What are Amazing Digital Transformation Risks and Failures?

Introduction

In order to ensure Digital Transformation success, there are a number of things

and warning signs you should be looking for.

I am going to discuss in this article what those top warning signs are for

Digital Transformation success.

My name is P. K. Saxena.

I am the CTO of Sofcon Systems India Pvt. Ltd.

Sofcon Systems India is having 27+ years of experience in the field of

Automation Solutions and now has started helping their clients in their migration

path to Industry 4.0.

My guide for this article is Eric Kimberling who is the CEO of Third Stage

Consulting company which is an independent consulting firm that helps clients

throughout the world reach the third stage of Digital Transformation journeys.

One of Eric’s favorite songs from the 1980s is a song called “Canary in a Coal

Mine” by “The Police” and not only it is a great song but it is a great analogy

that applies to Digital Transformations.

Canary

The analogy of a “Canary in a Coal Mine” is that Miners used to use Canaries

to identify when there was a gas leak.

The Canaries would be seeing until they smelled gas and died and that would be

the warning sign to the Miners that they needed to get out of the mine.

That is a lot like how Digital Transformations work.

You need a Canary in your Coal Mine as you are going through the Digital

Transformation to identify those warning signs before you see them because by

the time you see and feel the warning signs which is the pain of mistakes you

might be making, typically it is too late.

Your Digital Transformation has already failed yet you just don’t realize it.

So what I would like to write in this article are those top warning signs

that you should be seeing and feeling about as you go through your Digital

Transformation.

Executive Misalignment

The first warning sign that can derail any project, no matter how well you run it,

is Misalignment of your Executive Team.

If you have an Executive Team that isn’t on the same page, doesn’t have a clear

vision of what this transformation means to your organization and what this

transformation means to your organization’s future goals and objectives,

chances are very high that the project is going to fail.

If your executives are not aligned on what they want to be when they grow up

and what they want the organization to be when they grow up it is unlikely that

the project team and all the stakeholders and ultimately the employees that will

be using the technology and the new processes are going to be aligned as well.

So it is key up front before you even start evaluating potential technology or

certainly while you are evaluating potential technology to figure out what are

those areas of alignment that you need to get with your executive team,

you can plan to go through some YouTube videos that Eric had put on his

channel that cover this exact topic.

I have also included some links at the end of this article that cover this topic in

more detail but for this point and purpose of this article, it is important to make

sure you have Executive Alignment to ensure you don’t run into trouble

throughout your transformation.

Biased Technology Evaluation

Another warning sign that can derail a lot of projects early on is a Biased

Technology Evaluation.

If you are relying on consultants or System Integrator or Vendors whose are

somehow compensated for what decisions you make, chances are very likely that

they are recommending things to you which are not necessarily in your best

interest.

They are in their best interest and they are going to make more money off that.

So it is really important to have an unbiased decision-making process and

framework and an objective view of what your options are because that is

ultimately what is going to determine whether or not your project is successful.

What Eric always tells his clients is that you do not ensure a guaranteed success

if you choose the right technology for your organization but at least it gives you

a chance to succeed but if you choose the wrong technology or the technology

that is not a good fit then you are doomed to fail.

Choosing the right technology at least gives you a chance for success and early

in the process you want to make sure you have an unbiased view of technology

and that is where independent unbiased technology agnostic third parties like

Eric’s team at Third Stage Consulting Firm can help you as well.

No Business case

Another big problem that clients often run into or fall into is that they don’t have

a Business case, a quantifiable Business case for what this project should deliver

to the organization.

Too often organizations say that they are going to go through this project

regardless of what the ROI is.

It doesn’t matter how much they have to spend.

It doesn’t matter what kind of benefits they do or don’t get because they know

they need to replace their old technology and sticking with the status quo is not

an option.

That may be true but if you don’t have a Business case to quantify what you

expect your cost to be, to quantify what you expect your benefits to be and

where you expect to get the benefits, chances are very high that your project is

going to go off the rails because you don’t have a clear vision of what you expect

the benefits to be and how those quantifiable benefits might contribute to your

success in the future even if you know you have to replace your current systems,

even if you know there has already been approval internally and you have

support internally to replace your technology.

Hence it is still extremely important to have a Business case because that is

going to serve you very well from a project governance and overall vision and

direction perspective in longer term.

Rushing into Technical Implementation

Another common warning sign we see with Digital Transformation is jumping

prematurely into the implementation.

Once the technology decision is made, we often refer to this as cliff diving.

We see it all the time where clients are super excited about the new technology.

They have gone through this long strenuous evaluation process.

They see the vision and the possibilities of this new technology that they have

decided upon.

Their momentum is high.

Their excitement is high.

They are ready to roll.

Technical Implementation

Hence they just jump straight into their implementation without a clear plan,

without a clear mobilization of resources, without a clear blueprint of what they

want the operations to look like.

Going forward all those things need to be defined before you start bringing in

the expensive technical implementation consultants because if you don’t do that

what happens is the meter starts running while you are trying to make decisions

around.

What you want to be when you grow up.

And what further compounds this problem is that system integrator and vendors

contribute to the problem by fueling that momentum and excitement and

encouraging organizations to just jump right in and start doing the technical

implementation.

When in fact what is going to serve you the best is to back up and start with the

business aspects of your transformation.

Define what your team is going to look like.

What your project governance is going to be.

And what sort of internal competencies do you need to build to support the

project?

What should your business processes look like?

What is your organizational change strategy and plan?

All these stuff should be defined before you bring your system integrator in to

start the technical implementation.

So another warning sign to watch for is the prematurely jumping straight into

your technical implementation.

Unclear Business Requirements

Another common warning sign for Digital Transformation problems and failures

is not having clear business requirements and not drawing a line in the sand

that defines when you have completed your business requirements.

A lot of organizations today are falling into the trap of going with agile

implementation methodologies.

The agile approach can work in some cases but for many organizations especially

mid-sized or larger organizations the agile approach can actually create a lot

more problems than solve problems.

What I mean by that is agile will oftentimes encourage technical developers to

start building stuff without having clear signed off requirements in the process.

One thing that is very important for large scale Digital Transformations is to

make sure you have alignment on-

what your business requirements are and
what the priorities are for your business requirements.

And you certainly want to make sure you have completed that step in the process

before your system integrator goes and starts building technology because

otherwise you are going to be doing a lot of rework.

You are going to be having misalignment with your system integrator and your

system integrator is going to end up building technology that doesn’t necessarily

align with what your needs are so making sure that you have clear business

requirements defined early up front is another critical component.

No Customization

Now a really tricky warning sign that actually sounds like a great idea and in

theory is a great idea but has a definite dark side that a lot of companies don’t

plan for is this whole concept of no customization.

We are going to deploy the software and the technology the way it was built off

the shelf.

And we are going to change our business to fit the software.

We are not going to customize the software to fit our business.

And that is a good place to start.

It is a good goal to set but it is an unrealistic goal and chances are very high that

you are going to have to customize something.

You are going to have to change the software in some ways that may not

necessarily be the way the software was built and if you are wondering why is

that.

Why can’t we just be disciplined and just stick with no customization?

Can we think of it this way?

If everyone in your industry did exactly what you do.

Then why are you in business?

Competition

How are you competing with your competitors?

What makes you different?

Inevitably every organization has some aspects of secret sauce or competitive

advantage that the software doesn’t do out of the box because it is unique to

that organization and it makes them who they are and it makes them

competitive.

So when organizations go in with a no customization mentality then it becomes

unrealistic proposition for them.

What ends up happening is you draw a line in the sand, you set your budget,

you set resourcing, you set your overall strategy and you plan based on a faulty

assumption.

So where companies get into trouble is when they halfway through a project

then they realize that they need to customize and at that point they don’t know

what to do.

They don’t have a way to account for.

That they didn’t build any contingency into the plan or the budget and so that is

where a lot of companies get into trouble with the whole no customization

Expectation.

No Contingency Budget

Another area that a lot of companies get into trouble is organizations and teams

that have an inadequate contingency budget.

They don’t have enough time and money set aside as buffer for the unknowns.

The things that we don’t know we are going to run into the challenges.

We know they are there but we don’t know what exactly they are but we know

we are going to run into them at some point.

Organizations that are more successful know that they need to set aside a reserve of time and money that is not earmarked for anything but it is to be usedas needed as new things come up.

For example we just discussed about customization in the previous segment around how most organizations and teams end up needing to customize something.

Customization oftentimes will get drawn from the contingency budget.

If you don’t have a contingency budget consider that a warning that you are probably not being realistic about your Digital Transformation strategy.

Change Management is Limited to Training

Another common challenge is that organizations think that they are addressing the people side of the equation or the organizational change management side of the equation by giving training in communications which is a basic end-user training and it is organized right before go live by distributing basic newsletter which serves basic employee communications.

If that is all you are doing from an organizational change perspective then that is a huge warning sign.

Because you are not doing nearly enough to address the most important part of your transformation which is the people or the organizational change side of things.

So rather than focusing exclusively on training and communications you should also be looking at things like change impact, organizational design and organizational readiness– a whole host of other activities.

Eric has got videos on his YouTube channel that dive into that in more detail but in general it is important to recognize that training communications is barely scratching the surface of what it is you will need to make your transformation more successful.

Incomplete Definition of Success

It always amazes me how organizations define success for the transformations especially in cases where organizations are forced into an implementation either because their old system is no longer supported or they have outgrown it.

In such cases when Companies want to replace the old system they do it easily but when they set the bar low they tend to miss those goals and under perform what they could be doing with reference to their capacity.

If your definition is to simply replace your old technology or your goal is just to get the thing up and running and these are the extent of your definitions of success then chances are you are going to succeed partly because you have set the goal so low but also partly because you are missing out on the entire point of Digital Transformation which is to transform your business and not implement new technology.

Inadequate User Testing

Another warning sign to think about is when you do not have enough user acceptance testing or conference room pilots within your project plan.

It has been observed that generally system integrators are focused on the work they need to do.

They need to spend x amount of time and money designing the system, building the system, testing it, working out all the bugs and typically what ends up is just a sliver of time for the client to go and to do the user acceptance testing and then go live with the software.

This timeline usually gets compressed and there is not enough time for user acceptance testing.

Here the key is the user acceptance testing in Digital Transformation is very important not only because it ensures that the technology is not only working but also it is working for the business.

It is also important from an organizational change perspective to ensure that other stakeholders are getting their fingerprints all over the new processes and also all over the new workflows.

Whenever you go through a round of user acceptance testing you are going to find things that don’t quite work.

They may work from a technical perspective.

All the bugs may be worked out on the software side but there may be misalignment with what you need the software to do from a business process perspective.

It is important to make sure you have at least three rounds of user acceptance testing.

If you have the time and the patience and the budget to spend even more than three rounds that is even more beneficial.

So inadequate focus on user acceptance testing is another common warning sign that you should watch for.

No Back up Plan

The final warning sign to be thinking about as you engage in your Digital Transformation is if you don’t have a plan b or a backup plan.

What happens if this project doesn’t go well?

What happens if go live as is a disaster?

And what happens if you can’t ship product or service to customers through the new system for a period of time?

What is your contingency plan?

Will you go back to the old system?

Do you have a manual paper and pen or spreadsheet process you could fall back on?

What is that plan?

Contingency Plan

If you have addressed all the other warning signs that I wrote in this article then I would like to say you will get 100% guaranteed success.

There is still a chance that even if you do all those things but still you run into problems at go live.

No matter how remote that chance is it is really important that you have a backup plan or a contingency plan.

Ultimately in a perfect world you should have a very stringent go-no-go decision-making process that is unbiased.

It is not your system integrator telling you that everything is fine we should go live.

However it is an objective of third party saying no you are not ready and here is the risk and here is the likelihood of that risk and now let us make sure we fix that and mitigate that risk.

So having a plan b can be mitigated first of all by having a stop gap or a way to make sure you catch the problem before you go live but even then once you go live you want to make sure you have a clear backup plan or contingency plan in case things don’t go well so much like a Canary in the Coal Mine.

Key Takeaways

What is your Canary and let us make sure we have a Canary for you to pay attention to hopefully the Canary doesn’t die but if it does better the Canary than you and your team and your entire organization.

So independent third parties like Third Stage Consulting Firm’s team is able to help provide that independent quality assurance and independent risk mitigation and management to help ensure that you have identified those risks.

These are just a few of the most common ones we see and I hope you found this information useful.

I also encourage you to download some of the links I have included below which provide more thought leadership and best practices that will help you through your transformation.