In 2019, digital transformation is front-of-mind for everyone from small business owners to the CEO’s of Fortune 500 companies. Leaders are rightfully concerned about how they will innovate and digitize for success.
Unfortunately, the majority of these efforts will be in vain, with 84% of digital transformations ending in failure. Many of these efforts span multiple years, exceeded budgets, and results that fall short of initial ambitions.
A well-known example is GE’s attempt to build their own proprietary software platform for the industrial internet, called Predix. GE also formed a new business unit, GE Digital, which swelled to more than 1,500 employees by 2016. Predix encountered many technical challenges and significant delays before it was dialed back. In August 2018, GE announced it was selling off its digital assets business. Inc. describes their efforts at digital transformation as “lacking game-changing, multibillion dollar innovations.”
The BBC had similarly ambitious plans when they launched their Digital Media Initiative. This transformation would see the broadcaster digitize their operations, including producing new in-house production tools, an online digital archive and a new database. Siemens was initially hired in 2008 to work on the project, with 2009 as the anticipated completion date. After delays, the development was brought in-house. The BBC’s digital transformation effort took five years of development, $156M USD, and never became operational. An investigation by the Public Accounts Committee called the project a “complete failure.”
The challenges of successful digital transformations are not limited to the private sector. The Government of Canada began plans in 2012 to bring 150 government agencies and department websites into one unified portal. The massive undertaking was intended to make accessing government services online simple and streamlined for Canadians. Adobe was awarded a $1.54M contract for the project, but over several years the budget grew to more than $15M. In addition, federal departments also spent $19.8M in preparing for the migration to a single portal. By 2017, however, the project was scaled back, with just a fraction of the highest traffic government departments included in the new portal.
These failures are also not uncommon in procurement. A recent high-profile example is New York City’s Department of Information Technology and Telecommunications’ challenges implementing a procurement platform. The goal was to provide the department with a centralized way for 40 city-wide agencies to procure goods and services online from 11,000 suppliers. The organization hired a provider to build an eprocurement solution in 2016. The initial $30.5M contract eventually grew to $46.9M. The substantial cost and comparison to other eprocurement solutions led to a watchdog investigation by the Checks and Balances Project. The city asserts the project has been a success, despite the cost and the fact that agencies won’t be able to source and pay suppliers through the system until 2020. While the intentions of this undertaking were admirable, the end result is that the city agencies are without access to quality, centralized data on their suppliers.
There is much analysis as to why digital transformations fail. Like any project undertaken at an organization, the reasons for not meeting goals can be complex. They potentially include improper planning, lack of focus or strategic leadership and poor internal communication.
While many of these challenges can be organization-specific, there is a single foundation all successful digital transformations must rest on—good data. At the core of every digital transformation is the valuable data every business has, and developing smart ways to capitalize on it for the future. This means building or leveraging systems that allow employees and leaders to learn quickly from their data, make the best decisions and become more efficient.
Without high quality data everyone within the organization is confident in, even the most meticulously crafted digital strategies can crumble. Poor data means digital innovations cannot deliver value or insights to users. Organizations that get digital transformation right start with the highest quality data, and build their efforts from there.
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