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The three main reasons why digital transformations fail

September 15, 2022

Global spending on digital transformation is forecast to reach an astonishing $1.8 trillion in 2022.

In spite of that investment, 70% of those initiatives will fail unfortunately, according to Boston Consulting Group. That is trillions wasted with no return. So what are the main reasons why so many digital transformation projects fail?

1. Cloud complexity and cost blow-outs

Without a doubt, cost is always top of mind when it comes to discussing digital transformation initiatives. After all, the idea of investing in digital transformation is to improve efficiency, reduce cost and ultimately increase revenue, right?

Unfortunately, companies make the common mistake of thinking that any off-the-shelf product will be suitable for their business. However, not all products are created equal. Opting for what may appear as a more cost-efficient option in the short term may end up costing the business more in the long run as it requires heavier customisation, technical debt and maintenance costs. It’s also likely that as your business builds on these off-the-shelf products that it will only create a more complex architecture.

Additionally, it’s also important to remember that digital transformation costs more than just the new tools themselves. There is a need to consider the additional skills and resources that will be necessary to keep it updated and running post-launch.

It is also important to note that delaying digital transformation can also end up becoming more costly for organisations that are left behind and even end up losing their chance of survival in an increasingly fast-paced environment.

2. App modernisation roadblocks

It’s too often that when organisations begin modernising applications as part of the wider digital transformation strategy that it’s done so without considering the impacts it will have on other existing applications and systems.

It’s essential for organisations to unearth each app’s hidden dependencies and considerations, and how to manage them when migrating to the cloud. This involves asking questions about what other applications rely on the data from each application that is being migrated, and whether there will be latency if one app is on-prem and the other is in the cloud.

What many businesses fail to understand is that application modernisation usually involves various teams across the company. However, the people who are aware of or understand these dependencies may not be consulted during the initial stages of the application modernisation project. Failing to do so can result in the discovery of an unexpected dependency during the migration process, which can bring an entire digital transformation project to a halt.

3. Integration uncertainty and API management challenges

Another obvious barrier to a successful digital transformation is an organisation’s pre-existing system and not considering the compatibility of new and existing code, architecture and applications from the get-go. For instance, certain apps may require significant code changes to containerise. Or, it may involve leaving an existing application in place but securely exposing its functions or data via APIs. Sometimes the option to decommission a legacy application is more inexpensive and less risky than bringing a legacy application over. Either way, understanding which apps will require such integration attention from the beginning will make the transition to the cloud a lot smoother. Not planning correctly for this can be a major roadblock in seeing any application modernisation project move forward.

*This blog is sourced from acquired company Fronde.

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