In an increasingly digital era, businesses must prioritize digitization to remain competitive and consumer-focused. According to a survey 60% of organizations are already on the desired path of progress or have achieved their digital business optimization goals.
In this article, we’ll explore the common challenges in digital transformation, what factors hinder their progress, and how to overcome these obstacles to achieve success.
- What Is Digital Transformation?
- How Pandemic Enforced Digitization For Businesses
- 7 Most Common Challenges Of Digital Transformation
- Tips To Overcome Challenges Of Digital Transformation
- Future of Digital Transformation
- Conclusion
- FAQs
What is Digitization?
Digital transformation refers to the use of digital technology to transform business operations and create new growth opportunities. It involves leveraging digital tools to automate manual processes, gain insights from data, optimize workflows, and better engage with customers.
There are four main areas of digital transformation include:
- Process transformation: Modifying existing processes and workflows to optimize for efficiency and performance.
- Business model transformation: Reinventing and optimizing existing business models to address changing consumer needs and preferences.
- Domain transformation: Discover new opportunities with technological advancements redefining products and services.
- Cultural/ organization transformation:Adopting digital transformation across the organization at all levels of work.
How Pandemic Enforced Digitization For Businesses
The worldwide lockdown restrictions imposed by the government resulted in traditional organizations bearing a major setback. They were forced to rapidly innovate and find newer ways of operating in a world increasingly moving to digital.
According to a study, 70% of organizations have either adopted a digital transformation strategy or currently working on one.
Think about how the pharmaceutical and retail food industries have changed in the last two years. Consumers made every little purchase online, including their daily essentials.
While some businesses unearthed several benefits from digital adoption, including reaching their customers faster, enhancing operational efficiency, and generating more revenue, most still need to map out a clear digitalization strategy.
The forced and rapid digitization led to complexities in many operations and processes, such as supply chain management, data management, and the organization’s overall security.
Let’s take a look at the challenges in digital transformation in detail.
7 Most Common Challenges Of Digital Transformation
Digital transformation comes with several benefits associated with it. But it also comes with a need to think strategically through business processes and apply critical thinking while adopting digital solutions. This is where most businesses face barriers to digital transformation.
Here are seven critical digital transformation challenges of 2023 that we have observed in the industry.
1. Charting Out A Digitization Strategy
Misinformed digital transformation strategy and a lack of clarity are the two most significant challenges for companies to overcome.
An effective digital transformation strategy should involve the following:
- Assessing the current needs and challenges of the business.
- Identifying the root cause of inefficiencies.
- Researching and shortlisting the best solutions.
- Creating a well-documented plan for implementing those solutions.
- Businesses need to develop a clear strategy
- Identify key stakeholders
- Communicate effectively
- Invest in resources
- Provide training
- Establish an innovative culture
- Continuously monitor and measure the impact of digital transformation
Most businesses fail to complete all stages to catch up with the competition, leading to failures or inability to tap into the full potential of digitization.
2. Building Complex Digital Solutions
With technological advancements, digital solutions have taken a complex turn as well. While they solve a number of challenges for a business, they are also overwhelmingly difficult to get started with – sometimes, taking months to complete an end-to-end implementation to address a single business process.
Digital solutions solve a number of challenges for a business but they are also overwhelmingly difficult to get started with. Read more - via @webengage Click To TweetThen there is also the complexity of integrating with existing business stacks.
Businesses need a framework for digital transformation to help them plan better and discover more intuitive and integrated systems.
3. Navigating Organizational Pushback
Businesses running for years often see pushback from their employees when they change processes. This is owing to the habitual way of working, and the comfort employees and stakeholders find in the existing methods, which results in incomplete or slow adoption of digital transformation.
Organizations that have not been able to reap the benefits of digital transformation typically could not get ‘everyone’ on board. They’re running processes in siloes, leading to limited use cases and inefficiencies caused when collaborating with non-digitized departments.
4. Lacking Skills For Digitization
According to World Economic Forum, 85 million jobs will go unfulfilled globally by 2030 due to the gap in digital skills. With new technologies and processes emerging every day, there is a need to constantly upskill and learn the various aspects of digitization.
Businesses have faced challenges in hiring data-driven roles such as business analysts, cloud technology architects, IT managers, cybersecurity analysts, and similar, leading to discrepancies in the infrastructure set up for digital transformation. About 53% of organizations said that a significant chunk of the workforce must reskill themselves to attain digital progress.
5. Leveraging Existing Data
Whether online or offline, most organizations have heaps of data available in their existing systems – industry, business, and customers. A common digital transformation challenge most organizations face is the inability to store and unify data to derive actionable insights.
All the data is stored in multiple systems for various purposes, such as CRM, ERP, customer support tools, etc.; this creates silos with data fragments scattered across the organization, giving incomplete insights.
This results in making misinformed decisions while adopting digital technologies to solve the current and future needs of the business.
6. Understanding And Navigating Cybersecurity Risks
As per 53%Cybersecurity Ventures, the cost of cybercrimes is predicted to hit $8 trillion in 2023 and grow to $10.5 trillion in 2025.
Businesses that cannot identify cyber threats they are prone to, will be unable to implement security strategies to secure data while adopting new technologies.
7. Lacking sufficient Budgets For Digitization
Owing to all the above challenges, businesses must continually advance their scope of digital transformation. This requires implementing strategies and adopting tools they may not have budgeted for initially. Inadequate budgets slowly lead to delays in digitization, which further prolongs when the business can start reaping the benefits of digital transformation.
Changes in consumer needs, IT errors, and similar mistakes due to a lack of digital transformation strategy have increased costs. The lack of budgets to evolve has declined or halted digital transformation for most businesses.
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Tips To Overcome Challenges Of Digital Transformation
Digital transformation is essential for businesses to remain competitive in today’s digital world. However, many organizations face challenges in successfully adopting and implementing digital transformation strategies.
To overcome these digital transformation challenges:
By following these tips, businesses can navigate the challenges and achieve success by crafting a clear roadmap for digital transformation.
Future of Digital Transformation
The future of digital transformation is exciting, as the rapid pace of technological advancements will continue to offer new opportunities for businesses to innovate and grow. Artificial intelligence (AI), machine learning (ML), blockchain, and the Internet of Things (IoT) are just a few examples of technologies that will shape the future of digital transformation.
AI and ML will become increasingly crucial for businesses leveraging data and gaining insights to improve operations, enhance customer experience, and develop new products and services. We are already witnessing considerable disruptions in the industry, with AI becoming increasingly human-like and providing near-perfect outcomes with just a few simple commands.
In the future, digital transformation will become even more integral to business success, and companies that fail to embrace digital technologies will struggle to remain competitive. As such, it is crucial for organizations to constantly evaluate and invest in the latest digital tools and technologies to stay ahead of the curve.
Conclusion
Digital transformation is a crucial journey that businesses must undertake to remain competitive in today’s digital landscape. While the process can be overwhelming and prone to mistakes, companies must consider their need for digitization strategically, keeping their values and core objectives in mind.
Moreover, by understanding and taking active steps on these common digital transformation challenges, organizations can safeguard themselves from the pitfalls and gain success in their digital transformation journey.
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FAQs
Why does digital transformation fail?
Digital transformation can fail for various reasons, including lack of proper planning, unclear goals, resistance to change, inadequate resources, and insufficient employee training.
Why does digital transformation matter for my business?
Digital transformation is critical for businesses looking to remain competitive in a digital world. It helps businesses improve their operations, enhance customer experience, increase productivity, reduce costs, and generate more revenue.
What is the primary goal of digital transformation?
The main goal of digital transformation is to leverage digital technology to improve business operations, enhance customer experience, and drive growth.
What is the key to successful digital transformation?
The key to successful digital transformation is a clear understanding of the business’s goals, a well-defined strategy, and strong leadership. It is also essential to communicate the changes to employees and provide them with the necessary training and resources to adapt to the new digital environment.
How to get started with digital transformation?
To get started with digital transformation, businesses must first assess their current processes and identify areas for improvement. They should then develop a clear strategy that aligns with their business goals and outline the steps needed to achieve them.
Diksha Dwivedi 
Harshita Lal