards meeting future goals. 

Workforce transition plans help in acknowledging that digital transformation is a type of race and not any sprint. Therefore, organizations should aim at managing cultural change throughout the digital transformation process. 

#Digital Strategy & Vision

Organizations all around are under immense pressure to deliver high-end software applications quickly to the end customers. Due to this, they tend to focus significantly on the tools. The operational end of any business will state that performance will benefit rather than the value of the performance improvements to the respective company and its customers. The given tendency can help in creating additional challenges related to digital transformation through rapid shifts in the organizational structure. It will also alter business workflows without any readiness or internal alignment to operate within the same.

Most companies continue relying on preceding success metrics that might not apply to the new set of processes. The missteps that keep happening can doom the benefits offered by digital transformation to any organization. 

During the creation of the digital transformation initiative, it is crucial to start with the definition of success. A well-defined and detailed strategy will require a proper vision for what the given company that has been digitally transformed is going to be. It also offers insights into new metrics that will be helpful in capturing progress towards achieving the respective vision. 

The digital transformation vision should aim at incorporating the existing core strengths and competencies of the company. It will also acknowledge how to augment the same through the entire process of conversion.

#Digital Expertise and IT Infrastructure

Most conventional incumbent organizations rely to some extent on some inflexible technology stack for supporting monolithic applications. It serves to be a major barrier to transitioning technologies. This is because it tends to complicate the process of releasing application dependencies and adopting DevOps and Agile methodologies. In addition to this, employees might not have relevant expertise with the all-new technologies essential for transitioning IT applications and infrastructure and using the new technologies. 

For making ample progress towards the concept of digital transformation without the destabilization of the software development cycle, companies can look forward to adopting the bimodal IT scheme or approach. The given scheme includes Mode 1 –responsible for spearheading the new technology and processing its adoption. There is also the presence of Mode 2 –responsible for maintaining existing practices. 

With Bimodal IT, organizations are given the capability of managing the risks associated with digital transformation. Teams of Mode 1 are assigned new along with supporting applications. On the other hand, teams of Mode 2 help in managing mission-critical applications. In the given manner, the company is capable of taking a dedicated approach to digital transformation. It helps them to identify the next series of steps depending on the measured results of performance prior to Mode 1.

#Organizational Structure

Most organizations have come up with organizational structures for optimizing the internal objectives of different departments. In the respective structure, departments typically tend to only offer relevant status updates on a periodic basis to the existing stakeholders. It silos data across and within departments. Data will not be visible across different teams. Moreover, feedback is available on a well-defined cadence. Workflows tend to be inflexible and organizations are not able to improve the efficiency quotient.

One of the most intimidating aspects of the conversion to a customer-centric software company is the requirement of building continuous improvement into subsequent processes. Whatever might be the technology stack, skillsets, or workflows, the process of digital transformation will initially implement and get outdated easily. The development of the ability to respond effectively to the ongoing market changes will require a major shift in the organizational structure. 

Starting with leadership, the organization is expected to create dedicated workflows aligning effectively with the customers’ journey. The workflows help in shifting the focus of the team from the given project to a single, dedicated product. It helps in the creation of totally new KPIs. To top it all, shorter feedback loops that are built into workflows will help in identifying issues quickly towards making the team more efficient. The team that is flexible and autonomous can aim at continuously improving the respective processes while reacting to relevant customer feedback for delivering increased application value. 

#Absence of Dedicated IT Skills

Behind every effective digital transformation strategy is the presence of a highly dedicated and skilled IT team. However, the development of an efficient team is harder. As more companies continue pursuing new and cutting-edge technologies, there is the development of a significant labor deficit.

As per a recent study report, around 54 percent of organizations revealed that skill shortage was responsible for holding them back from achieving the transformation goals. 

Particularly, organizations expressed a lack of expertise in:

  • Enterprise architecture
  • Technical architecture
  • Cybersecurity
  • Advanced data analytics

An effective way of overcoming the challenge is by hiring experienced software consultants or industry experts for supplementing the in-house team at your organization.

Additionally, you should also focus on ensuring a better understanding of the customers, the development of service provider partnerships, and reduced development costs through low-code or no-code platforms. 

#Absence of Organizational Change Management

Inefficient workflows, non-functional organizational structures, and inflexible leadership styles can all hinder the success of the digital transformation. It was not so apparent before 2021 when organizations continued struggling towards quickly shifting to a remote-based business model.

The mere process of navigating new tools is quite hard. However, when you include change resistance to the given structure, transformation might appear almost impossible. On the other hand, commitment towards achieving top-notch organizational change management can help your company in preparing the employees for what lies ahead. Rather than just focusing on the technical aspects of digital transformation, it is equally important to consider the people it will be affecting directly through the development of an in-depth change management scenario.

#Ever-evolving Needs of Customers

In the past year, people all around have realized that they can do so much more from their laptops and smartphones. Therefore, customers have become more demanding and discerning than ever before. 

In the modern era, advanced resources like touchless checkout solutions are no longer comfortable-to-use options. They are increasingly becoming necessities and essentials. Instead of assuming that you are aware of the technologies that your customers are looking for, it is recommended to take ample time for performing in-depth market research. In this manner, you can observe what customers want actually along with what competition is doing to succeed in the given industry. 

#Budget Constraints and Concerns

When you do not have a well-defined organizational strategy, another issue that arises is coming up with a set budget and sticking to it. It is easier to go through scope creep when you are responding to customization requests and the ever-evolving needs of the end customers. When you do not have a well-defined strategy in place, you can end up making decisions that would not result in any benefit while increasing the timeline and budget.

It is recommended to look into your organization’s long-term goals with respect to digital transformation. You can make use of the goals to come up with a realistic plan and budget for the project. For doing so, it is expected that you understand the digital solutions that you aim at implementing. Moreover, you should also understand the culture with which you will be integrating the solutions.

Top Ways of Overcoming the Challenges of Business Digital Transformation

#Investing in the Digital Adoption Platform

An all-new digital process or application will not be instantly effective. It will be required to offer proper onboarding, support, and training, to the employees of your organization. You can also deliver support to the end customers for empowering them to leverage the systems effectively. For ensuring the success of the digital transformation project, you can think of investing in a DAP or Digital Adoption Platform. 

DAPs are helpful in offering organizations with no-code or low-code tools for creating in-app content. In turn, it helps in offering a contextual onboarding experience along with ongoing performance support. It would include:

  • Interactive user flows and walkthroughs
  • Onboarding experiences and product tours
  • Embedded knowledge bases

#Creation of the Change Leadership Team

Analyze your current workforce and look for those that are innovative, influential, and reliable. You can think of bringing together a cross-functional team that consists of top-end performers for creating a dedicated change leadership team. The team will be responsible for creating a dedicated vision for the digital transformation process. 

The vision will align with the respective business goals of the organization. It will enable organizations to come up with a proactive approach towards digital transformation initiatives focusing on the people’s aspect of change. 

#Hiring a Digital Transformation Consultant

Digital transformation can be regarded as the comprehensive realignment of core tools, processes, and experiences. Most companies do not go through the entire transformation process. It presents a serious challenge to companies that might get overwhelmed by the scale. You can hire services from a reliable Artificial Intelligence company or expert service provider in the industry. 

When you hire a professional digital transformation consultant, he or she can provide you with the expertise of professional services. They know what they are doing in the given field. They will also come up with a proper framework along with a foundation for achieving success. 

Conclusion

It is a simple process to replicate the organizational structure, workflow, and technology of digitally-native organizations on paper. It might appear as simple as updating some software version. However, it is not so.

The technology that you choose might be straightforward. However, end-users are not. Modern software development processes and tools allow new workflows for which organizations need ample time to optimize. Without in-depth visibility into the respective application release process for delivering customer value, an organization is not able to efficiently manage the challenges associated with digital transformation. With so much at stake, it is imperative for businesses to analyze how to resolve the challenges with respect to digital transformation. 

Let's Talk