Digital Transformation Pitfalls—And How to Avoid Them

Digital Transformation Pitfalls—And How to Avoid Them

READ TIME: 4 MIN

Digital Transformation Pitfalls—And How to Avoid Them

Digital Transformation Pitfalls—And How to Avoid Them

Digital transformation is a broad term that refers to the use of digital technologies to accelerate business performance. Although at its most basic level, digital transformation entails movement from paper-based systems to digital, the connectivity enabled by cloud computing, along with technologies like AI and mobile devices, have created a world of possibilities for companies in terms of customer reach and satisfaction.

Enticed by these possibilities, many companies have jumped eagerly into digital transformation, only to find disappointment. It is estimated that as many as 70% of digital transformations fail, at least in their initial implementation1. To help your business avoid the costly failures other companies have experienced, we’ve compiled the following list of common missteps to avoid when planning and implementing your digital transformation:

Lack of Clear Goals

Digital transformation is not an end in itself; it is a process that should be targeted at improving your company’s capabilities to accomplish one or more specific business goals. Such goals are often primarily tied to enhancing customer experience, but they may also be aimed at improving cross-departmental communication, improving collaboration with external partners, increasing operational efficiency, or reducing costs. When digital transformation efforts are not aligned with specific goals, an expensive failure is almost a certainty. Revlon’s high-profile digital transformation debacle of 2018 was partially due to lack of clear vision for the project, and their stock fell 6.9% in the 24 hours after the failure was publicly announced2.

What to Do About It

  • Establish specific business goals that digital transformation can enable
  • Develop IT strategy that clearly links new technologies with specific business goals
  • Get business leaders and technology leaders “on the same page” regarding digital transformation goals and strategy

Choosing the Wrong Technology

This mistake can result when digital transformations lack specific goals, but it can also occur if you become infatuated with a specific technology just because it strikes your fancy. Some refer to this as “shiny object” syndrome, and any of us can be prone to it. However, it is essential that the tech you implement aligns closely with your identified goals for digital transformation, making it vital that you set aside any personal biases and choose the best-fit technology for your goals.

What to Do About It

  • Use team-based decision-making to prevent undue imposition of any one individual’s biases
  • Consider pros and cons of multiple solutions, technologies
  • Include external consultant for an outside perspective

Ignoring Change Management Elements

The term “digital transformation” has an almost magical feel, but don’t let the mystique of the terminology fool you into thinking that the technology itself is all your company needs to be transformed. Digital transformation is a fundamentally human process, and we humans are creatures of habit. For some employees, habits related to current technology are hard to break, and you might see resistance or pushback to new technologies. Do not underestimate the risks of this pitfall—employee resistance to new tech is the #1 barrier to successful digital transformation3.

What to Do About It

  • Enlist “early adopter” employees as change agents to encourage new tech adoption
  • Involve employees in every phase of the digital transformation
  • Make sure employees understand how the new tech will benefit them

Trying to Do Too Much Too Fast

Digital transformation is a complex process that needs to be completed thoroughly to succeed. The pressure to produce quick results has led many firms down the road to failure, as rushing the process can mean that employees are not sufficiently trained, and new systems are not tested thoroughly enough to identify glitches or points of failure. Even large companies like Haribo have had to learn this lesson the hard way. Their rushed digital transformation in 2018 resulted in supply chain issues that caused a 25% drop in sales4.

What to Do About It

  • Create a realistic roadmap that includes time for all required phases, including staff training
  • Prioritize your business goals rather than trying to do “everything” in one fell swoop
  • Include sufficient time for systems testing before going live

Allocation of Insufficient Resources

This digital transformation misstep dovetails with the pitfall discussed previously, but it is an important issue to consider separately as well. Digital transformations cannot be completed in a half-hearted way by skimping on resources, which can happen even in resource-heavy environments. Hewlett-Packard’s famous digital transformation fail in 2004 is a prime example. Insufficient resource planning and poor coordination across departments resulted in the company losing about 5 times what it invested in its digital transformation5.

What to Do About It

  • Create a realistic budget that includes costs of testing, training, and maintaining new systems
  • Determine a realistic timeline that allows for all phases and occasional setbacks
  • Consider external consultation to accurately scope and structure the project

NexusTek provides executive-level technology leadership services, strategic IT consulting and assessment, and ongoing managed IT services to support customers’ digital transformations from initial conception and planning all the way through implementation, testing, and maintenance.

Is your business ready to advance into new realms of possibility through digital transformation?

References:

1. Deloitte. (2020). Digital transformation: Are people still our greatest asset? https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/about-deloitte/deloitte-uk-digital-transformation-are-people-still-our-greatest-asset.pdf

2,5. Global Digital Assurance. (2022, May 18). 5 high-profile digital transformation fails. https://www.globaldigitalassurance.com/5-high-profile-digital-transformation-fails/

3. Economist Intelligence Unit. (2018). In brief: Managing the pace of technological change. https://businessrealities.eiu.com/blog/wp-content/uploads/2018/04/Managing-the-pace-of-technological-change.pdf

4. Kimberling, E. (2021, April 8). Top 10 digital transformation failures of all time, selected by an ERP expert witness. Third Stage Consulting Group. https://www.thirdstage-consulting.com/top-10-digital-transformation-failures-of-all-time-selected-by-an-erp-expert-witness/

Is E-commerce Right for Smaller Businesses? 10 Stats That Tell the Story

Is E-commerce Right for Smaller Businesses? 10 Stats That Tell the Story

READ TIME: 4 MIN

Is E-commerce Right for Smaller Businesses? 10 Stats That Tell the Story

Is E-commerce Right for Smaller Businesses? 10 Stats That Tell the Story

A nearly universal aim among smaller businesses is to become…well, less small. The question of how to expand market reach and find new customers is on the minds of most leaders of small and medium-sized businesses (SMBs), and the prospect of branching out into e-commerce can be tempting.

But is e-commerce really a good move for SMBs? It’s a reasonable question, which is why we’ve put together this “story in stats” to shed light on e-commerce’s place in the small business world. And spoiler alert…for SMBs who are considering adding online sales to their repertoire, the story has a happy ending!

1/3

Let’s start with an overview. Currently, over one third of SMBs have not set up any type of e-commerce platform1. This places these businesses at a disadvantage if their competitors offer online sales options (which they probably do).

3x

To understand the magnitude of the advantage SMBs gain when they adjust their business models to include e-commerce options, think about this stat: In the last 10 years, the portion of U.S. retail sales commanded by e-commerce has TRIPLED. Specifically, online sales accounted for about 5% of all U.S. retail sales in 2013, but now they account for about 15%2. With younger generations opting for e-shopping at higher rates than older generations, it’s logical to expect this upward trend to continue.

0 %

On the flip side, to understand the disadvantage experienced by companies that don’t offer e-commerce options, consider this statistic: 40% of buyers will not purchase items or services from a company that doesn’t offer their preferred channel3. That means you could lose out on a huge chunk of potential customers simply because you don’t offer their preferred buying channels.

0 %

And what are those most preferred channels? A whopping 64% of customers reported a distinct preference for ordering online and picking up in-store4. A slightly smaller proportion (55%) reported a preference for either fully online buying or hybrid (i.e., combination of in-store and online). So for SMBs wondering how to position themselves to reach as many customers as possible, the take-home here is that having both in-store and e-commerce options is advantageous.

0 %

Now, you may be reasonably wondering if e-commerce will increase your total revenue, or if it will simply cannibalize your brick-and-mortar sales. The encouraging news is that for brick-and-mortar operations that added an e-commerce option, their online channel generated a 28% increase in revenue overall5.

0 %

But wait, it gets even better! Adding an e-commerce option not only generates additional revenue through online purchases—it can also increase your in-store sales. Remember how we mentioned above the 64% of buyers prefer to purchase online but pick up in-store? Well, those buyers often find additional items they want to purchase once they enter the store. A Google study found that 85% of buyers make additional in-store purchases when picking up their online orders6.

0 %

Once a business makes the plunge into the e-commerce realm, some new questions arise. You may already know that customer experience is the key to success, but how do you enhance online customer experience? In short, website speed. One study revealed that a 0.1 second improvement in site speed was associated with a 9.2% increase in order value7.

0 %

On the other hand, a slow website may portend disappointing outcomes for SMBs who adopt e-commerce. One study revealed that 79% of customers would be less likely to make a repeat purchase from an online site if they felt dissatisfied with its speed8. This is one reason why hosting your e-commerce platform with a cloud provider makes sense. You avoid any latency issues that may crop up with on-premises infrastructure, and the scalability of the cloud allows your platform to handle surges in traffic and purchases.

0 %

Even with good site speed, you still face the unpleasant reality of shopping cart abandonment. One study found that 63% of customers abandon carts if shipping is too expensive, while 36% do so if shipping takes too long9. Whether partnering with a third-party fulfillment company or managing shipping internally, automating workflows following order submission helps to increase efficiency and reduce labor costs associated with order fulfillment.

0 %

Customers may also abandon carts if personal information they entered previously has not been stored in the online purchase platform. When faced with having to re-enter credit card information, 30% of online buyers will abandon carts, and 25% do the same if asked to re-enter their shipping information10. For SMBs wishing to enhance customer experience by storing this type of sensitive data, consulting with a cybersecurity expert first is a must.

The story told by the last few stats (aka, “How to Lose Online Customers”) may have left you wondering what happened to the “happy ending” that we promised for this story. The silver lining is that developing a solid underlying infrastructure for your e-commerce operations can help you to create the positive shopping experience that attracts customers and keeps them coming back.

Offering both cloud hosting, managed IT, and cybersecurity services, NexusTek assists SMBs to create, manage, and secure the IT infrastructure needed to support top-of-the-line e-commerce operations.

Interested in exploring how to create a powerful infrastructure for your e-commerce platform?

References:

  1. (2021). Small and medium business trends report. https://www.salesforce.com/content/dam/web/en_gb/www/pdf/2021-smb-trends-uk.pdf
  2. S. Census. (2023, February 17). U.S. Census Bureau news. https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
  3. (2019). State of the connected customer, third edition. https://www.salesforce.com/content/dam/web/en_us/www/assets/pdf/salesforce-state-of-the-connected-customer-report-2019.pdf
  4. Haller, K., Wallace, M., Cheung, J., & Gupta, S. (2022). Consumers want it all: Hybrid shopping, sustainability, and purpose-driven brands. IBM. https://www.ibm.com/downloads/cas/YZYLMLEV
  5. Stewart, N. (2023). Omnichannel retail brands increase revenue 28% via ecommerce presence. BigCommerce. https://www.bigcommerce.com/blog/ecommerce-presence-increase-revenue/
  6. (2021, August 18). In-store yield higher sales conversion rates than e-commerce. https://www.linkedin.com/pulse/in-store-yield-higher-sales-conversion-rates-than-e-commerce-/
  7. (2020). Milliseconds make millions. https://www2.deloitte.com/content/dam/Deloitte/ie/Documents/Consulting/Milliseconds_Make_Millions_report.pdf
  8. Wilson, A. (2022). Why site speed is so important: Conversions, loyalty, and Google search ranking. Shopify. https://www.shopify.com/blog/site-speed-importance#:~:text=In%20an%20era%20of%20instant,users%20by%20up%20to%2027%25
  9. Estay, B. (2023). 16 online shopping statistics: How many people shop online? BigCommerce. https://www.bigcommerce.com/blog/online-shopping-statistics/
  10. Estay, B. (2023). 16 online shopping statistics: How many people shop online? BigCommerce. https://www.bigcommerce.com/blog/online-shopping-statistics/