The pitfalls of digital transformation that every organization needs to avoid

The conceptĀ  of digital transformation does have its own share of risks but if you understand it well many of them can be avoided. If you are inexperienced risks are bound to emerge. Some of them may carry a financial impact or the project may end up being a loss. After addressing the topic what is digital transformation there is a need to interpret the various forms of risks.

Ownership and its costs

An issue that organization tends to encounter during the process of digital transformation is the ownership costs. There are numerous costs involved related to the ownership costs. Though it may sound simple many organizations face difficulty when it comes to managing costs and digital transformation exceed the set target initially by a major amount. One of the primary challenges confronting an organization is how to deploy technology with a predictable ownership cost.

The main risk of mitigating the risk is to set realistic expectations about the price. It turns out to be a blind spot for most of the organizations since they are not able to understand costs that goes into the implementation and cost estimation. Being aware of the total cost of ownership is the main cause of failure within the process of digital transformation.

Operational disruption

This is a second type of risk that organizations encounter that is considerable is the risk and cost of operational disruption. What happens when the product cannot be shipped and the orders of the customers cannot be executed. Such issues may turn out to be instant that may cause an organization to suffer from losses. Close to 50 % of the organizations experience some form of material disruption and the total cost to an overall project is 50 % to 300 % on an average. Apart from that it is disruptive to employee morale, customer satisfaction and the overall morale of the employees.

As part of the risk mitigation strategy there has to be a strong project governance, which is necessary to deploy this technology. Prevention of operational disruption is crucial for any organization and to do so the risk scenarios have to be planned well in advance.

Employee attrition and morale

An overlooked aspect of a digital transformation strategy is employee attrition and the morale of the employees. It is not that the deployment of the technology has a direct impact on the morale of the employees, but it can become a mess point when it comes to workers experience. Such a perception leads to a low confidence on the project within the leadership of a business.

Once again this brings us to the question of organizational change management and why it is vital for an organization. The process addresses all the risks and outlines the potential benefits that the changes may bring to a business. Such strategies are also known to communicate, this business value to the entire enterprise. When you are planning the process of digital transformation ensure that the work streams will mitigate all tasks of low morale. If it is not addressed properly it can lead to a higher level of attrition in a project. More so in this era of great resignation where companies are finding it difficult to locate quality employees.

Dilution of competitive advantage

Another overlooked risk of digital transformation is competitive advantage. Many organizations proceed on to the concept of digital transformation with the hope that it will bring changes as the recent organizational changes is bound to usher in new capabilities that is bound to make them competitive.

It could be true that if the competitive advantage is unique it is unlikely to locate commercial off the shelf software that is bound to extend support to such processes. The question that emerges is what can the company do next being aware of the processes. Being aware that there is a possibility of losing out on competitive advantage what is going to be the strategy of the companies in such cases is interesting.

Another possibility is to locate a third party bolt on system that addresses the competitive advantage and its needs in a better way. It may lead to an increase in risk integration.

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