How to Improve Your Digital Transformation Project Failure Rate

Research has shown digital transformation projects in the APAC region fail at a high rate — and have mixed success at best.

For example, Gartner research recently released in Australia found that the success rate for CIOs running digital projects was about 48%, which analyst vice president analyst Daniel Sanchez-Reina said “was like a coin flip.” He termed the problem the “curse of random success.”

Vishal Dhawan, APAC regional managing director at software firm Planview, said his company serves 4,500 customers globally — including over 200 in Australia and more than 50 in New Zealand. The organisation recently analysed 2,500 value streams managed through its software, revealing that companies are only seeing 8% of their planned initiatives being tangibly delivered.

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“I think today, boards, CXOs, they are all saying, ‘Hey, I’ve been spending millions on digital transformation. Can somebody show me the value I’m realising against these digital initiatives?’ If you look at the numbers and the success rates, I think the waste on digitalisation is quite alarming,” Dhawan said.

However, as he explained to TechRepublic, organisations can improve their success rate by focusing on culture, enhancing decision-making capabilities, and enabling the ability to pivot.

Why are organisations struggling with digital transformation projects?

Planview has identified several key challenges that organisations face when pursuing digital transformation.

Lack of visibility and transparency

The work of organisations makes for a “very heterogeneous landscape,” Dhawan explained. Although many technology systems are implemented “for the right reasons,” he noted that executives often struggle to get a clear view of the status of digital initiatives across the organisation.

“That visibility and that transparency at a near real-time basis is lacking,” Dhawan said.

Additionally, CEOs may be aware of their top strategic projects but often still need to request reports for updates on their progress.

“And then half the organisation ends up running around to collect data for that project, and by the time the data comes to the CEO, you know, the shape of things have moved on,” he explained. “So there’s obviously inefficiencies in terms of productivity and just collating that basic sense of visibility,” Dhawan said.

Difficulty in adapting to changing conditions

Companies often struggle to change their digital projects or strategy mid-stream as requirements change, Dhawan said.

He emphasised the need for organisations to dynamically adjust or flex their strategy, change initiatives, and reallocate resources in response to changing dynamics of the market.

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“The question is: How do you have those basic capabilities … to be able to change and refine your strategies and tactics and initiatives, you know, based on those changing dynamics?” he asked.

The rise of pure digital business models

More operating models are emerging that are purely digital, with no start and end point as with traditional transformations or projects. Dhawan said banks and telcos are aspiring to that digital operating model.

“It results in a completely different mind shift,” he explained. “They are no longer running projects. If somebody is running an e-commerce platform or a mobile platform, it’s not a typical project where you have a start and a stop; you’re starting a product initiative, and there’s no stop as such.”

This digital operating model creates a set of new challenges for customers adapting to this continuous innovation model in complex organisations, such as prioritisation and reprioritisation in line with strategy, bringing cross-functional teams together on agile projects, allocating costs, and measuring KPIs.

Three ways to improve your digital transformation success rate

A strong culture, enabling better decision-making capabilities, and the ability to shift priorities in an agile way are all factors in improving digital transformations or digital operation models, Dhawan said.

1. Foster a strong company culture

Dhawan said success in digital transformation is a culmination of people, processes, and technology within a business — where technology is utilised as a catalyst, rather than just an end in itself.

Planview sees some organisations being effective when the starting point is people and culture.

“I think it starts with that mind shift, the culture, and how they are approaching driving their strategy. That’s the starting point. So culture and the organisation design becomes a good foundation,” Dhawan said.

2. Have the capabilities for objective decision-making

Recent research conducted by The Economist for Planview, which surveyed 600 executives in seven countries, found just 14% were confident in their organisation’s decision-making capabilities.

“It comes down to having the right set of capabilities — where you’re able to drive a very objective-based decision-making model, especially when you’re looking at allocating your capital, allocating your resources during a typical budgeting cycle,” Dhawan said.

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With demand coming from all sides, Dhawan said objective approaches helped build consensus, so people are aligned. “They should be thinking, ‘Yes this is the right allocation of where our company’s capital should be and where our resources should be invested for what we are trying to achieve.”

3. Enable always-on course correction for transformation

Being ready to change is an essential part of today’s digital transformation or digital operations projects.

“You need to be able to come together as a management or project team to quickly look at a data-driven, objective model of reassessing, reallocating that capital and resources that is finite,” Dhawan said.

“It is about constantly looking at how work is aligning as much as possible to your strategy and making sure any variances are quickly highlighted, so that you can then course correct very quickly.”