While there are more technological capabilities at our fingertips than ever before, the path forward isn’t always easy. From securing funding to transitioning from legacy systems, there are many obstacles that can hinder even the most ambitious initiatives.
Today, we’re sharing seven of the most common digital transformation challenges. We’ll also detail how to move past these challenges and usher in the benefits your organization seeks to realize.
The 2022 ERP Report
This annual report summarizes our independent research into organizations' selection and implementation decisions and their project results.
What is Digital Transformation?
Put simply, digital transformation is the application of digital technologies to create new business models. The aim is often to solve business pain points, improve efficiencies, and deliver a more personalized customer experience.
Digital transformation is based on the notion that digital tools, such as ERP solutions, can benefit every area of a business. In other words, these tools can help companies improve their processes and culture so they can remain competitive and relevant.
For many companies, digital business transformation is necessary for long-term survival in a competitive market. As time goes on, companies are becoming more data-rich and connected. By moving in this direction, you can derive the following benefits:
- An improved customer experience
- Richer, more actionable data
- Improved flexibility, agility, and innovation
7 Digital Transformation Challenges
1. Lack of Dedicated IT Skills
Behind every successful digital transformation is a dedicated, highly-skilled IT team. However, building this team is getting harder. As more companies pursue new technologies, a labor deficit is developing.
According to one recent survey, 54% of organizations reported that skill shortages were holding them back from pursuing their transformation goals. In particular, they were lacking expertise in:
- Technical architecture
- Enterprise architecture
- Advanced data analytics
One way to avoid this challenge? Consider hiring outside experts and software consultants to supplement your in-house team.
2. A Lack of Organizational Change Management
Outdated organizational structures, inefficient workflows, and rigid leadership styles can all impede digital transformation success. This was never more apparent than in 2020 when companies struggled to quickly shift to a remote business model.
Simply navigating new tools is hard enough, but when you add change resistance to the mix, transformation can begin to look impossible.
Fortunately, a focus on organizational change management can help your company prepare employees for what lies ahead. Instead of just focusing on the technical side of digital transformation, you need to consider the people it directly affects by developing a comprehensive change management plan.
3. Evolving Customer Needs
This past year, people have realized just how much they can get done from their laptop and smartphone. As such, customers are more discerning and demanding than ever before.
Now, resources like touchless checkout options are no longer nice-to-have options. They’re increasingly becoming expectations.
Rather than assume you know which technologies your customers want you to provide, we recommend taking the time to perform market research. This way, you can see what they actually want, as well as what the competition is doing to win their business.
4. Lack of a Defined Strategy
Digital transformation is far more than a buzzword. Yet, it often gets thrown around without any clear definition. This leads companies to forge ahead in murky waters, confident that they need to be moving but not quite sure where they’re going.
Without a strategy in place, your transformation could fail to get off the ground. So, ask yourself: What are my company’s goals and priorities? Are they consistent across the organization, or are some stakeholders on completely different pages?
Take it from us: a little business-IT alignment goes a long way.
5. Budget Concerns and Constraints
Another issue that arises when you don’t have a clear-cut strategy is difficulty setting or sticking to a budget.
It’s easy to experience scope creep as you respond to customization requests and evolving customer needs. Without a strategy in place, you’re bound to make decisions that result in little to no benefit yet increase your budget and timeline.
We recommend looking at the long-term goals of your transformation and using these milestones to develop a realistic project plan. To do so, you’ll need to clearly understand the digital solutions you’re implementing, as well as the culture you’re integrating them into.
6. Inefficient Business Processes
Do your current business processes reflect the growth you expect your company to achieve? Is your current roadmap capable of helping you reach your long-term business goals?
If not, you may need to adjust workflows, change business rules, and leverage data in different ways than you first envisioned when you implemented your legacy systems. This often takes the form of business process reengineering.
7. Ineffective Data Management
Customer data is one of the pillars of digital transformation. With it, you can gain rich insights into your buyers’ preferences, behaviors, and potential future decisions.
As you can imagine, the way you capture and organize this data matters.
If you’re still working with siloed systems, it can be difficult to consolidate this information to make it centrally accessible. If it’s all stored in one data center, the same may hold true.
To correct these issues, it’s important to pare everything back. What do you need to know about your customers to serve them effectively? Make a list and use it to guide your data strategy.
Ensuring a Successful Digital Transformation
The seven digital transformation challenges listed above might seem overwhelming, but they don’t have to mean the end of the road for your project. Learning how to prepare for, identify, and work around these issues is key.
Many problems begin by rushing into the effort starry-eyed about the shiny new technologies promoted by ERP vendors. By taking your time, researching your options, and preparing your employees, you can realize all of the benefits you hoped to achieve.
Our team of ERP consultants can help you at every step of this journey. Contact us below for a free consultation.