Digital transformation initiatives have tremendous potential and can completely transform any business. Unfortunately, most plans fail and don’t materialize as planned.
According to our 2017 ERP Systems Report, most initiatives take longer than planned, cost more than expected, and/or fail to deliver the expected business benefits. This may sound discouraging to those who are about to start such an imitative, but our experience shows that companies that struggle, tend to fall into these same pitfalls and traps.
The reasons for failure aren’t insurmountable. It simply requires awareness of the risks, along with effective risk mitigation strategies. Easier said than done of course, but still something that any executive and project team can overcome.
Here are the biggest risks of digital transformation, along with some strategies to overcome each:
The Digital Transformation Initiative Exceeds the Planned Time and Cost
Most digital transformation initiatives are derailed before they are completed, simply because they consume too much time, money, and resources along the way. The best way to overcome this risk is to have a complete and realistic budget, which means that you’ll need to add a dose of reality to what technology and ERP vendors might propose to you. Their costs typically do not include key components of a successful project, such as organizational change management and business process re-engineering.
Technology Bias and Blind Spots De-rail Your Overall Initiative
Let’s face it: most ERP consultants and vendors are biased and would prefer that you implement the technology they’re peddling – regardless of whether or not it’s a good fit. With so many options in today’s marketplace, it’s important to have a technology agnostic view of your options so that you’re selecting and implementing the software that best fits your needs – not necessarily earning the most commission for a sales rep. Finding the best technology for your business should be clearly outlined in your overarching digital, IT, and ERP strategy.
Business Processes Aren’t Aligned With Technology – and Vice Versa
Speaking of biases, technology vendors general prefer that you purchase and implement their software is quickly as possible so they can start earning commission ASAP. However, a more deliberate and measured approach is generally more effective. You need time to ensure that you’ve conducted business process reengineering to ensure that your technology is enabling more effective and efficient business processes. Otherwise, you’ll simply be paving the cowpaths, so to speak, and creating misalignment between your software and your operations.
Employees Don’t Accept the Corresponding Organizational and Business Process Changes
The people side of the equation is one of the biggest – if not the single biggest – risk of any digital transformation initiative. According to our research and experience, most organizations cite organizational change management as the biggest challenge and risk in their implementations. A well-defined organizational change strategy is the best way to overcome this risk. Side note: your organizational change plan should include much more than end user training.
The Digital Transformation Effort Doesn’t Deliver A Strong Return on Investment
These initiatives are generally expensive, so any rational executive team expects to see a tangible return on investment. This isn’t generally top of mind for many project teams and their vendors, but if you don’t measure it, you won’t achieve it. To ensure you have the business benefits to justify the investment, ensure that you’ve create a business case and a benefits realization plan. In addition, you’ll need to conduct post-implementation audits – something that most don’t want to do once they’ve finished an implementation.
These risks are very real, but they can be overcome with the right mitigation strategies. Learn more successful strategies by downloading our “An Expert’s Guide to ERP Success” eBook.