Did you know that only 30% of digital transformations succeed? This is according to research by Forth, Reichert, de Laubier, and Chakraborty. They tested more than 35 factors related to engagement, strategy, technology, approach, governance, and financial and human resources. Based on that research, the authors identified six factors that can increase the chances of success from 30% to 80%. What are those factors? Read on!
Over the past year, during my master’s program (Data Driven Business), I conducted research within a construction and development company to explore how they could make more data-driven decisions. My research focused on the culture, competencies, and leadership style needed to become a more data-driven organization.
For this research, I read an interesting article titled “‘Flipping the Odds of Digital Transformation Success” by Patrick Forth, Tom Reichert, Romain de Laubier, and Saibal Chakraborty. A fascinating piece with valuable insights into the factors that influence the success of digital transformations. According to SAP, digital transformation involves both a technological shift and a shift in business and culture, which is why the article fit perfectly with my research. Through this blog, I’d love to give you a glimpse into the article!
“Only 30% of digital transformations succeed”
The human factor
Let’s jump straight to one of the most striking results from the research by Patrick Forth, Tom Reichert, Romain de Laubier, and Saibal Chakraborty (2020): only 30% of digital transformations succeed. This percentage surprised me at first. After all, it’s a very small portion of all digital transformations that are actually achieved according to plan. On the other hand, I saw firsthand last year in the organization where I wrote my thesis how difficult this transformation can be.
According to the authors of *Flipping the Odds of Digital Transformation Success*, it’s no surprise that so few digital transformations succeed: “The technology is important, but the people dimension (organization, operating model, processes, and culture) is usually the determining factor. Organizational inertia from deeply rooted behaviors is a big impediment.”
“Digital transformation is a fundamental rethinking of customer experience, business models, and processes. The goal is to find ways to deliver value, generate revenue, and improve efficiency.”
Digital transformation
I saw this exact phenomenon during the writing of my thesis. The organization had ambitious goals for becoming more data-driven, but focused mainly on the data aspect: What data do we need? How do we capture that data? What tool should we use? These were just some of the questions circulating within the working group responsible for digital transformation. These are important questions, but they add little value to becoming data-driven if the human aspect of the organization isn’t considered. When we look at the definition of digital transformation, we see that data, technology, and people must go hand in hand.
The organization SAP, for instance, describes digital transformation as both a cultural and business transformation as well as a technological one. “It is a fundamental rethinking of customer experience, business models, and processes. The goal is to find ways to deliver value, generate revenue, and improve efficiency.”
Research into the success factors for digital transformations
So, what should organizations focus on if they want to succeed with their digital transformation? Forth, Reichert, de Laubier, and Chakraborty tested more than 35 factors related to engagement, strategy, technology, approach, governance, and financial and human resources. Based on that research, the authors identified six factors that can increase the chances of success from 30% to 80%. Of all possible combinations investigated, none had the same impact on success as the combination of these six factors. This can be explained by the fact that many of the factors are correlated: “When organizations effectively address one factor, they also tend to address one or more of the others.”
“Leaders remove roadblocks quickly, adapt to changing contexts, and promote behavioral change throughout the organization.”
What are the six success factors for digital transformations?
First, it is important that organizations have an integrated strategy with clear transformation goals. This strategy should then be translated into specific actions embedded in a roadmap. The second important factor is leadership commitment, from the CEO down to middle management. Managers must be involved in the planning and execution of the transformation program. In addition, the deployment of talent is crucial. Management must allocate people and resources to steer the transformation. Also important, according to the authors, is having an Agile Governance Mindset: “Leaders remove roadblocks quickly, adapt to changing contexts, and promote behavioral change throughout the organization.” The fifth factor the article describes is the importance of monitoring progress: “The company establishes clear metrics and objectives for processes and outcomes, with sufficient availability and quality of data.” The final and certainly not least important factor is establishing a modern technology architecture. After all, digital transformation remains a collaboration of technology and people!
Practical relevance of the article
What I appreciate most about this article is that the authors don’t simply list six success factors; they also consider their practical applicability. They outline two conditions that organizations must meet in order to apply the six described factors. A useful checklist is provided that companies can use to assess their current position and determine their likelihood of success. The six factors that increase the success rate of digital transformation are clearly explained, and the authors made the effort to connect the interplay between data, technology, and people — a combination that, in my view, doesn’t always get enough attention.
So if you're interested in tools to help shape your digital transformation, or curious about the role people play — alongside data and technology — in that transformation, I definitely recommend reading the article!
Sanne de Haas