The causes of digital transformation failure are complex and multifaceted. From inadequate change management to culture gaps and skills shortage, as many as 90 percent of projects risk missing their intended targets. We discuss these challenges in detail, suggest three ways in which HR can help, and recommend a tech stack for on-ground execution.
Companies of every size and line-of-business are investing heavily in the digital transformation of key verticals. From marketing to core operations and from admin to finance, almost every process can be positively impacted by digitization.
Unlike earlier approaches where the simple transition of manual tasks to digital was the only objective, the ongoing wave of digital transformation tries to combine human capabilities with the power of technology. In fact, this is at the core of the Fourth Industrial Revolution – “Industry 4.0 is the integration of cyber-physical systems that communicate and co-operate with humans and other smart systems to improve day-to-day processes – and this includes the integration of IoT, AI, and smart technology,” explains Gavin White, Managing Director of targeted recruitment solutions company Autotech Recruit Ltd.
Despite these lofty ambitions, however, studies still suggest that only 37 percent of digital transformation projects are successful. Let’s look at the reasons behind this alarming statistic and how HR can enable the successful implementation of digital transformation projects.
Why Do Digital Transformation Projects Fail?
A surprising cause of digital transformation failure is inadequate change management: the ability to anticipate, assess, prepare for, and streamline the impact of change on the workforce. Companies embarking on digitalization projects must be equipped with a smart mix of technologies and operational models which can minimize the disruption caused by digital transformation.
Unfortunately, transformation is often carried out in silos – relegated to either IT or an individual department. This means that its holistic impact on the workforce is not considered.
Another common roadblock is the shortage of resources for digital transformation. These resources include skill gaps, a limited technical talent pool, and lack of buy-in from business leaders, which impedes proper funds allocation. As a result, digital transformation projects run into delays and ambiguous directions, leading to sunk costs for the company.
Learn more: How to Bridge the Digital Skills Gap in 2019
Three Ways in which HR can Intervene and Enable Digital Transformation
HR possesses invaluable knowledge of a company’s workforce, their needs/capabilities, possible limitations, and glaring gaps in expertise. It is only by being cognizant of all these factors that business leaders can ensure end-to-end transformation success. Here’s how HR can help get there:
1. Foster a culture of innovation
Digitization cannot proceed without a solid foundation. In many ways, this is the first step for any change management model, where the organization prepares for and defines the transformation at hand. A workplace culture which still relies on outmoded models and attitudes cannot be transformed overnight – business leaders must closely collaborate with HR, finding ways to building a change-ready culture. These include:
- Events, webinars, and townhalls communicating the value proposition of change to employees
- Regular surveys and feedback analysis to gauge employee sentiment
- Technology pilots among focus group to acclimatize the workforce
- Identification of digital advocates in every department to convert traditionalists
- Rewards and recognition programs which acknowledge internal efforts at innovation
2. Deliver digital transformation training
Training is integral to the success of any transformation project, and it is no different when companies are going digital. HR must be ready to provide pre-adoption training, ongoing learning initiatives throughout the transformation cycle, and feedback/response sessions after implementation. This will make sure that the technology finds its intended effect without disrupting workflows, and employees are ready to maximize its potential every day.
3. Hire for digital transformation
The absence of technical talent is a major hurdle for companies approaching digitization. Especially for smaller businesses, this could mean projects are scrapped midway and investments are wasted. HR can help proactively hire keeping in mind transformation possibilities, and even quickly plug skill gaps for ongoing projects. For small businesses, HR can explore independent workforces and contingent hiring models to keep digital transformation initiatives on track.
Fighting Tech Challenges with Tech
As HR picks up the baton of digital transformation success, the latest technology can go a long way in easing the change. Here are our recommendations for HR teams looking to support digitization projects:
A Capgemini study reveals that 62 percent of businesses rank cultural issues as the biggest hurdle on the path to digital transformation, while 43 percent are held back by a lack of digital skills. By following these best practices and working with senior leadership, HR can play a game-changing role, as companies explore new ideas for productivity and growth in an environment driven entirely by digitization.