Only a small number of organisations have been able to successfully scale their digital initiatives beyond the experimentation and piloting stages, a study finds, which identifies six barriers which must be navigated on when embarking on a digital transformation journey.
Business analyst Gartner contends that this is because digital transformation requires more than simply investing in the latest technology – it demands significant changes to culture and systems.
“To change an organisation designed for a structured, ordered, process-oriented world to one designed for ecosystems, adaptation, learning and experimentation is hard,” said Marcus Blosch, research vice president at Gartner.
“Some organisations will navigate that change, and others that can’t change will become outdated and be replaced.”
The six barriers and Gartner’s advice on overcoming them are outlined below:
1 A change-resisting culture
“Culture is organisational ‘dark matter’ – you can’t see it, but its effects are obvious,” said Blosch. “The challenge is that many organisations have developed a culture of hierarchy and clear boundaries between areas of responsibilities. Digital innovation requires the opposite: collaborative cross-functional and self-directed teams that are not afraid of uncertain outcomes.”
Those aiming to establish a digital culture should start small: define a digital mindset, assemble a digital innovation team, and shield it from the rest of the organisation to let the new culture develop. Connections between the digital innovation and core teams can then be used to scale new ideas and spread the culture.
2 Limited sharing and collaboration
Digital innovation with its collaborative cross-functional teams is often very different from what employees are used to with regards to functions and hierarchies and resistance is inevitable.
“It’s not necessary to have everyone on board in the early stages. Try to find areas where interests overlap, and create a starting point,” said Blosch. “Build a first version, test the idea and use the success story to gain the momentum needed for the next step.”
3 The business isn’t ready
Many business leaders are caught up in the hype around digital business. But when the CIO or CDO wants to start the transformation process, it turns out that the business doesn’t have the skills or resources needed.
Gartner recommends focusing on the early adopters with the willingness and openness to change and leverage digital. But keep in mind that digital may just not be relevant to certain parts of the organisation.
4 The talent gap
Employees need new skills focused on innovation, change and creativity along with the new technologies themselves, such as artificial intelligence (AI) and the Internet of Things (IoT)
“In smaller or more innovative organisations, it is possible to redefine individuals’ roles to include more skills and competencies needed to support digital,” said Blosch. “In other organisations, using a bimodal approach makes sense by creating a separate group to handle innovation with the requisite skill set.”
5 Current practices don’t support the talent
“Some organisations may shift to a product management-based approach for digital innovations because it allows for multiple iterations,” said Blosch. “Operational innovations can follow the usual approaches until the digital team is skilled and experienced enough to extend its reach and share the learned practices with the organisation.”
6 Change isn’t easy
Developing platforms, changing the organisational structure, and creating an ecosystem of partners is challenging.
According to Gartner, enterprises should build the organisational capabilities that make change simpler and faster. To do that, it said, they should develop a platform-based strategy that supports continuous change and design principles and then innovate on top of that platform.
It seems that UK leaders still need reminding that people are what makes the difference between success and failure in a digital transformation programme, not technology.
New research published today by Capita Resourcing finds that four-fifths of HR leaders (82 per cent) reckon their workforce needs to improve its skills in order to get the most out of digital transformation. The vast majority (94 per cent) of HR leaders report difficulties accessing the skills their organisation requires to support its transformation objectives, and the research reveals that many of the most significant transformation challenges facing organisations are skills-related.
Significantly, more than one third (36 per cent) of businesses are suffering due to a lack of leadership skills and experience of running change programmes, while 35 per cent are finding it difficult to predict future jobs and skills requirements. Beyond this, 29 per cent are held back by a lack of digital skills among their workforce and 28 per cent are hampered by a lack of access to high quality digital talent.
The white paper based on the research, The Case for Workforce-led Transformation, also reveals that there is still too much emphasis placed on technology. More than 200 HR leaders at companies employing more than 100 people reported that their organisations have primarily focused on technology within their digital transformation programmes, in terms of resource, investment and time. Only one third felt that culture and people have been a key focus in their transformation strategies up until now, and only 35 per cent stated that skills had been prioritised.
“Our research has clearly highlighted that digital transformation is about so much more than just technology,” says Geoff Smith, executive director at Capita Resourcing. “Organisations must start to realise that transformation always needs to be workforce-driven. He adds that HR must protect and establish the right culture and behaviours within the workforce and they must also work closely alongside their counterparts in IT.
This isn’t the first research study to throw light on why organisations find digital transformation so difficult even though it has been on the agenda for several years now. There is no doubt that such transformation represents one of the biggest and deepest change programmes that some organisations have ever faced. In many cases, it touches every part of an organisation so, of course, is going to bring a significant number of challenges. But organisations must learn from others and stop repeating the mistake of placing technology before people. Problems also seem to be rooted in the silo-based mentality that has existed in too many companies for too long. The far-reaching nature that digital transformation brings exposes the risks of departments and a lack of joined-up thinking within firms.
Ultimately, there is only one direction in which to look to address these issues: the top. Once again a lack of leadership is cited as one of the problems but there is only a limited window of time left in which this void can be tolerated and it is already threatening the future of companies. Leaders need to ensure that not only must skills, culture and talent rise to the top of the agenda but that they remain there throughout the digital journey and beyond.
No-one said digital transformation was going to be easy but it seems many organisations are a long way off even beginning to realise the benefits of their initiatives. According to a new report from self-service integration specialist, SnapLogic, two-fifths of organisations are behind schedule with their plans or are yet to start them. More than two-thirds (69 per cent) have had to re-evaluate their digital transformation strategy and, as a result of this, three-fifths (59 per cent) said they would do things differently if they had an opportunity.
Market research company, Vanson Bourne, carried out the survey on 500 IT decision-makers, representing medium- and large businesses with more than 500 employees across the UK and US. Three fifths (58 per cent) admitted that there is a degree of confusion within the organisation around what they are trying to achieve.
This all makes for worrying reading and even more alarming are some of the common roadblocks identified: internal politics (34 per cent); lack of centralised ownership (22 per cent); and a lack of senior management buy-in (17 per cent). More than half (55 per cent) noted that a reliance on legacy technologies and/or a lack of the right technologies within their organisation was holding them back, while one third were stalled by a lack of the right skilled talent, and 31 per cent reported that data silos were causing problems.
Additionally, one fifth of organisations didn’t test or pilot their digital transformation projects before deploying them company-wide, while 21 per cent of IT decision-makers continued to roll out company-wide digital transformation despite unsuccessful pilot programmes in one part of the business.
Gaurav Dhillon, CEO at SnapLogic, described the research as a stark wake-up call to the technology industry that they must do a better job advising, partnering with, and supporting customers in their digital transformation journey “if we are to ever see the reality of a digital-first economy”.
It is not only the technology industry that should be shouldering the responsibility for these failures though and senior leadership should not escape blame. Given the scale and pace of the change, it perhaps isn’t entirely unexpected that internal politics and lack of project ownership are issues but there shouldn’t be a senior leadership team in the land that doesn’t have buy-in to their digital transformation strategy. Indeed, they should be championing and leading such programmes.
No leader should be allowing failed pilots to run out in other parts of the organisation. Aside from the costs this could incur, it risks alienating and demotivating employees. We can only assume that too many leaders are distancing themselves from digital transformation projects and outsourcing responsibility to those below them. This simply isn’t good enough and programmes will continue to fall short of expectations if this situation prevails.
Digital transformation represents a massive opportunity for organisations to be more efficient, more productive, to break into new markets, win new customers and develop new products and services. It also gives leaders an opportunity to shape a brave new business world and make their mark in the Fourth Industrial Revolution. None of the above will happen though unless leaders grasp this opportunity with both hands and get stuck in.
