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The Harsh Reality: Why 84% of Digital Transformation Projects Fail

By Francis Jan, Partner Strategy, Operations & Development

Over the past decade, companies across all industry sectors have prioritized “Digital Transformation” as a key objective for business development and performance improvement. Yet, this $2 trillion industry faces a substantial 84% failure rate, despite its rapid advancement.

The question arises: Why?

Through decades of industrial transformations, spanning from the advent of automation to the present era of digitalization and Industry 4.0, it has become evident that technology functions are a valuable tool. Long-term success in digital transformation, however, isn’t just about the technology. While digitalization is a crucial technical aspect, the pivotal factors for long-term success lie in clearly defining a purpose and creating a vision, along with an unwavering commitment and strategic approach.

So, are we missing the target because the word “Digital” points us in the wrong direction? Not really, digitalization is a critical part (technically) but it will not deliver the expected results without a broader approach.

In this article, I will unravel the web of challenges that so often lead to failure and provide my insights into what MUST precede the decision to embark on the journey of perpetual improvement.

The Goal of Digital Transformation is to Create Value

Digital Transformation will employ a recurring process similar to the traditional systematic PDCA (Plan-Do-Check-Act) model, with valuable business data serving as a catalyst.

Digital Transformation will:

  • Impact all the processes of the company (and potentially the product).
  • Guarantee the interconnectivity between processes with a clear objective to maximize value and support the enterprise strategy.
  • Create a scalable operating model.
  • Use a significant volume of technology and data.
  • Invest in performing systems and develop automation of tasks.

Bottom Line: There is no “blanket” solution. Each enterprise is unique and must carefully define its objectives before embarking on this journey of digital transformation.

Readiness Assessment – Measuring the Power of Your Change Engine

Digital Transformation is a challenging and long journey, after the initial push, the maintenance can often extend beyond an executive’s career. Its success much depends on steadfast perseverance and consistency to overcome inevitable hurdles.

Meaningful sizeable changes are built on 2 major pillars:

  • Long-term vision and commitment from leadership.
  • A workplace culture that embraces and adapts to change.

Bottom Line: The people involved are the primary drivers of success.

As with every change initiative, the following questions need to be addressed before you begin:

  • Even with a robust data management function in place, is the current structure of our data optimized to align with our objectives? (Does it support global business goals, accommodate high variability of models, and allow the integration of third parties?)
  • Is Digital a part of our product offering? If yes, how do we connect it to our internal processes?
  • Do we have a clear, long-term strategy with executable initiatives?
  • Is our organization designed to support our objectives? Are roles and responsibilities clear and objectives measurable?

Value Creation – The Fuel of your Initiative – Define and Measure Success Accurately

A precise definition of success is crucial – without it, the project is at risk of yielding results below expectations or, worse, possibly facing abandonment.

Even Companies with Strong Digital Cultures Face a 40% Failure Rate!

Why? Although 54% of companies anticipate considerable growth through Digital Transformation, 40% of them neglect to conduct a thorough analysis of their business environment or establish a clear vision and strategy.

Bottom Line: This further underscores that technology, while a pivotal tool, is not the sole foundation of successful Digital Transformation.

A Proven Methodology for Building a Solid and Company-Accepted Roadmap

Fostering strategic patience and building a roadmap that focuses on both activities and tangible results is essential for keeping the entire company motivated and aligned.

Team Preparedness – A Crucial Element to your Success

The success of your initiative relies heavily on your team. To ensure readiness, you will need to carefully evaluate the following:

  • Roles and Competencies (both hard and soft)
  • You will need to appoint leaders
  • Training and/or recruiting requirements
  • Former experience with major transformation initiatives
  • Effectiveness of decision processes (speed, delegation, etc.)
  • Ensuring diversity of experiences and knowledge to align with your company’s needs
  • Advisory and Consultancy Requirements as the foundation

Digital Transformation is an ongoing initiative; the initial push can need external support, but your team must be able to appropriate and continue the project after the first 3 phases described above.

Bottom Line: In the highly complex landscape of Digital Transformation, the true cost of missteps can be significant. A lack of strategic team preparedness may lead to suboptimal results, hindering the overall success of the initiative. This is where the value of a team of seasoned experts comes into play. 

With decades of experience in successfully driving digital transformation initiatives, our team of experts has created a tried and proven methodology that leads to measurable successes. Leveraging the insights and guidance of Altix Consulting’s seasoned experts who have consistently delivered successful outcomes not only mitigates risk, it also offers the strategic advantage of assembling a proficient team that will prime your company for long-term success and help build a foundation that ensures sustained excellence.  

About Francis Jan:

With a 40+ year career spanning a multitude of industrial sectors across three continents and companies varying in size from family-owned to publicly traded industrial giants, Francis is an accomplished global executive, recognized for achieving double-digit growth in revenue and margins, along with a consistent 30% cost reduction. Renowned for successful transformations in diverse industries, his entrepreneurial approach prioritizes bottom-line performance, optimizing manufacturing and supply chain processes. A proven team builder, Francis fosters multicultural teams, delivering outstanding goals on time with passion and resilience. 

Francis’ expertise in technology and in orchestrating successful transformations is underscored by 11 process patents and 4 product patents attributed to him.

About Altix: 

Altix is the middle-market international industrial champions’ management consulting partner, providing business strategy, technology and innovation, and operational excellence support, in the world of advanced manufacturing and international supply chain. www.altixconsulting.com