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Time for industry to stop ‘Dream-Selling’ digital transformations

Dave Stevens
Founder & Managing Director

The digital transformation landscape is fraught with challenges and often littered with costly failures. To ensure success, the industry must shift from "dream selling" to delivering true value. By emphasising proper design, understanding real business needs, and utilising proven solutions, companies can achieve meaningful and sustainable results in their digital transformation initiatives.

It’s a little talked about, but concerning, fact that around 75 per cent of businesses that invest in digital transformation to increase productivity, gain competitive advantage, or enjoy other benefits, don’t realise the outcomes required on the solution that was sold to them.

More daunting is that only around five per cent of digital transformation projects achieve the outcomes promised at the start, on time and within budget. Another 20 per cent of them, while not complete failures, deliver the business benefits the project intended to achieve, but either over budget, behind time or both.

The rest are among the millions of dollars’ worth of projects that are half-finished, abandoned, or irreparable. The funds wasted on these projects extend beyond the project costs, with the failure also delivering a massive hit to a company’s bottom line, decreasing staff satisfaction and, in many cases, damaging their relationship with their customers.

It is an astounding data point that the industry needs to focus on changing, and now.

Looking beyond the hype

Digital transformations are critical for Australian business to succeed on the local and global stage.

Boards, business owners and the C-suite clearly recognise this, driving implementation of modern technologies such as AI into their operations so they can be resilient to ever changing trends, better meet customer needs and experience faster time to market.

But to ensure this adoption of digital transformations by Australian business of all sizes remains at pace and ensures success, the industry does need to dispense with the hype around the latest solutions being the panacea to all business challenges – and instead, focus on the true value it will deliver.

Too many times, “dream selling” by vendors sees transformation projects being a failure from the outset, because the application is at the centre of a project, not the business challenges that are trying to be addressed.

There are numerous cases where the business owner, board or C-suite has been blindly influenced by market hype that the latest shiny new tool is needed. Fearful of being left behind, they establish a project to implement the said solution into their business, without it delivering true value.

When they then brief a partner - be it a Systems integrator or IT Service Provider - many will blindly follow the brief to implement the prescribed solution and not seek to deliver a true solution that will deliver true value – solutions that are tested and proven.

“True value needs to be more than just managing a company’s risk register – it needs to deliver a customer uplift, a reduction in churn, increased revenues, reduced reworks, or an uptick in the share price.”

And true value needs to be more than just managing a company’s risk register – it needs to deliver one or all of the following – an uplift in customers, a reduction in churn, increased revenues, reduced reworks, and/or an uptick in the share price.

Take the first phase of Nike’s digital transformation as an example, which saw the company lose an estimated $100 million USD from its initial $40 million tech investment to modernise its global supply chain.

Within months of the integration of a software solution – as phase one of a bigger transformation project – it became apparent that, due to the system being configured to manage ideal scenarios, it was unable to have flexibility or adapt to the real situation. It therefore did not accurately forecast demand or properly allocate inventory, resulting in some products being overstocked while others were understocked. Additionally, the failure exacerbated delivery delays, compounded storage costs, and created dissatisfaction among retailers and customers.

A lesser brand would have found this hard to overcome, but as a dominant footwear and apparel retail brand, Nike was able to weather the failure and eventually successfully implement its global supply chain project.

Such examples would have organisations question investing in transformation – but on the flip side by doing nothing will see them, and Australia more broadly, left behind.

So, what is needed to successfully implement a digital transformation project that drives true value to companies and their end users?

True value is the real technology must-have

Beyond the removal of dream selling and focus on delivering true value by the industry, it is important that IT partners get the design phase right. They need to really understand the business, how it works and the challenges they can and need to address through digital technologies. They also need to improve their skills in converting business requirements into a high-end technical architecture.

Without this and tight scope control, the digital transformation is bound to head the same way that most have done so to date – sitting on the scrap heap of nice but irrelevant ideas to streamline business through technology. That’s why we’ve moved to a fixed price transformation model, so that our customers will be guaranteed they will get true value on time and on budget, and with a solution that delivers true value.

For my industry colleagues – including the vendors and IT partners – it is time that we resist from encouraging and enabling wrong solutions being integrated into a system that will not deliver true value.

For Australian businesses rightfully seeking to transform business through technology, make sure you’re not hoodwinked into thinking the latest shiny new thing is a “must have” in the next phase of your digital transformation.

Instead, seek a partner who asks the tough questions on what a transformation implementation will really deliver and what will be the true value that the business will extract.

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