9 Critical Digital Transformation Challenges to Overcome (2023)
Digital transformation presents organizations with the opportunity to re-imagine the way their business is run through new digital processes and tools. However, as with any change management initiative, there are challenges businesses will face throughout the transformation processes, ranging from people-centric issues, structural problems, technical barriers, and everything in between.
What Are the Biggest Digital Transformation Challenges Organizations Face?
- Lack of Change Management Strategy
- Complex Software & Technology
- Driving Adoption of New Tools & Processes
- Continuous Evolution of Customer Needs
- Lack of a Digital Transformation Strategy
- Lack of Proper IT Skills
- Security Concerns
- Budget Constraints
- Culture Mindset
Why Is Digital Transformation Difficult?
Digital transformation is not only adopting new software, technologies, and processes that are more efficient and automated than traditional business practices and processes, it’s an entirely new, innovative way of doing something that is core to your business.
That means organizations must consider everything when taking on a digital transformation initiative – from how people will react to the change, how it will impact customer relations, the cost, how it will align to business goals, and so forth. Digital transformations empower organizations to take their business into the future, and position companies to withstand competition and grow into new areas.
But all of that is easier said than done – according to digital transformation statistics, 70% of all digital transformation programs fail due to employee resistance and lack of support from management (McKinsey) and only 16% of employees said that their company’s digital transformation efforts improve their performance or are sustainable.
9 Top Digital Transformation Challenges Impacting Businesses in 2023
While digital transformation presents unique opportunities for organizations to innovate and grow, it also forces critical thinking and potentially reimagine aspects that are core to your business.
Here are the 9 most important challenges to consider when undertaking digital transformation projects in 2023:
1. Lack of Change Management Strategy
Organizations with a thorough change management strategy are 6x more likely to meet or exceed digital transformation objectives. (Prosci) Having a strong change management culture is vital for any organization’s success. A lack of a change strategy sets up any new project or implementation plan up for failure.
An effective change management strategy involves planning a project by identifying the root causes of issues – and building relationships with all stakeholders and employees. You can begin to craft your change management strategy with our change management plan template below:
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2. Complex Software & Technology
Enterprise software is inherently complex. New technologies can be intimidating. This is a large challenge for organizations undergoing digital transformation – both from an implementation and data integration perspective, as well as from an end-user experience perspective. Leaders should consider this when in the early stages of a transformation project, and seek out the most intuitive, integrated systems.
3. Driving Adoption of New Tools & Processes
New processes and technologies often present challenges in the form of resistance to change from tenured employees who feel there is nothing wrong with the way they’re currently doing things. For new software implementations, organizations must provide comprehensive onboarding training, as well as continuous employee performance support to help employees become productive and proficient with a tool quickly, allowing them to understand the value of these new processes.
Above: With Whatfix for digital transformation, you can create in-app performance support and self-help content for your enterprise applications such as Salesforce.
4. Continuous Evolution of Customer Needs
Organizations are always evolving – and COVID-19 accelerated this. Consider what a customer wants. That changes as the world evolves and industries change.
Digital transformation is not an easy project, and intensive transformation efforts can take years to accomplish. What happens if, during that time, your customer needs change? Evolution of customer problems will happen. Don’t be surprised, and plan to be agile when it comes time to adopt new digital technologies.
5. Lack of a Digital Transformation Strategy
Why are you replacing legacy systems and manual processes for new digital systems? Does your organization have a plan (or need) to implement advanced and complex systems? Are you ready to properly migrate your existing systems into new ones?
These are all questions that should be answered before implementing a digital transformation process. There is no such thing as a successful transformation project without a predetermined strategy. Don’t be sold on false assumptions and buzz-words. Know where your organization can be improved, what areas of the company are in need of upgrade, and start from there.
6. Lack of Proper IT Skills
To succeed in your transformation efforts, you’ll need a skilled, high-performing IT team. And that is difficult to put together – especially in the current tech worker shortage. According to an enterprise study, 54% of organizations said that they’re not able to accomplish their digital transformation goals because of a lack of technically-skilled employees.
The challenges presented to organizations include a lack of skill sets in cybersecurity, application architecture, software integrations, data analytics, and data migration. Organizations that lack IT professionals can combat this challenge by outsourcing this work to outside consultants and digital transformation experts to help bridge the implementation and migration gap.
7. Security Concerns
A push back many enterprise organizations in data-sensitive industries have is privacy and cybersecurity concerns. And that is valid. Most digital transformation efforts involve leaving behind on-premise solutions to move to the cloud, as well as integrating all of a company’s data into one centralized system.
Of course, this brings up the increased threat of cyberattacks stealing customer data and company secrets. Online attacks can target system vulnerabilities, poor setups, and unsuspecting users. Be sure to have a plan in place to proactively mitigate these threats before they happen. Bring in a cybersecurity expert to help identify weakness in your defense.
8. Budget Constraints
Digital transformation is not a cheap investment. For organizations that have a less-than-stellar transformation strategy, scope creep can slowly start to push back deadlines and add in new work – all adding to the cost of a project. Add in any consultation work, changes in your customer needs or IT errors, and the cost of digital transformation continues to increase.
Understand what your long-term goals are, and what ROI you plan to achieve from your transformation process. This will help you clearly understand what spending is too much, and what room you have to increase your budget.
9. Culture Mindset
Organizations with legacy systems and manual processes often have an old-school mentality. Things change slowly, automation is looked down upon, and new technologies are difficult to adopt. A huge challenge of digital transformation is a cultural one. Everyone – from leadership to new employees – must be on the same page. Everyone should be ready to make big changes in their day-to-day lives, and not be afraid of learning new things.
5 Tips for Overcoming the Challenges of Enterprise Digital Transformation
Here are five strategies enterprises can implement to overcome the challenges of digital transformation and reach their potential with the empowerment of new digital systems and technologies.
1. Invest in a Digital Adoption Platform
A new digital application or process will not automatically be more effective – you’ll need to provide proper onboarding, training, and support to your employees or end-users to empower them to use these systems better. To ensure the success of your digital transformation project, invest in a digital adoption platform (DAP).
DAPs provide organizations with no-code tools to create in-app content to provide a contextual onboarding experience, as well as ongoing performance support. This includes:
- Interactive walkthroughs and user flows that take new users on a step-by-step tutorial of how to use different features
- Product tours and onboarding experiences that include popup windows, highlight different areas of a product, and overlap task lists on a user’s screen that must be completed
- Embedded knowledge bases that include a searchable repository of frequently asked questions on the platform, and allow companies to include links to other performance support resources in their Sharepoint, Google Drive, internal wiki, or anywhere on the web.
The best digital adoption platforms also include features that allow end-users to provide feedback on the training and support content, right when they’re using it. They also provide detailed analytics on what features are being used, what flows are the most successful, areas of your new digital tools that need to be explained further, what the overall product adoption level looks like among your organization, and more.
Whatfix’s DAP takes an enterprise focus of driving adoption of new digital transformation projects and is the highest-rated enterprise DAP on G2.com with a 4.6/5 rating across 180+ real-user reviews. You can read all of those Whatfix reviews here.
Additionally, here are three customer stories on enterprise organizations using Whatfix to drive success of their digital transformation projects:
2. Create a Change Leadership Team
Look at your current workforce and find those that are influential, innovative, and trustworthy. Bring together a cross-functional team consisting of these high performers to create a change leadership team. This team will help create a vision for your digital transformation process that aligns with business goals and is created by those who are connected to the inner workings of your organization
This allows organizations to take a proactive approach to digital transformation initiatives that focus on the people aspect of change.
3. Hire a Digital Transformation Consultant
Every change is not digital transformation – digital transformation is a wholesale realignment of core processes, tools, and experiences. Most organizations have never gone through an entire transformation process such as these, and it presents a scary challenge to organizations that might feel intimidated by this scale.
Hiring a digital transformation consultant will provide you with the comfort of professionals who have done this before and know what they’re doing. They will provide you with a framework and foundation for finding success, with a track record to back this up.
4. Align Business Goals with Digital Transformation Strategy
What are the reasons for your organization’s digital transformation? This should be front-and-center of everything you’re working toward when implementing new processes. Understand your customers’ needs, and the pain points and friction areas in your offerings, products, and services. Analyze your current processes to identify outdated systems that are in need of infrastructure improvement.
At the end of the day, your transformation process should align directly with your core business goals. It should empower employees to be better at their job functions, make your customer experience better with more intuitive systems that solve more customer problems, and drive more revenue for our organization.
5. Be Agile
At the core of digital transformation projects is a sense of organizational vulnerability. Leaders realize that to adapt and compete in a global, digital world, innovation and change must happen. But technology is changing rapidly and continues to scale faster than most realize.
Being agile means not being afraid to pivot. It means taking advantage of opportunities when they arise. The sheer fact that you’re going through digital transformation already shows you’re agile – but lean into this. Don’t be afraid of new processes and tools, or changing up traditional practices to new ones.
Watch the video below to see Whatfix in action.