Digital transformation, why it fails and what is necessary
Wade and Shane (2020) uncovered a pre-COVID-19 digital transformation failure rate of 87.5 per cent. (Wilcocks, University of London Subject Guide, p226)
Four main reasons why digital transformation fails:
- Lack of strategic digital leadership and investment prioritisation
- Lack of large scale project management capability
- Unrealistic expectations, limited scope, poor governance and underestimating cultural barriers. (Wade and Shane, 2020)
- Lack of detailed digital strategic vision
Ross et al (2019) suggest five building blocks (really organisational capabilities) needed for digital success.
First, shared Customer Insight where Schneider Electric experimented and placed digital offerings before customers to learn what they find valuable and involved them in co-creation.
Second, build an operational Backbone such as LEGO simplifying 13 interdependent global supply chain process with standardisation, integration of processes into other business functions and process automation.
Third, building a Digital Platform is a technologically-enabled business model that create value by facilitating exchanges between producers and consumers, data and infrastructure (IMDA, 2021). API (Application Programming Interface) linkages allow seamless exchange of data.
Fourth, build an accountability framework e.g Spotify has project managers that retain ownership throughout a component’s lifecycle. Metrics that record progress and release software continuously as well as collaboration built on trust.
Lastly, build an External Developer Platform, e.g. DBS Bank in Singapore offers its outside partners more than 200 API digital components e,g, customer spending patterns, to develop synergies and complementor, collaborating with competitors.