Mission-critical digital transformation projects too often end with a whimper rather than a bang. An estimated three-quarters of corporate transformation efforts fail to deliver their intended return on investment.
Given the rapidly evolving technology landscape, companies often struggle to deliver short-term results while simultaneously reinventing the organization and keeping the business running day-to-day. Post-implementation, some companies cannot even perform basic functions like processing orders efficiently or closing the books quickly at the end of a quarter. The problem: Leaders often fail to consider how to sustain value creation over time as programs scale from the pilot phase to wide-scale execution.
“Most implementations are viewed as IT projects,” says Tim Hertzig, a principal in Deloitte’s Technology practice and global product owner of Deloitte’s Ascend digital transformation solution. “These projects fail to achieve the value they initially aspire to, because they don’t factor in change management that ensures adoption and they don’t consider industry-leading practices.”’
Technology rarely drives value alone, according to Kristi Kaplan, Deloitte principal and US executive sponsor of Deloitte’s Ascend platform. “Rather it’s how technology is implemented and adopted in an organization that actually creates the value,” she says. To deliver business results that gain momentum rather than fade away, executives need a long-term transformation plan.
According to Deloitte’s analysis, the right combination of digital transformation actions can unlock as much as $1.25 trillion in additional market capitalization across all Fortune 500 companies. On the other hand, implementing digital change for its own sake without a strategy and technology-aligned investments—“random acts of digital”—could cost firms $1.5 trillion.
Best practices for implementation
To unlock this potential value, there are a number of best practices leading companies use to design and execute digital transformations successfully, Deloitte has found. Three stand out:
Ensure inclusive governance: Project governance needs to span business, HR, finance, and IT stakeholders, creating transparency in reporting and decision-making to maintain forward momentum. Successful projects are jointly owned; all executives understand where they are in the project lifecycle and what decisions need to be made to keep the program moving.
“Where that transparency doesn’t exist, or where all the stakeholders are not at the table and do not feel ownership in these programs, the result can be an IT organization that’s driving what truly needs to be a business transformation,” says Kaplan. “When business leaders fail to own things like change management, technology adoption, and organizational retraining, the risk profile goes way up.”
“Executives need the assurance and the visibility that the ROI of their technology investments is being realized, and when there are risks, they need transparency before problems grow into full blown issues,” Hertzig adds. “That transparency becomes embedded into the governance rhythms of an organization.”
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