Digital Transformation development projects abound, today’s business leaders are increasingly turning to technology to gain a competitive advantage. But as with any other project, Digital Transformation projects come with a broad range of risks that can compromise success with a diminished ROI. At best, a company may see a minimal ROI; at worst, the project could open a can of worms that ends up costing the business.
According to a Mckinsey study performed in 2021, a whopping 69% of Digital Transformation projects were ultimately considered a failure. These development projects not only fell short in terms of ROI and performance; they also fell short in their ability to propel a business forward in terms of its competitiveness within the company’s industry.
The Causes of Digital Transformation Failure
There is no shortage when it comes to the causes of Digital Transformation failure. These failures are directly tied in to the most serious Digital Transformation risks. Here is a look at some of the most common causes of failure
- Poor Alignment – Often, there exists a lack of alignment between the development team and the client. This results in skewed expectations, which create conditions that are ripe for failure. Scope creep, increased timelines and cost overruns are commonly the end result for these development projects.
- Poor User Adoption Rates – Poor user adoption rates and lack of pre-deployment training on the new enterprise software platform or mobile app can also limit a project’s success.
- Poor Project Planning – A lack of planning is yet another common cause of Digital Transformation project failure. Without a detailed road map, your project will be destined for failure before a single line of code is even written. This contributes to poor alignment between the development team and the client too. Notably, though, a well-developed software requirements document (SRD) and business requirements document (BRD) can effectively remedy this and many other issues.
The Most Common Digital Transformation Risks
With companies investing vast sums of money into the latest technology, you must have a keen awareness of the most common Digital Transformation risks. This awareness is essential for avoiding these pitfalls, thereby maximizing your chances of success with a healthy ROI, operational benefits and a competitive advantage. Here’s a look at some of the most common risks that contribute to Digital Transformation failure.
- A Poor BRD or SRD – Software requirements documents and business requirements documents are essential for success because they provide a detailed road map for the project. These documents include information on the users, features and functionalities, the company’s needs and the technical specs, among other things. If your SRD and/or BRD falls short, you’re at risk of scope creep, cost overruns, extended development timeframes and expectation mis-alignment between the client and the development team.
- A Bad Digital Transformation Strategy – You’re at high risk of failure if your development strategy is ailing. The most effective Digital Transformation strategies involve the identification of a problem, challenge or pain point. Then, you architect a solution to that issue, leveraging it as you develop a software solution, mobile app, web platform or other technology to serve as a solution. It’s important to remember that you cannot be all things to all people. You want a targeted solution to minimize this Digital Transformation risk.
- Lack of User Training – If you forego user training prior to deployment of an enterprise development project, you’re placing yourself at risk of failure and/or underperformance. Even the most user-friendly enterprise platform requires training. This way, users will be provided with the knowledge and insight they need to make the most of this new technology, thereby maximizing productivity and ROI. In the case of consumer-targeted platforms, an automated tutorial feature is a must-have.
- Failure to Involve Actual End Users – Fail to involve real end users in the planning and development process and you’ll position yourself for failure. This is a very real Digital Transformation risk because actual users will have otherwise-elusive insights that are critical for success. These insights are often revealed at the very end of the development process when the users are pulled in for training. This means you may find yourself with an inefficient platform that may require significant revisions in order to meet the organization’s needs.
- A Lack of Regulatory Compliance – Regulatory compliance burdens must be considered as you map out your Digital Transformation project, lest you find yourself in a situation where you have a piece of shiny new technology that would lead to non-compliance and all that goes along with that non-compliance. Banks, credit unions, lenders, health care organizations — they’re all highly-regulated. As such, the technology that’s used within these industries must allow for full regulatory compliance. The consequences of non-compliance can be staggering in terms of the financial cost and public perception.
For instance, nearly a dozen major banks were fined a combined sum of nearly $2 billion dollars after they used consumer-grade messaging apps like WhatsApp to communicate with clients. This led to recordkeeping violations and lots of negative press. This case underscores the importance of taking a proactive approach to this Digital Transformation risk. Know your regulatory compliance burdens and make a concerted effort to ensure that your development project promotes compliance.
Minimize Digital Transformation Risks With an Experienced Development Team
Digital Transformation risks abound, an experienced development team can help guide you down the path toward success. That’s exactly what you’ll experience when you work with the team at 7T.
At 7T, we specialize in regulatory compliance and our team is well-positioned to develop a software platform that allows you to achieve compliance today and well into the future. One of our offerings is SayHey Messenger® , a regulatory-compliant business messaging platform that allows clients to maintain compliance in highly-regulated business spaces such as finance, banking and insurance.
We’re guided by the approach of “Digital Transformation Driven by Business Strategy.” As such, the 7T development team works with company leaders who are seeking to solve problems and drive ROI through AI-powered Digital Transformation and innovative business messaging solutions such as SayHey Messenger®.