Investment in digital transformation projects globally is poised to exceed US$1.8 trillion this year and US$2.8 trillion by 2025, yet over 80 percent of these projects might fail to meet their business case metrics
Zen Ex Machina, CEO, Matthew Hodgson, a veteran technology transformation, finds it ludicrous that anywhere between about 50 to 85 percent of transformation projects are earmarked for failure.
He contends that a key reason for the disappointing efficacy rate is a lack of unified vision within an organisation, about the reason for the initiative and its proposed ongoing impacts. Significantly he adds, this could be solved via a more dedicated reliance on data as a guide to the most organisational appropriate transformation execution.
“Nearly 50 percent of executives will make decisions based on gut feel, and given that 86 percent of digital transformations will fail, at least having good data, particularly comparative data, that looks at how you've been going three, six and 12 months. Don't base it on gut instinct, start with it, but base your decisions on how and on where you are going to start and what metrics are you going to use. Base it on data, base it on the impact,” he advises.
Hodgson adds that it is essential not to view your company’s transformation as a silo and seek competitive comparison and question where your company should be relative to other types of transformations, either in your industry or in your region.
Those on the frontline of digital transformation projects will claim that the reason there is typically 16 percent chance of success, is that those driving the project are focussing on the wrong areas. If there was a formula for digital transformation it would be comprised of 80 percent soft skills (humans) and 20 percent technology.
Future proofing
In the realm of future-proofing effectively for future technology needs, Hodgson says transformation goals should now be less focused on scalability and more centred around ensuring systems are robust and resilient. And this often means making human capital more resilient.
“How can we be more resilient to change, so that when something like a pandemic hit, we don't devolve back into crisis management with managers micromanaging their people due to fear? We know that from the psychological data, that the most effective way for people to work is to be self-organizing, to be self-managing, that's immediately 20 percent more effective in terms of goal achievement and productivity.”
Resilience to change is very much bound up with how we create organisational constructs and operating models that allow for an acceptance of the inevitability to change, ensuring that impact is manageable, Hodgson explained.
“We know with change is inevitable, it's always going to happen. How is it that we can very purposefully in a structured and disciplined way respond, as opposed to just being reactive?”
In order to push that 16 percent success rate further, Hodgson’s tips for best-of-breed change management include; the centrality of cross-functional teams; the need for a clear goal for any transformation project and the use of value-based metrics to assess that impact.
“We want to ensure that we understand explicitly impact, flow and capability. Use those three metrics, inspect and adapt them at least quarterly to see whether the initiatives that you're iterating through are actually going in the direction that you want. Because if you're basing it on data and you're not seeing those things move the metrics, it empowers you to then go, let's just take, pause and work out what our next step actually should be.”
As we shift into a post-pandemic phase, Logicalis Australia CEO Anthony Woodward said that there is a big shift away from investing in reactive digital projects such as the tactical areas that allowed organisations to enable working from home.
“Now organizations are focusing back to the core, truly transformative changes they want to make to change the way they facilitate business. Digitalizing processes and digitalizing the way they interact with other parts of their business and other parts of their ecosystem in new ways,” Woodward says.
Most essential in the digital change management space, Woodward posits is how much the transformation effort has focused in on the employee experience.
“It is back to challenge we have in the skills shortage, a challenge that many industries have, not just IT, but anywhere that there are professional workers. The employee experience that people have while they are dealing with the systems in their everyday work life is really driving the effort,” he says.
There is a new dimension to the post-lockdown workplace to contend with also, Woodward assets, a new layer of staff who were recently employed, many of them completely remotely and have never had the experience of working in a real office or face to face with others.
Digital Only
This ‘digital only’ nascent employee, has a different set of expectations to what the work environment offers and expect to engage in that business in a fully digital way.
“Organizations that don't have true digitalisation of their processes that enable them to move quickly, innovate and change, will find that they will really struggle to attract talent, now and in the future,” Woodward says.
One of the biggest blockers to change aside from the skill shortage remains the problem of legacy systems and the need for innovative technology solutions to provide integration.
“Legacy remains one of the really core problems that a lot of clients face. We've called out before that there are some organizations that are keen to change the way that they do business in a digital world, but the systems that they use are holding them back and changing those systems is no mean feat, especially if it's things like some of the more ancient ERPs that are out there.
“I've heard it said that some knowledge workers may deal with one hundred applications in a single day, just to get their tasks done, obviously in the future, what we want to deal with is three or four to get that job done.”
Woodward also counters the notion that the pandemic drove digital transformation. “It wasn't really true transformation. I think it was quite tactical, it might have enabled a lot of what needed to be digitalized to go online and allow people to work remotely, but true digital transformation is about how a business can actually operate differently by using digital technologies to engage with customers, partners, employees, suppliers, etc.”
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