5 FAQs on digital transformation challenges

No organization can hope to innovate and survive without a digital transformation strategy. Just think of some recent examples. Nike adopted a direct-to-consumer (D2C) e-commerce strategy that resulted in sales growing from $2.5 billion in 2010 to $16.4 billion in 2021. Leadership that prioritized digital transformation, an agile e-commerce platform, and emerging technologies like automation and predictive analytics made this feat possible. In the world of automobiles, Tesla is revolutionizing the way vehicles are built, purchased, and driven by adopting digital transformation from start to finish.

Digital transformation strategies must embrace new business models with the inclusion of emerging technologies where necessary (as in the case of Nike) and the need to stay well ahead of the competition in an industry that’s becoming increasingly innovative (such as Tesla). Yet failures are a cause for concern—McKinsey found organizations capture less than a third of their expected value after launching their digital transformation initiatives.

When critical factors are not addressed properly, digital transformation does not achieve the desired outcomes and fails to maximize the ROI. In this blog, we direct some common questions our clients ask about digital transformation to Fortude’s experts to give you a better understanding of what exactly makes your transformation journey a success.

1. What are some important factors to consider when fast-tracking digital transformation?

Leadership that understands technology and champions change at every stage of the process is critical. Our advice is to perform a digital maturity assessment to identify which technologies you need to digitize your operations. Then, use the findings of your assessment to craft a detailed business case that aligns digital objectives with overall organizational goals. A business case is important because it:

• Provides clarity and sets timelines.
• Maps out desired outcomes that align with digital initiatives.
• Assesses possible risks and measures to mitigate them.
• Helps to understand ROI in terms of time and resources used, with metrics for a quantitative post-digital transformation initiative analysis.

For example, when we worked with a leading online retailer to revamp their e-commerce operations, our starting point was a digital maturity assessment where we looked at 6 core dimensions: customer, strategy, technology, operations, people and organization, and data. We identified gaps for each area and provided guidance on system upgrades, data integration, automating reporting capabilities and manual processes, implementing cybersecurity measures, real-time inventory tracking, and prioritizing the customer experience to transform e-commerce.

2. What can we do if we encounter a change-averse mindset within our organization?

Change is always challenging, and it’s only human to have misgivings. We’re again emphasizing the need for tech-driven leadership, as these individuals must set the tone for their entire team. Change management has to be a robust process that enables a smooth transition to new technologies and processes. We advise consulting all teams from the start to understand concerns and address them adequately. For example, some team members may fear being replaced by technology. They need assurance that automation largely targets repetitive manual functions, and they will have the capacity to direct their time towards more value-generating tasks. An organization’s leadership should be ready to invest in upskilling and expanding their team to benefit from introducing digital solutions.

Our views are also reflected in a Deloitte report, which says that change management is not a one-size-fits-all approach and organizations have to understand the impact on each team member. Only a people-centric approach will create an organizational culture that’s ready to accept technological transformation and build a foundation for innovation.

3. How can we deal with legacy systems and organizational silos?

Any organization will have legacy systems in their infrastructure, remnants of their early digital transformation efforts. Outdated legacy systems need continuous modernization and integration with other systems to align with the organization’s present and future business needs. The business case that you built at the start will help you choose between different vendors for similar platforms through like-for-like analysis of software systems and calculate the ROI of investing in a platform and/or automation. Upgrading infrastructure also means addressing security concerns and adopting measures that protect your operations, data, and digital assets. Sometimes a complete upgrade may not be the right choice for you, especially if you’re working on a tight budget. Then consider building a composable infrastructure that leverages your existing system while introducing reusable components.

You must go beyond merely modernizing legacy systems. Such systems often result in siloed working practices. Digital transformation is a project for the long term and hence requires team collaboration for successful implementations. Here, too, the leadership must champion cross-functional collaboration and discourage siloed working practices.