5 Top Challenges to Digital Transformation

If there’s one thing everyone can agree on about digital transformation, it’s that change is constant – and happening faster than ever before. We’ve seen many iconic brands upended in recent history by digital disruption (think Blockbuster as one we all know), which provides every brand and organization with a sense of urgency – that we must find and act on change before it finds us.

Every organization looking to tackle digital transformation instead of being tackled is sure to face some challenges. In the 2016 State of Digital Transformation Report, Brian Solis and the Altimeter Group surveyed 500 executives and digital transformation strategists whose organizations had already begun digital transformation initiatives.  Five top challenges most common among those surveyed included:

(1) understanding customer behavior

(2) a lack of data or ROI to justify the value of digital transformation

(3) risk management, compliance or legal complications

(4) resources required

(5) changing the company culture to be agile.

Change is Hard

These same challenges were echoed in a recent informal survey of business executives in Los Angeles and Chicago by Microsoft. Digital transformation in their organization was being hindered they said, because their organizational or corporate culture was not open to rapid change or new ideas. Others said legacy systems, a lack of collaboration, and a lack of data and intelligence were holding them back. 

The cost of innovation was noted as a barrier, too, which goes along with findings of a recent Economist Intelligence Unit Digital Evolution Report which found 88% of the companies surveyed for the report believe they “do not have the right technology in place to currently execute a digital strategy.”

Challenge(s) Accepted

The good news is that facing the common challenges associated with digital transformation initiatives pays off:

• Benefits already being witnessed from digital transformation efforts include increased market share (41%), increased customer engagement in digital channels (37%), more positive employee morale (37%), greater web and mobile engagement (32%), and increased customer revenue (30%). – State of Digital Transformation Report, Altimeter Group, 2016
• 39% say their digital transformation efforts have helped them make strong progress in enabling real-time transactions; 32% say it has helped them make strong progress in improving the efficiency of operations; 28% say it has helped them acquire new customers. – Digital Evolution: Learning from the Leaders in Digital Transformation, Economist Intelligence Unit (EIU), 2015
• 33% say that their digital transformation efforts have helped them make strong progress in creating new sales channels; 25% say it has helped them make strong progress in accelerating product development. – Digital Evolution: Learning from the Leaders in Digital Transformation, Economist Intelligence Unit (EIU), 2015
• 71% of digitally maturing companies say they attract new talent based on their digital vision, (versus 10% of early-stage companies).  – Aligning the Organization for Its Digital Focus Report, MIT Sloan Management Review & Deloitte University Press, 2016.

So, digital transformation challenge(s): accepted.