Digital transformation breaks with tradition and replaces obsolete processes with newer and more efficient ones. Here are the opportunities and challenges of digital transformation for organizations.
Digital Transformation Projects (2): Opportunities and Challenges of DigitalizationLinh Tran, Thursday 05 April 2018 | Reading time: unknown
The first part of this 3-part series gave an insight into what “digital transformation” means. We’ve established the following definition for this process:
A digital transformation is a process of disruption and the following process of regeneration. Antiquated structures get torn down and are replaced by new, more efficient processes and structures."
In part 2, we’ll take a closer look at the chances and challenges digital transformation projects bring about.
Digital technologies offer organizations the chance to significantly increase their efficiency. One example is the value-added chain: new technologies enable companies to reduce costs while increasing their revenue at the same time. Thanks to the digitization, companies can greatly reduce the time to market. And time is one of the corners of the project triangle, which means that saving time has a direct impact on the project budget and scope. This is possible due to automation and optimization of production processes and workflows, which in turn leads to increased innovation power and customer satisfaction, since companies can offer them more value for their money.
Digital transformation also changes communication. Team members can now collaborate more effectively with one another. When you look up digitization and collaboration, you’ll often stumble upon the word “crowdsourcing”. Crowdsourcing means that organizations can tap into a large knowledge pool and close any potential knowledge gaps. This pool can include customers, partners, universities and other external stakeholders in the innovation process.
Digital transformation doesn’t happen overnight. It’s a continuous process which involves the whole organization. A digital transformation can only be successful if everyone, particularly the c-level, stands behind it.
It’s not just about modernizing technologies and having the newest apps, it’s more about a change of culture. Everyone in the organization must let go of their pre-existing thought and leadership styles and must be willing to take the risk of trying something new – and maybe failing.
Just like any other change project, part of the change management involves motivating the staff to embrace innovations and help them overcome their insecurities and fears. This is particularly important because a lot of change projects fail due to the staff not accepting the change.
Here are some other challenges organizations have to overcome during a digital transformation process:
- Insufficient cross-departmental collaboration
- Not enough time for the transformation: day-to-day business means that resources do not have the capacities for the transformation project, but there’s also a high cost and price pressure in the market
- Ineffective project and change management
- Cyber security issues
- Missing technical infrastructure
- Insufficient preparation and training of staff for the digitization
Stay tuned for part 3 of our blog series, in which we’ll give you a 6-step guide for a successful digital transformation. While the road to digitalization varies from organization to organization, you can still use our guide for orientation.