Perhaps only fools or those without the means refuse to take advantage of obviously-useful new tools and technology On the other hand, we possibly should stop fetishizing the use of new tools. By all means, explore the application of artificial intelligence, virtual reality, augmented reality, internet of things, network slicing, 5G, 6G, the internet and so forth.
New technologies will be applied. But maybe we should stop confusing the matter by insisting that "digital transformation" is qualitatively different from all the other adaptations we have made over the decades and centuries.
Looking only at agriculture, we can note the application of new technology over time, that has transformed that business and pursuit.
“74 percent of cloud-related transformations fail to capture expected savings or business value,” say McKinsey consultants Matthias Kässer, Wolf Richter, Gundbert Scherf, and Christoph Schrey.
Those results would not be unfamiliar to anyone who follows success rates of information technology initiatives, where the rule of thumb is that 70 percent of projects fail in some way.
Of the $1.3 trillion that was spent on digital transformation--using digital technologies to create new or modify existing business processes--in 2018, it is estimated that $900 billion went to waste, say Ed Lam, Li & Fung CFO, Kirk Girard is former Director of Planning and Development in Santa Clara County and Vernon Irvin Lumen Technologies president of Government, Education, and Mid & Small Business.
That should not come as a surprise, as historically, most big information technology projects fail. BCG research suggests that 70 percent of digital transformations fall short of their objectives.
From 2003 to 2012, only 6.4 percent of federal IT projects with $10 million or more in labor costs were successful, according to a study by Standish, noted by Brookings.
IT project success rates range between 28 percent and 30 percent, Standish also notes. The World Bank has estimated that large-scale information and communication projects (each worth over U.S. $6 million) fail or partially fail at a rate of 71 percent.
McKinsey says that big IT projects also often run over budget. Roughly half of all large IT projects—defined as those with initial price tags exceeding $15 million—run over budget. On average, large IT projects run 45 percent over budget and seven percent over time, while delivering 56 percent less value than predicted, McKinsey says.
Beyond IT, virtually all efforts at organizational change arguably also fail. The rule of thumb is that 70 percent of organizational change programs fail, in part or completely.
There is a reason for that experience. Assume you propose some change that requires just two approvals to proceed, with the odds of approval at 50 percent for each step. The odds of getting “yes” decisions in a two-step process are about 25 percent (.5x.5=.25).
In other words, if only two approvals are required to make any change, and the odds of success are 50-50 for each stage, the odds of success are one in four.
The odds of success get longer for any change process that actually requires multiple approvals.
Assume there are five sets of approvals. Assume your odds of success are high--about 66 percent--at each stage. In that case, your odds of success are about one in eight for any change that requires five key approvals (.66x.66x.66x.66x.66=82/243).
In a more realistic scenario where odds of approval at any key chokepoint are 50 percent, and there are 15 such approval gates, the odds of success are about 0.0000305.
So it is not digital transformation specifically which tends to fail. Most big IT projects fail.
If one defines digital transformation “as the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers,” you can see why it is so hard to measure.
DX affects “all” of the business; produces “fundamental change” in “operations and value” creation, it often is said. How often does any single technology change or program affect “the whole business?” How often does any technology program produce “fundamental change” in operations or value creation?
Also, by that standard of “fundamental change,” many industries arguably already have achieved most of the value of DX. If “value for customers” is correlated with “how we make our money,” then content businesses and many retailers already have succeeded, for the most part. They sell online; they fulfill remotely; they handle customer interactions online.
Many other industries, such as marketing, consulting and research, likewise largely rely on online processes and fulfillment. Other industries possibly cannot pursue “fundamental transformation.”
The qualifications, such as saying DX “will look different for every company,” only highlight the problem. DX requires technology, to be sure, but also cultural change. And how do you measure that?
Some might say DX requires a “culture of experimentation; a willingness to fail or an ability to successfully challenge older ways of doing things.” Some of us would say success in any single one of those areas will succeed only about 30 percent of the time.
So what people often do not expect is failure. And there is no reason to believe any single effort at some part of DX will succeed more often than three times out of 10.
The e-conomy 2022 report produced by Bain, Google and Temasek provides an example of why DX is so hard to define or measure. Literally “all” of a business, all processes and economic or social outcomes are linked in some way to applied digital technology.
And what we cannot precisely quantify or measure is hard to track or monitor. If one thinks of DX as simply the latest description of “applying digital technology” to processes, then one also understands why there actually is no end point. We simply keep evolving our technology use over time.
source: Harvard Business Review
We should not expect people and organizations to stop talking about “digital transformation.” But maybe we shouldn’t listen quite so much.
source: The Marketing Technologist
Yes, by all means continue to experiment with new ways to apply internet, communications and computing technologies to improve operations, product value and customer interaction capabilities.
But we also should understand that some businesses and industries make money pushing "digital transformation." That is just reality. They make money even if you do not.
And it always is harder than it might seem.
So maybe it is time to stop paying attention. Apply new tools as you can see the value. You know, like we always have done. But tune out the hype.
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