But although players everywhere claim to have successfully completed their digital transformation or are about to complete it, in reality there are not so many digital businesses. 

About 84% of digital transformation projects fail, according to McKinsey. 

There are several main reasons why digital transformation does not produce desired results.  

Lack of planning & research  

This is one of the most common mistakes. A company implements digital solutions without evaluating in advance whether the time and resources spent are compensated by improving business performance. Going digital is appropriate only when there is an understanding that this will lead to specific positive effects, reducing labor costs, increasing margins, and increasing sales. 

Otherwise, digital transformation turns into a pile of initiatives that are useless for business, at least at a particular stage of development. For example, it makes no sense for a young small startup to spend energy on implementing a staff gamification system it is more important to focus on scaling and achieving payback. Such initiatives not only do not give a positive effect, but can also interfere, as they drag along a heap of new regulations and cause rejection of the team. How to avoid it? 

Solution  

Any digital innovation must be preceded by a lot of analytical work. It is important to put specific questions: 

- What challenges is the business facing now? 

- What technologies can solve them?

- What investments will be required?

- How exactly and in when will it pay off?

- How much financial performance will improve?

Ideally, a company should not be limited to preliminary analysis, but also evaluate intermediate results at each micro-stage in order to adjust processes if necessary. 

Lack of digitalization culture 

According to a study by the consulting company KMDA, one of the main obstacles to digital business transformation is resistance to change on the part of the team. If employees do not understand the meaning of introducing new initiatives, they will always reject innovations in the company. 

The reason for the resistance of digital transformation among employees may be the fear that automation will deprive them of their jobs or concern about their personal data. These fears have been especially intensified recentl. The economic crisis provokes the fear of being left without a job, and the loss of access to the digital tools necessary for work makes us think that the total digitization of processes has a downside. 

Solution 

Another common reason why digital transformation attempts fail is due to a lack of expertise. In most cases, companies refuse to create a single digitalization body, for example, introducing the position of  Chief digital transformation officer (CDTO). All this ends with numerous mistakes. 

But even the creation of an entire division for digital transformation in the absence of competencies from the team can lead to collapse.

This happened to General Electric, which founded GE Digital in 2015 in order to work with external clients. In pursuit of quick financial results, management turned this structure into a tool for solving the company's internal problems, and the entire planned effect failed. 

An important factor in the lack of digital competencies was the lack of staff in the IT field, that especially intensified with the onset of the pandemic. 

That's why it's vitally important to turn into professional IT consulting services company, that processes enough expertise and experience in promoting digital tranformation.

Lack of strategy 

Digital transformation is not made up of disparate digital solutions. Frst of all, it is a fundamental process restructuring of all that requires a complete strategy.  

A traditional bank will not be able to turn into a fintech company if it simply transfers individual processes to a digital format. It will have to change both the product itself and the way it interacts with customers, its positioning and marketing, organizational structure and other aspects - and all this requires holistic approach. 

But in practice, it often happens that digital solutions are implemented by each department independently of each other. The result is, as the popular saying goes, automating chaos leads to automated chaos. 

Solution 

To prevent this, an integrated strategy  should be developed. Where each initiative will perform its function. In the process of developing such a strategy, it may turn out that in order to go digital, you need to completely change the business model, and sometimes the product itself. 

This is what happened with Netflix, which was originally created as a DVD rental network. While expanding the business, the company introduced solutions that fit well with the concept of digitalization. Netflix developed its own movie recommendation system based on an analysis of user preferences, introduced a rental subscription, and created a bonus system. But with the rise of streaming video, the DVD format itself was doomed, and no amount of digital enhancement would have made the business successful.