How to spot a failing digital transformation project

For large-scale projects, figuring out what's working and what isn't can be a daunting task

Digital transformation should be considered a priority for any business hoping to stay relevant in 2021 and beyond, but putting something into practice is not always easy.

Organisations that make digitising their processes and systems a priority tend to be able to keep up better with the wider world. As technologies evolve, the market shifts, which changes what people come to expect from organisations they interact with.

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Ensuring this is done in the correct manner will prove to be a huge benefit to all businesses, no matter their size. This is particularly true when it comes to shifting away from outdated, legacy technologies, which usually provides enormous benefits with relatively small upfront costs. However, getting this right can be a much more difficult task than it may appear. It requires resources, willpower, and strategic thinking to see projects to the end.

As you can imagine, digital transformation is often referred to as a journey, which may include making mistakes along the way. This is all a learning process where failure is a mere byproduct of the courage to experiment and invest in new technologies that can modernise your business. Although failing fast is considered to be a cliche, it helps IT teams detect issues that may occur and resolve them rapidly so your team can remain focused on other things.

However, research has shown that as much as 90% of all digital transformation projects fail to fully meet their initial goals. Meanwhile, 75% of IT decision-makers are concerned that being involved in a failed digital transformation project would cost them their job. With such high stakes – money, jobs and the reputation of the organisation – it’s crucial to spot the telltale signals of a digital transformation disaster waiting to happen and grind it to a halt before it's too late.

What are the warning signs of a digital transformation disaster?

The first step to stopping a digital transformation disaster is to find a way to spot the warning signs so issues can be dealt with quickly and efficiently.

"If a digital transformation programme is going well, you will be getting consistent messages from business representatives, the programme leadership and external partners," says Lisa Heneghan, global head of technology and management consulting at KPMG. Such feedback is crucial to any project undertaken, she says, and concerns should run far and wide should there be an abrupt breakdown in communication.

Positive responses to ongoing efforts, or the lack of them, needn't be focused on how the technology itself is being developed. It's clearly not ideal if the technology being worked on is riddled with errors, but there are wider concerns that should also be deemed just as alarming. Failure to deliver the promised improved management information, better client relationships or easier access to internal data are also concerning.

Jim Bowes, CEO and founder of Manifesto, which worked with the National Trust on its own digital transformation, suggests cultural issues, namely a reluctance to change, can stop digital transformation plans from taking off before an organisation fires the starting gun.

"A level of this is to be expected but seeing lots of this sentiment can be a definite red flag that not enough is being done to take people on the journey and drive behavioural change," he says.

Why digital projects need a leader

It might be a case of stating the obvious, but no organisation is going to be able to spot the signs that a digital transformation project might be going wrong unless they have people looking for them.

Jim Bowes told us that it's important to have someone with what he called a 'helicopter view' so that "whilst you are working on the detail, you are also stepping back and reflecting on how different parts of the programme are going and whether they are aligning with the organisation's overall goals".

Rick Pastore, senior director and IT research advisor at the Hackett Group, also emphasises the need to have someone with overall ownership - that 'human helicopter'. He argues the clearest indication of problems "is when there is no one clear owner of a digital project to drive it forward".

"There are many moving parts to any digital transformation project and they all need to be aligned," he adds.

When and how to act if things go wrong

The best time to act is before things go wrong. That's not a deliberately obtuse point.

The fact is, if the implementation is planned well, the IT team are thoroughly involved from the start, there are clear business objectives, and there is strong leadership with someone in overall control of the project, it can be possible to flag potential issues before they appear, and prevent them from happening.

Rick Pastore told us: "For lead officers, the best action is usually pre-emptive. If you're chasing efficiencies at the expense of stability and resilience, you're not thinking clearly - and your lack of forethought will have a detrimental effect on your project."

A dark blue abstract caterpillar transforming into a dark blue chrysalis then a light blue butterfly

It's crucial to do the right things when a problem is identified, and to act quickly, argues Lisa Heneghan of KPMG.

"Once you've established there is a problem, the next thing to do is fully diagnose the underlying root causes. This is not necessarily straightforward, and sometimes the answers may take a while to determine and solve."

For example, if it's identified that the scope of the project is too large or poorly defined, action should be taken at once to fix this, and it may mean scaling back the project or prioritising the benefits it should achieve.

Avoiding failure may mean starting over

There may also be problems with those individuals assembled to drive the project, explains Heneghan, which, in the worst-case scenario, may require you to bring in an entirely new team. "This happens more than you'd imagine," she explains.

The best practice advice around digital transformation is not so different from the best practice for all areas of business development. It revolves around planning, leadership, evaluation, monitoring, and mitigation.

It's the technology part, and the fact that transformation is organisation-wide, that makes it seem more daunting than some other aspects of business development. But that's no reason to shy away. Problems don't fix themselves.

How to avoid failure in your digital transformation project

It may well remind readers of the well-known idiom ‘what came first, the chicken or the egg’, but realising that the utilisation of emerging technology in supporting digital transformation initiatives is a crucial step in learning to avoid repeated failures.

The advancement of new technologies like artificial intelligence and machine learning can improve the speed and quality of a project, while reducing costs. Once harboured, IT departments can deploy these tools on multiple projects, simultaneously or one after the other.

A digital transformation toolkit, of course, varies massively from business to business, depending on the goods or services they produce. For instance, those with commercial custom may enhance their websites with chatbot functions and newsletter platforms, while those that are not commercial-facing would benefit from more ‘industrial’ technology, like robotics. 

The key here is to encourage human employees to co-exist with technology. Technology has the capability to even replace human resources in certain areas, and so comes with threatening connotations.

When it comes to making a success out of any digital transformation, impacted staff need to not only recognise but to embrace changes. The power of AI and machine learning certainly have the power to fulfil established success metrics, but only if part of a diverse workforce that holds human resources at its core.

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