Introduction
As the world becomes increasingly digital, traditional corporations are facing a new challenge: how to transform their operations, processes, and strategies to stay competitive in the digital age. This process is known as digital transformation.
While the benefits of digital transformation are clear, such as increased efficiency, cost savings, and better customer experiences, the process itself is not easy. In fact, many companies struggle to successfully implement digital transformation, with some estimates suggesting a failure rate of up to 70%.
In this article, we will explore the main challenges that companies face in digital transformation, and provide examples and best practices for how to overcome them.
The Main Challenges of Digital Transformation
1. Legacy Systems
One of the biggest challenges that companies face in digital transformation is dealing with legacy systems. Legacy systems are outdated technology platforms, software applications, or hardware devices that are no longer supported by the vendor or the industry.
These legacy systems are often deeply ingrained in a company's operations and processes, making it difficult to replace or upgrade them. They may also lack the interoperability and compatibility with newer technologies, which can impede the integration of new digital tools and systems.
For example, a manufacturing company may have a legacy ERP system that is heavily customized to its specific processes and workflows. This customization may have been done over many years, with different teams adding their own modifications and integrations. To replace this system with a newer, cloud-based ERP solution would require a significant amount of planning, migration, and training.
2. Lack of Digital Skills
Another major challenge in digital transformation is the lack of digital skills and expertise within a company's workforce. As digital technologies continue to evolve and proliferate, companies need employees who can use and manage them effectively.
However, many companies struggle to find and retain employees with the necessary digital skills, such as data analytics, programming, and digital marketing. This can be especially true for older, more established companies that may not have a strong culture of digital innovation.
For example, a retail company may have a marketing team that is used to traditional print and television advertising. When the company decides to shift its focus to digital marketing, the team may lack the skills and knowledge to effectively use digital channels, such as social media and email campaigns.
3. Resistance to Change
Resistance to change is a common challenge in any major organizational change, including digital transformation. Employees and stakeholders may be resistant to new technologies, processes, and strategies that disrupt their familiar ways of working.