The 6 Key Challenges of Digital Transformation



The rapid pace of technological change, an increasingly competitive market, and more demanding consumer needs have driven many organisations headfirst into a digital transformation journey they see as the solution to their current challenges. Understanding the common dilemmas faced by each organisation across a range of different scenarios is one way to create more successful transformations:

  1. What to prioritise? There is always an opportunity cost to investing in one area of your business. Increasing the efficiency of your organisation’s current operations through digital transformation may come at the cost of your customers and meeting their needs short term. Are the potential gains in operational efficiency going to bring in long-term returns that outweigh the potential reduction in customer satisfaction, loyalty, and even purchases from shifting your short-term focus?

  2. Trends vs Individuals Predictive models of customer behaviour are a key appeal of digital transformation initiatives. They usually require complex business intelligence (BI), analytics, and data capabilities. Seeking patterns of behaviour (for both internal resources and external consumers) through aggregating data can offer useful insights, but may obscure the individual. What makes your people unique? What makes your customers unique? Businesses must remain vigilant not to ignore the value in individual stories when looking through the lens of aggregate data and trends.

  3. Resource Allocation Everyone wants more resources, but to support a digital transformation requires a shift to investing in more specialised IT resources. Organisations must weigh up the returns from hiring or engaging more specialised resources (e.g. data scientists) compared to investing in more training and resources for managers and staff in other functional business areas. That trade-off is often difficult to assess, but puts the resource investment of your digital transformation into perspective.

  4. Resource Displacement Computing machines, AI, and automated processes have and will continue to displace unskilled or semi skilled workers. That trend is even spilling into the replacement of skilled employees too, as autonomous decision-making technologies are becoming more advanced. That level of resource displacement will require adaptable recruitment, onboarding, and training and redevelopment of internal resources to handle that displacement without disrupting the organisation’s culture.

  5. Data Governance “Data is like garbage. You better know what you’re going to do with it before you start collecting it.” – Mark Twain. All data can be stored, at a cost. Understanding what data your business needs to capture and analyse is critical to making a digital transformation cost-effective. This makes data both an opportunity and a problem. Any data that is not or cannot be used is essentially worthless. Clearly defining which data is going to be used is going to be a key challenge to ensure your digital transformation brings in value-for-money. Organisations must also ensure that data is accessible and easy to consume for the users who need it, but this comes with a trade-off in security. Balancing a reasonable level of accessibility without compromising sensitive information to loss or leakage is a real dilemma that must be addressed before embarking on a successful digital journey.

  6. Technology vs... There is an overemphasis on technology to drive digital transformation. While new and innovative technologies may be integral to achieving your business objectives, technology on its own is rarely transformational. Successful transformation can only be achieved when technology manages to adapt or support human behaviours for the better. Every individual is a complex bundle of intense emotion, body sensations, thoughts, beliefs, and behaviours. That complexity makes such a task far from straightforward. The typical success stories for digital transformation are Uber or Netflix. But in those stories technology is not the hero, their people are. What made them successful was a unique business model, and an organisational culture that could sustain radical and disruptive change throughout their digital journey. Technology was merely the stage on which their stories played out.

This leaves us at the most complex, and often the most challenging hurdle for every digital transformation: people. A topic we think deserves it’s own post, so stay tuned...