Digital transformation: The 5 most common challenges

Krunal Shah

Mar 15, 2021 | 9 min read

Digital transformation challenges

The basic idea of digital transformation is all messed up in the minds of the majority of the new-age entrepreneurs. They think that digital transformation means the wayward deployment of the upcoming technologies, but the reality is far different from it. In reality, digital transformation is a comprehensive business process that is used to maximize profits by including apt technologies

As we dig deep, we find it is not as simple as we think. Because according to McKinsey and Company’s survey, less than 33% of the digital transformation attempts yield praiseworthy results. Companies of all shapes and sizes are rapidly trying to jump on this bandwagon without realizing the digital transformation challenges.

Digital transformation will bring a paradigm shift in the daily activities of the companies and it will have its challenges. But before jumping the queue, we will understand digital transformation’s definition and the impact it will have on businesses worldwide.

Table of Content

Digital Transformation: Definition

Digital Transformation definition

Digital transformation in simple words is an idea that modern technologies are more than capable of changing the way humans go about their traditional issues. Many researchers believe that companies that are not willing to adapt to this transformation will die a premature death. In contrast, companies that aggressively embrace digital transformation will remain at the top of their genre.

The key to boss the digital transformation process lies in changing your company as a whole. Yes, entrepreneurs who look to include Digital Transformation definition in only certain areas fail miserably. Be it operations, your business model, people involved, etc. everything must be transformed.

As the transformation will impact your employees as well, they must remain on the same page during the transformation process. It is highly essential for its success, thus employees should be taken care of.

Advantages of Digital transformation

Advantages of Digital transformation

In the present world, as much as 90% of the companies are doing their business from the cloud. Not only is this cost-effective but it also makes data moving easier. As the mundane tasks don’t bother the team anymore, they can focus on other productive things. Some of the leading advantages of digital transformation are as follows:

Better customer experience: According to reports by Accenture, customer experience (CX) is one of the key drivers for sustainable growth in business. More than 2/3rd of the companies majorly compete on it to thrive in the competition. Digital transformation can be vital in enhancing the customer experience and give you a clear edge over your competitors.

Improved customer insights: Companies will have better data-driven customer insights through digital transformation. With the help of structured data, businesses can make better customer-centric strategies, use social media metrics to increase their growth.

Enhanced resource management: Digital transformation brings all the tools at one place rather than having a dispersed database. Moreover, it can also integrate apps and software at a single junction for better Business Intelligence (BI)

Businesses should not consider digital transformation as a functional unit or a separate department. Instead, it focuses on leading efficiency and innovation across units.

Increased productivity and profits: Companies that adapt to digital transformation see increase in the profits. According to Oxford Economics and SAP Centre for Business Insights, 85% of the companies see increase in market share through digital transformation. In addition, 80% of the businesses that have completed the cycle of digital transformation report better profits.

After understanding the positive impacts of digital, it is time to see digital transformation challenges and opportunities.

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5 top challenges to digital transformation and its solutions

Digital Transformation challenges and solutions

As mentioned earlier, digital transformation brings in a paradigm shift. Thus, there are some hurdles that prevent companies from smoothly implementing it. We have listed the top 5 challenges that give businesses a hard time in implementing digital transformation and their solutions.

Poor strategy and lack of leadership

Poor strategy and lack of leadership

Many businesses fail to implement digital transformation due to lack of clarity of thought. A report by CIO stated that the majority of the digital transformation failures as the CEOs do not have a definite scope. Moreover, a Harvard University review stated that top brands like P&G, Ford, etc. asked their top people to step down as they were unable to embrace the change.

Top C-level executives fail to embrace digital transformation because it requires a high number of initiatives. Moreover, some of them are not able to convey a solid digital transformation definition to their employees. Because of this, their employees are not on the same page which impacts their efficiency and performance.

Another huge barrier in digital transformation that the leaders are unable to understand the clear picture themselves. Because they are ill-aware of this evolutionary change, they will refrain from putting a definite step forward and welcome the change.

Solution

The leaders of the companies should have a clear blue-print of the strategic plan needed for digital transformation. Moreover, they should have a clear understanding of what impact will this change cause in their company.

Since the CEOs are aware of digital transformation metrics, they will be able to convey clearly to their employees. As the communication process is seamless, the employees will happily react to the changes which impact their efficiency positively.

The curious case of customer experience

Customer Experience

If we say that we live in a ‘experience economy’ it will not be an overstatement. The modern day consumers rate their shopping experience much more than anything else. It means that, if the company fails to provide the best customer experience, they will lose their customers.

Apart from customer retention, better customer experience (CX) will help in making a different brand image for your company. Moreover, brands that are reluctant to change according to the digital transformation will have a hard time retaining their customers.

Companies should understand that bad CX is the main silent killer. Because the customers who leave your platform due to bad experience, seldom return.

Solution

The catch here is to re-do your customer experience process from the bottom. Try and focus on the journey of your targeted audience to get a clear idea about their buying patterns. In addition, going through the journey of your customers will help you touch various other touch points as well. By embracing digital transformation, you will stand a better chance of user retention.

The other important thing is to get stronghold on the ‘art of customer experience’. The catch here lies in revamping your current brand presence. Because of this, your product will become easily accessible to the customers through digital transformation.

Digital transformation will help your business to develop more customer-centric products and keep you ahead of the competitors. And once you reach this pedestal, you will have aced the digital transformation challenges.

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Improper data gathering

Improper data gathering

In the modern world, where every business is digitally connected, the mantra for success is customer data. Irrespective of the size or position of your company in the market, you have to leverage the customer data to its core.

The problem companies face with the data is despite having it in bulk, they do not know how to use it effectively. Because of it, the businesses cannot make full use of the customer information they have. Digital transformation will lose its soul if the available data is not used properly.

As the new age businesses have highly unstructured data, they are unable to dedicatedly use it for a specific purpose. Moreover, many organizations these days have collections of systems that contain various data pulled together. Since the collected data is not from a specific source, it becomes tough to use it to its optimal level.

Solution

In order to fix this problem, companies should look to start afresh. Moreover, they should even look to determine the key things that impact the buying patterns of their targeted customer. Because by doing so, they will be able to cater them in a more personalized manner by using the data.

Once you have listed the key attributes, you can keep your data centralized and use it accordingly. This simplistic approach will allow you to touch your targeted audience via various touch points like social media, etc. Also, since you know what your customer wants, the data will create value for your business.

Maintaining high levels of security

Maintaining high levels of security

One of the major hurdles in successful digital transformation is having top-level security. There are many cases around the world where big companies have fallen prey to cyber-attacks and failed miserably. Moreover, according to Gartner, companies know 99% of the security issues for at least a year before acting on them.

Moreover, the fast evolution of the new-age technologies makes life tougher for business and they cannot keep pace with it. Improper security leads to unsuccessful digital transformation which brings uncertainty and instability.

Solution

To overcome this digital transformation challenge, businesses must opt for cloud migration. Cloud computing will be vital in enhancing the security levels and make digital transformation easier for businesses. Cloud will be important in case the software systems reside in a unifying digital adoption platform.

Moreover, with cloud computing, the businesses can accelerate the implementation of digital transformation initiatives. After the disastrous pandemic in 2020, many companies have opted for cloud migration to keep their data safe.

The bottom line is; no leader wants to say ‘we could have done something more’ after a mishap. Opting for cloud computing helps you prioritize your security and make your business trustworthy. Moreover, in today’s uncertain times, a safe business becomes inevitable to win and keep the trust of your customers.

Not having proper business models

Not having proper business models

There are instances where businesses want to embrace the change digital transformation brings but are not well-equipped for it. Moreover, sometimes companies are so rigid for their legacy that they don’t want to change. And here is where their legacy becomes a burden for them instead of an asset.

For example, we did witness what happened to the leading mobile company Nokia when they refused to digitally transform. Another example is related to Kodak. In the 20th century, Kodak invented the digital camera before it was even known to the public. But instead of taking an early bird advantage, they decided to bury the invention as it threatened their legacy.

Another example is of Bell Atlantic, but it is slightly different. The company saw that the landline phones were dying and had no future. So, instead of sitting on the fence, the company took charge and made a seamless transition to mobile phones. We all are aware of Verizon.

Solution

It requires a pin-point thought process to leave your old legacy and embrace a new system. Moreover, to ride the hand-wagon of digital transformation, you have to be right about your timing.

There is no set template for this digital transformation challenge. It requires properly designed innovative steps and a will to take risks. In addition, the leader of companies should think beyond their quarterly benefits to get out of their legacy and include digital transformation.

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Conclusion

Businesses should understand that even if they are not willing to change, the digital will not stop evolving. So it is better to include digital transformation in your business to render top-notch customer experience to your targeted audience.

Through digital transformation, you can work towards adopting an omni channel approach as well. Because of the omni channel approach, you can connect with your customer in many ways. It will also allow your brand to spread rapidly and increase its horizon. The 24/7 connectivity will play a huge role in helping your business deliver more personalized customer services.

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