Why Digital Transformation Projects are Bleeding Organizations Dry & Ways to Avoid The Same Fate

Digital transformation projects hold great promise for the future but it requires meticulous planning, adequate funding and several other factors to make a project successful. Here’s a look at the top barriers to digital transformation.

October 26, 2022

IT decision-makers almost unanimously agree that digital transformation is a business imperative and necessary for a business’s long term survival. Yet, too many transformational projects have fallen apart, overshot budgets, or gone behind schedule. In this article, we explore the top barriers to successful digital transformation and ways to overcome them.

Are large-scale digital transformation projects a thing of the past? According to a vast majority (72%) of 200 IT decision-makers at UK-based businesses who participated in a Toca surveyOpens a new window , the answer is yes. While almost all those surveyed (94%) agree that faster digital transformation is a business imperative, 71% struggle to keep pace with stringent timelines and quickly build new applications, connect systems, and automate processes. The majority (79%) say they are struggling to complete their digital transformation projects within a time frame of at least half as much as the time they were given two years ago.

According to Mat Rule, the CEO of low-code app development platform Toca, the following are three factors that have created a challenging environment for delivering digital transformation:

    • Increased user expectations of new applications, 
    • Shorter timelines for projects, and 
    • Budget constraints  

At the same time, organizations have no choice but to deliver. Over 60% of IT decision-makers admit that prioritizing digital transformation projects over other objectives is necessary to not lose out on the business opportunities provided by new and improved tech-enabled services. 

Secondly, regardless of the sector they operate in, 59% of IT decision-makers agree that digital transformation is necessary to improve customers’ digital journeys in everything from shopping to banking. Customers expect that they will be able to interact with a business online, or they will patronize another. 

See More: 3 Reasons Why Companies Must Be Prepared for Digital Transformation

Delays That Prevent Digital Transformation Projects From Becoming a Reality

Despite the consensus that digital transformation is required to remain competitive, on average, businesses have only been able to address one in four problems with digital transformation. Almost all decision-makers attributed slow innovation to an increase in technical debt resulting from the need to speed up digital projects. Most IT teams are under pressure from the market and competitive forces to develop and ship fast. This need for speed forces many development teams into making trade-offs between taking on technical debt or delaying a software release.

But instead of meeting customers’ growing expectations on time, speeding up project completion, more often than not, has resulted in project delays and cost overruns, costing organizations over £3 million per project, with an average cost per day overrun of £20,200. The more technical debt, the more problems show up in production, causing applications to be re-routed into development, increasing delays and preventing IT teams from taking on new projects. 

Additionally, at least half of the respondents said project delays have negatively affected employee satisfaction, customer service and productivity levels, user experience and business revenue. Almost all the respondents (87%) confirmed that reducing technical debt while speeding up innovation is a priority. IT professionals should note that it is not the debt that causes the delays and overruns but the failure to devise a plan to manage it. 

Top Barriers to Successful Digital Transformation

Having a plan to reduce technical debt is but one solution to successful digital transformation. Toca survey respondents also cited the following barriers that organizations must overcome during the transformation process:

Legacy systems and integration challenges

A majority (89%) of those surveyed stated they would prefer to leverage legacy systems to speed up digital projects rather than having to rewrite and re-platform them, with 85% saying that rewriting and replatforming legacy apps slowed down transformation and innovation. Yet, 41% stated that legacy systems are difficult to integrate, especially within limited budgets and skills shortages. Difficulty with the integration of legacy apps was cited by 39% of the respondents. 

To address these challenges, decision-makers should refrain from acquiring dozens of technologies to transform the business digitally. Rather, it is better to invest in tools and systems that will streamline the employees’ digital experience. One solution is low-code development. Low code development enables organizations to leverage existing systems when building new applications, connecting systems and automating processes. 

See More: Is Zero Trust the Catalyst for a Successful Digital Transformation?

Shortage of developers 

The shortage of developers with the necessary skill sets was cited by 39% of the respondents. Digital transformation requires developers to be technically competent, understand their organizations’ business challenges, and have the business mindset to deal with those challenges.

Budget constraints

Budget constraints are the top barrier to successful digital transformation cited by almost half (49%) of IT decision-makers. Most IT teams are finding they are required to deliver more and faster without a proportional increase in budget and resources. To obtain the necessary funding, decision-makers must clarify how the required up-front investment will bring about both long-term and short-term increases in business revenue.

Lack of collaboration across the enterprise

A significant barrier to the success of digital transformation projects, as cited by 43% of decision-makers, is the lack of company-wide collaboration. Employees are the ultimate driving force behind a business’s digital transformation initiatives; thus, cross-functional planning and analysis are essential to collaboration. Whether it is the financial office, human resources, sales and marketing or R&D, all are equally affected for better or worse by their company’s technical solutions.  

To overcome this barrier to success, decision-makers must clearly communicate their digital transformation vision to the entire company. A cross-functional group of individuals who can contribute diverse viewpoints should be tasked with leading the employee experience strategy in terms of technology, business processes and organizational structure. 

Do not try to change everything at once

Due to cost overruns and delays, those surveyed by Toca recognize that opting for large-scale digital transformation projects will not keep costs under control. Decision-makers are finding that it is better to break down changes into smaller tasks that can be better managed by the entire organization working together to adapt to new ways of working. As summed up by Kissflow’s Chief Product Officer Dinesh Varadharajan, digital transformation is “an enterprise-wide activity where people should come first.”

Are there other barriers to digital transformation that organizations fail to take into account? Share with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window . We’d love to hear from you!

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Mary Ann Richardson
Mary Ann Richardson is an independent IT analyst at technology research firm CMR Executive Advisory, focused on providing individuals and organizations with the information they need to use technology more productively and to make better business decisions. Ms Richardson has provided on-site training for a number of organizations in the Philadelphia area. A former Gartner analyst, Ms Richardson is also a frequent contributor to online technology sites.
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