Digital transformation is the need of the hour for businesses across all industries—from information technology (IT) and automobile manufacturing to healthcare services. Through the implementation of digital transformation by automating processes, maximizing return on investment (ROI), and enhancing the customer experience, enterprises can evolve into efficient, scalable business units.
According to Gartner, “Eighty-seven percent of senior business leaders say digitalization is a company priority, yet only 40% of organizations have brought digital initiatives to scale.”
When engaging in the process of digital transformation, an organization must foresee possible technological and workforce challenges and financial barriers that they might experience when adopting new technologies and replacing conventional methods. Can you implement digital transformation within your business and achieve substantial growth? Yes, it is possible. By reading this article, you can gain a good understanding of some of the most common challenges of digital transformation and how you can overcome them.
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7 Major Digital Transformation Challenges
When organizations change from traditional methods to a digital-first approach, there tend to be challenges and difficulties. In this article, I’ll discuss the seven primary challenges that business encounter in their digital-transformation processes, as Figure 1 shows.
Figure 1—The challenges of digital transformation
1. Evolution of Business Models
Transforming a business to move from a traditional to a digital-first model can be time consuming and complex. The Chief Information Officer (CIO) and Chief Technology Officer (CTO) must have a clear picture of the technologies they’re adopting and how they can use them to build the business.
Dealing with a workforce that is unwilling to change can become a significant challenge. To enable employees to realize the benefits of digital transformation, a business must train and guide them, encourage their use of best practices, and ultimately, test employees’ capabilities.
2. Breaking Down Silos
A lack of communication among disparate organizations and systems gives rise to silos, which negatively impact business growth. To facilitate communication and break down silos, a business needs a unified platform—a digital-transformation solution that provides an interconnected platform across various departments and disparate systems.
3. Legacy Systems and Infrastructure
One of the leading challenges that a business faces is replacing legacy systems with new, next-generation technology. For any organization, having an obsolete infrastructure and less-than optimal legacy systems is a significant barrier to implementing a digital-transformation strategy. Such outdated systems result in unnecessary costs and inefficiencies.
4. Building Impactful Digital Strategies
To be successful, a business must develop a solid strategy for digital transformation. Devising a long-term digital strategy can help an organization to grow and enhance business success through continual change. This digital strategy can help a businesses to optimize the business and stay ahead of the curve.
5. Insufficient Budget Planning
Implementing a 360-degree digital transformation for a business can be expensive and challenging. Small businesses or larger businesses that have previously faced losses due to market trends or catastrophic events might not be able to incorporate the necessary digital tools and technologies. A business must develop a personalized digital strategy that addresses organizational and customer needs.
6. Ever-Growing Customer Needs
Businesses often spend a massive amount of money adopting new technologies and implementing digital strategies to improve the customer experience and their customer satisfaction (CSAT) scores. However, ever-growing customer expectations and the need to look for holistic solutions and enhanced services make it difficult for organizations to make rapid changes and adapt to and deliver on the needs of customers.
7. Security and Compliance
Within highly competitive business domains and an ever-growing digital landscape, businesses might struggle to meet customer needs. As a consequence, they might risk implementing digital technologies without adequately weighing their pros and cons. This could result in adverse events at the enterprise level such as a cybersecurity breach or compliance issues.
6 Ways to Overcome the Challenges of Digital Transformation
Businesses must prioritize three components to succeed in their digital-transformation journey: their digital strategy and strategic mindset, consistent upskilling of their employees, and incorporating new technologies.
Let’s consider the following beneficial approaches to overcoming these digital transformation challenges and ensuring a seamless digital-transformation journey.
1. Analyze Your Business Outcomes
A business must have a comprehensive plan for embracing new technologies that aligns with its desired business outcomes—a plan that details the necessary processes, systems, and resources. By thoroughly analyzing your business outcomes, you can identify areas for improvement and seamlessly deploy new digital technologies that increase efficiency.
2. Empower Your C-Level Employees
As the CIO, CTO and Chief Financial Officer (CFO) make the crucial decisions that are necessary to transform the business, clear communication among all C-level executives can supercharge the transformation process. These are the executives who decide what technologies to deploy, plan the budget, and deliver the digital-transformation strategy to employees. The people who are leading your workforce must establish a rapport that smooths operations and enables them to achieve a successful digital transformation.
3. Create a Digital Roadmap
Not all employees in your organization will welcome this transformation. Some employees might be inflexible about adapting to these changes. To overcome such challenges, create a roadmap for your organization, outline the level of performance you expect, and show how digital transformation can boost business growth and ROI. In this way, you can facilitate employees’ understanding the strategic vision.
4. Strategize on Recruitment and Upskilling
One of the major challenges of digital transformation is a lack of the necessary expertise among the employees who make up your workforce. Consider expanding your talent pool and recruiting leaders and employees with experience in the field of digital transformation. By bringing in people with the necessary expertise, you can solve most of the problems a business usually faces during a digital transformation and hit the ground running. To further close the skills gap and help your workforce to adapt to the changes they’re experiencing, train, guide, and help employees to understand the new technologies and best practices that you’re adopting.
5. Formulate a Complete Budget and Plan
Create a comprehensive financial plan to ease the acquisition and implementation of digital-transformation technologies. Prioritize business goals, strategies, and outcomes, and formulate a budget and plan that supports your digital goals. Calculate business expenses and returns on investment to forestall any potential financial crises and ensure that you can lead a successful digital-transformation journey.
6. Reinforce Security Through Digital Transformation
Because digital transformation involves the adoption of a lot of disruptive tools and technologies, you should enhance your business’s cybersecurity policies. To avoid data breaches and cybersecurity threats, implement a proactive strategy for end-to-end monitoring of your business processes and systems. During a digital transformation, implementing a cybersecurity strategy is crucial to your business’s success. Even though it requires a significant budget, investing in such a strategy is imperative to ensure the complete protection of your business against cyber threats and attacks.
Conclusion
Future-proofing your business through a 360-degree digital transformation is a must in today’s business world. By understanding your business’s needs and priorities and creating a digital-transformation roadmap, you can readily overcome the common challenges that businesses encounter during a digital transformation. Build a reliable and scalable business by prudently investing in your digital transformation.
Nagarajan’s expertise is in building high-quality digital businesses and enabling artificial-intelligence (AI) infused digital transformations. He has great passion about optimizing cost-to-book and cost-to-serve for enterprises. He holds a Bachelor of Science degree in Computer Science and Engineering from the University of Madras and has done coursework in Organizational Leadership through the Executive Leadership Program at UC Berkeley’s Haas School of Business. Read More
