Why only 30% of Digital Transformation projects are successful…

Only 30% of digital transformation projects are successful!  So why do the other 70% fail?

Business transformation projects can be extremely challenging. The unfortunate reality is only 30% of transformation projects are successful – and that’s not many!  Especially when transformation projects are typically expensive and use huge amounts of resource and time.

A 2018 McKinsey study documented that companies spent more than $1.3 trillion on digital transformations, 70% of which failed to reach their desired outcomes, which means over $900 million went to waste.

In a 2022 McKinsey Global Survey of 2,190 companies in pursuit of transforming their businesses, two-thirds said they were ‘just treading water, taking no decisive action, and consequently achieving little or no success.’

Is this any different in New Zealand? We were curious to find out more, so we created a brief survey to learn more about how Kiwi organisations prepare for digital transformation projects and how much they understood about the impact of the change before investing.

Over the past 5 years, we’ve worked with over 30 organisations and have gathered their input as to why projects have failed in the past:

  • Transformation is relegated to a ‘Transformation Lead’ diluting its impact as the function is segregated from business as usual
  • The purpose of the transformation is not defined, so no one really knows what is trying to be achieved
  • People are not included in the process, so they feel that transformation is being done to them
  • Transformation is often seen as an ‘IT’ thing, focused on technology rather than a business thing, focused on people
  • The company relies on what they think they already know, so changes never make it

Our recipients included 91 responses from CIOs, senior managers, change/transformation managers and other decision makers from government agencies and organisations. 

We asked:

  • Do you have any Digital Transformation projects on the go or about to start?
  • How confident are you that you know the impact of change?
  • How beneficial would it be to see the results of the change before you committed time and budget?
  • Have you quantified the value your transformation will deliver?

How would you answer these questions?  Give it a go and let us know how you got on!

Our survey said…

  • 72 of our 91 respondents confirmed they had a digital transformation on the go or about to start
  • Of these 72, 86% responded with scores of 4 and above on our 6-score scale (1 being not beneficial and 6 being highly beneficial) re not being confident that they knew the impact of the change
  • Despite acknowledgement that it would be beneficial to know the transformation value before works starts, 54% of people have not quantified the value of their transformations

What does this mean?

These results were surprising – there are large number of digital transformation projects inflight or about to start. But what’s worrying is the number of respondents who admitted they didn’t know the impact of the change before they went ahead. 

Just over half of organisations hadn’t quantified the value of their transformations… how did they expect to measure success?

When we see these results, it gets easier to understand why 70% of projects fail.  There’s also the fact that many businesses are just not prepared enough before starting and haven’t gone through the key steps of Discovery, Audit, Benchmarking, Planning, Managing and Reporting.  We’ve written a helpful article about this – read it here.

What to do…

How are you supposed to deliver successful change programs if you don’t know what the impact is?   Roll out the crystal balls, divining sticks and tea leaves??

Alternatively, see the impact of change before you start your project – get in touch with Neil for a chat about how creating the digital twin of your organisation will show you the impact of the change before you commit time and budget!  What’s not to like?