Five Digital Transformation Challenges CIOs Must Overcome

2020 is the year that businesses want to forget, even as its aftermath continues. Even though the black swan event left battle scars, these corporate survivors emerged stronger on many fronts. For instance, the Covid-19 pandemic accelerated digital transformation globally—at an unprecedented scale.

Traditional brick-and-mortar retail is a case in point of how industries evolve in dire circumstances. Here, the pace of omnichannel retail adoption saw an exponential rise as buyers demanded and voted with their wallets for online shopping experiences. Industries across the board reflected this trend as they embraced digital transformation's role.

A recent survey by International Data Corporation reveals that higher digital transformation investments became the norm for more than 75% of Indian businesses in 2022 and 2023 as compared to 2021. Another 20% of their peers will spend similar amounts on DX as in 2021. Banking, financial services and insurance, communications, retail and manufacturing lead India Inc.'s DX adoption trends.

DX investments across India are expected to rise to the tune of $85 billion by 2026, with areas like customer experience driving investments across verticals. Yet, several bottlenecks threaten to slow down DX adoption across the world.

Globally, 89% of boards see digital investments as an essential aspect of the growth strategy, according to a Gartner survey. At the same time, only 35% of board directors have been able to accomplish or are close to attaining their DX goals. This can become a sticky wicket for chief information officers.

Multiple challenges lie behind the elusive nature of digital investments. Timely addressal of these bottlenecks is essential to innovate in time and decrease technical debt.

Even the most well-charted digital-transformation plans can be affected by a feared four-letter word—risk. Perceptions of risk can severely impede DX-related innovation. The business misses an early mover advantage due to its wait-and-watch approach.

Employees often prefer to remain in their comfort zone when it comes to change. Digital transformation's success requires an ongoing change management process from the specific stakeholders and IT team.

"Hesitation and resistance to even a new app or tool may hamper its user adoption rates," Manoj Srivastava, chief information officer of EaseMyTrip. "This requires efforts to change stakeholders' mindsets."

"Also, adapting to newer changes calls for more aspects than just pure play training exercises. This may be seen an issue by many employees," he said.

A case in point can be the hesitation among function heads and teams about replacement of legacy systems. In such cases, the CIO must highlight improvements that digital transformation delivers for the respective functions.

"Diplomatically persuade these stakeholders about measurable benefits and outcomes," says Shailesh Joshi, former vice president of IT for DAMAC Properties.

"Alleviate any concerns about lack of recognition for their own team and function by stressing the point that IT is just a project enabler. The project belongs to them," Joshi said.

One way to ensure this is to appoint function heads as the project sponsors for transformation projects related to their function. Make it clear that the project success is fully attributable to his or her team. This increases that function’s project ownership, which leads to better involvement, business resources and chances of success. In this case, the CIO's responsibility centres on management of the project, budgets and meetings.

Key stakeholders often consider digital transformation as an instant cure-all for all organisational objectives. This creates expectations of quick and tangible return on investment from DX projects. It also fails to account for DX readiness on fronts like leadership, culture, structure and capabilities.

Joshi emphasises that digital transformation must not be viewed as a magician's wand. "Digital transformation may not yield instant results. Organisations often rush into these projects, which can be a costly mistake. In many such cases, the stakeholders discover over a few months that the project needs more time and attention," Joshi said.

Unrealistic expectations can spell an early demise for even the most ambitious of DX initiatives. For example, comparison of project management goals with success stories from other industry verticals is not always feasible.

Digital transformation must start with a top-down evaluation of whether the expected business outcomes align with achievable objectives. Set clear DX priorities right from day one rather than seeing them as isolated digital projects. Top-priority digital projects must be accorded special attention.

Follow this up with the adoption of a measured, incremental DX rollout. Transformation on a domain-wise basis can prove to be a useful tactic. Effective budgeting, communication, evaluation and cost management exercises must be a part of this strategy.

The customer experience is often a casualty of uncoordinated digital initiatives. Ignoring this essential aspect will come at the cost of lost revenues. DX projects must enforce the need for a customer-focused approach at every touchpoint to avoid such issues.

Ideal customer journeys depend on accurate visibility of every step of your sales and post-sale stages. This is where the quality of your data assets comes into play. "Customer segmentation enables you to know what your users lack. So, you can ensure the best service using the right tools and information. Positive post-purchase customer experiences come next. Leverage all the resources at your disposal to show your customers that you care," Srivastava said.

Ensuring a consistent digital experience can be a challenge for multinational companies with teams spread across the world. In the absence of a common long-term vision, multiple issues can arise on fronts like integration, budgets and processes. Consolidation of technology architecture under a unified framework is a useful approach in such cases. A uniform strategy ensures optimal execution across geographies, customer interfaces and applications. 

Proper mechanisms to measure outcomes remain the biggest challenge in digital transformation initiatives. If these metrics are not established at the outset itself, it is difficult to establish DX success. Justification of sizable DX investments can be tricky in their absence.

Metrics to measure a DX initiative's success must be closely mapped to desired business outcomes. In addition to the easily quantifiable key performance indicators like revenues, factor in other aspects. For instance, usable metrics on this front include user adoption levels and training effectiveness. Parameters like the specific project's time to market, customer reach or prospect conversions are also useful metrics due to the resultant organisational impact.

"Metrics are non-negotiable when it comes to measuring a project's success. At the same time, you may not be able to quantify the impact of critical initiatives like customer experience. In such instances, you can measure success in terms of benefits like noticeable work improvements or customer satisfaction surveys," Joshi said.

Shortage of skill sets, especially in areas like data science, artificial intelligence, machine learning, multi-cloud computing and customer experience, is an ongoing challenge. High talent turnover rates further hamper digital transformation objectives.

Creation of an employee-centric approach is essential to retain talent in India's highly competitive jobs market. Identification and upskilling of team members who demonstrate potential can go a long way towards development of desired skill sets.

Allocate budgets dedicated to ongoing skill-set enhancement for your team. These efforts must be monitored and measured on an ongoing basis for best results.

Businesses often opt for partnerships with an established managed services provider to tackle aspects of their DX journey. Such an approach also takes care of manpower retention issues.

According to IDC, businesses must look for the following attributes from an MSP on the DX front:

• Consulting capabilities

• Multiple delivery models, for example, customer premises equipment, hosted or cloud

• Customisation options

Strategies to recruit top talent must accompany the efforts detailed above. Hybrid or even remote work models might prove essential in today’s context. These working models also remove the geographical limitations and open a wider talent pool to choose from. Being flexible on this front will be helpful to attract and retain valuable team assets.