New technologies like cloud computing, artificial intelligence (AI), machine learning, and predictive analytics, continue to disrupt industries.
They promise lower costs and higher productivity but successful digital transformation still seems an elusive goal.
In the latest Mckinsey Global Survey, they found that despite large-scale change efforts the success rate of digital transformation is lower than 30% and it only seems to be getting harder.
This is true among even digitally-savvy industries like media and telecoms. In these industries, the success rate didn’t exceed 26%, although they did far outperform more traditional industries, like automotive, infrastructure, pharmaceuticals, and oil and gas. Here the digital transformation success rate ranged between 4%-11%.
Despite the low success rates, businesses are continuing to transform their products, services, and business processes in the hope of creating a more digital business.
Successful digital transformation could represent a significant competitive advantage with the promise of greater efficiency, scalable infrastructure, and lower demands on capital and operational expenditure.
In this blog, we take a look at the four main challenges South African businesses face on their journey towards digital transformation.
- Developing capable leadership
According to a recent online poll of South African businesses conducted by SUSE, 19% of respondents said that a lack of focus from top management was a challenge when it came to digital transformation.
To reiterate this, in a study conducted by Mckinsey they found that having the right, digital-savvy leaders in place was one of the key success factors when it came to digital transformation.
It is clear that leadership plays an important role in the success of digital transformation initiatives. Leaders need to be familiar with digital technologies in order to drive these initiatives forward and should pursue opportunities to gain exposure to new technological developments and examples for their implementation.
Another key factor is the level of commitment from leaders. In instances where people in key roles are more involved in transformation initiatives, success is more likely.
Generating buy-in from leaders across an organisation not only provides clear direction and focus but the commitment to see the business strategy executed.
2. Upskilling the workforce
In the poll conducted by SUSE, 30% of respondents said that a lack of resources and in-house skills was a challenge to successful digital transformation.
This is reiterated by the Mckinsey study that confirms that developing talent and skills throughout the organisation is one of the most important factors for success in a business’s transformation.
Just look at mining as an example:
Machine learning can predict equipment breakages ahead of time with an accuracy that helps avoid downtime and the associated costs, and improves overall safety in the operation.
These benefits can only be extracted by the business if employees across the organisation understand the tools being implemented and how they’re translated into their daily activities.
Successful digital transformation means companies need to be more proactive and focus their efforts on upskilling workers for a more connected work environment.
3. Choosing and implementing the right digital solutions
The rapid growth of digital tools and SaaS businesses has created a complicated landscape to assess. In the SUSE poll, 20% of respondents said that there were too many different solutions to understand which one is best for their organisation.
Complexity is not, however, a bad thing.
The Mckinsey study showed that organisations who successfully transformed their businesses adopted more technologies and digital tools than those that didn’t.
A possible reason for this is that employees become more effective at adopting new technology the more often it happens. That is not to say that any and every tool should be adopted.
68% of respondents said that their digital transformation was focused on their internal processes by giving day-to-day tools a digital upgrade. Tools that are used daily and affect cross-functional teams or business units should be prioritised.
4. Developing a cohesive digital transformation strategy
Aligning your organisation behind a single strategy is key. According to the SUSE poll, 11% of respondents said that they didn’t have a cohesive digital transformation strategy across their organisation.
In the Mckinsey study, they highlighted that the element of digital transformation with the greatest influence on the outcomes are clear targets for an organisations’ key performance indicators (KPIs) and clear communication of the transformation’s timeline.
Business leaders need to create clear change stories that help employees understand where the organisation is headed, why it is changing, and why the changes are important. Businesses that do that are three times more likely to have a successful transformation.
Communicating frequently via traditional and digital methods is essential to align your organisation under one strategy to achieve a single set of KPIs on the same timeline.
Adopting new technologies through the process of digital transformation holds the key to lower costs, increased transparency, and higher productivity but it is not without its challenges.
South African businesses need to develop leaders and upskill their workforce if they want to successfully transition into the digital age.
Digital transformation should start with internal processes that are used daily and affect the widest range of employees. Effectively communicating what is changing and why it is changing is important to keep your organisation aligned and focused on what is important.