These are the 10 most common challenges in digital transformation

Digital transformation is no longer a choice but a necessity for companies that want to survive and remain competitive in an ever-changing market. This process starts with modernizing legacy applications, but during its execution, you may encounter several unexpected challenges. In this blog article, we will not only discuss the ten most common stumbling blocks but also how to prevent them, so you can achieve a successful digital transformation for your company.

Many companies are still using legacy applications. These systems were built long ago with outdated technology and come with a number of drawbacks. They are expensive to maintain, difficult to scale, hard to integrate with other applications, and pose significant security risks.

All the more reason to say goodbye to a legacy environment and start the digital transformation within your company. However, during this process, you may encounter some unexpected challenges, some of which were also highlighted last year in a study commissioned by Computable and conducted by Enigma Research. In this blog article, we will further elaborate on the ten most important challenges in digital transformation.

1. Lack of support from (top) management

When there is insufficient support from management, digital transformation initiatives are bound to fail. Without a clear vision and prioritization from the top, there’s a risk of fragmented, ineffective initiatives developing in parallel without adding real value. This obstructs the successful execution of digital transformation. A clearly defined strategy and strong leadership are essential for successfully guiding the transformation process. Without a shared goal and a well-defined roadmap, the risk of failure is significant. Everyone within the organization must be convinced that management fully supports the digital transformation.

2. Lack of a comprehensive strategy

Many organizations embark on a digital transformation without a clear vision or comprehensive strategy. They get swept up by the latest technological hypes without considering whether these actually have a positive impact on their business objectives. This often results in fragmented, ineffective initiatives that add little value. A successful digital transformation starts with setting clear, measurable, and above all achievable goals. Create a roadmap with well-defined milestones and build in regular evaluation moments, so you’re always able to adjust the strategy in a timely manner.

3. Insufficient budget

A lack of budget can cause your company’s digital transformation to fail, as it hinders the implementation of essential technologies and processes. Digital transformation often requires significant investments in new hardware, software, employee training, and possibly hiring external experts. Without sufficient financial resources, you won’t be able to acquire the necessary tools, properly train your staff, or attract the (external) expertise needed to carry out the transformation successfully. This can result in incomplete or ineffective implementations, leaving your company behind competitors who do invest adequately in their digital transformation.

4. Resistance to change

Legacy systems are often deeply embedded in business processes, which can cause employees to respond hesitantly to the implementation of new technologies and systems. This hesitation can stem from various reasons: fear of job loss or changing roles, familiarity with existing processes and systems, lack of trust in new technologies, and uncertainty about their ability to learn new skills. Resistance from staff can delay, hinder, or even derail a successful digital transformation. This resistance can occur at all levels of the organization, from the shop floor to upper management. It can lead to reduced productivity, increased error rates, and even sabotage during the implementation process. However, this challenge can be overcome with proper communication and training. It is crucial to clearly communicate the necessity and benefits of the changes to your employees.

5. Choosing the wrong technology

Choosing the wrong technology can cause a digital transformation to fail entirely. A particular technology may be too expensive, difficult to integrate with other systems, or simply too complex to use or maintain. That’s why it’s essential to ask yourself a few key questions when selecting a technology. Is the technology future-proof? Does it offer sufficient integration options with both existing and new systems? Is it scalable?

It’s wise to opt for open standards and proven technologies. This way, you can be fairly certain that there is enough expertise available in the market, and the risk of encountering major issues during implementation is minimized. Another important consideration when choosing the right technology is to avoid becoming too dependent on a single vendor. Such vendor lock-in can lead to rising costs over time and limit your flexibility in the future.

6. Lack of technical expertise

During a digital transformation, you move away from your legacy environment and adopt modern technologies—technologies your technical staff must fully understand in order for the process to succeed. For example, migrating legacy applications to the cloud can be a complex undertaking. Potential issues may include integration challenges, compatibility problems, and data security risks.

Migrating and integrating data from legacy systems into modern cloud environments can be time-consuming and prone to errors. Data loss or corruption must be avoided at all costs, as it can threaten the continuity of critical business processes. Additionally, strong cybersecurity measures are essential, as your business-critical data must remain protected against cyberattacks in the new environment.

To properly set up and manage this new infrastructure, it’s crucial to have IT personnel with the right technical expertise.

7. Lack of a plan of action

Careful planning and structured execution are the foundation of a successful digital transformation. To achieve this, you cannot do without a strong project team responsible for planning, monitoring, and coordinating the entire transformation process. This ensures that the project stays on track and that potential obstacles can be identified and addressed in a timely manner. Through continuous monitoring, your company can effectively adjust and optimize progress, greatly increasing the chances of a successful digital transformation.

8. Trying to modernize everything at once

A successful digital transformation is a gradual process that requires a thoughtful, step-by-step approach. Developing a well-planned migration strategy is essential in this process. Start with the least critical systems and gradually move toward more complex components. This phased approach ensures that the legacy system remains partially operational throughout the entire process. This iterative strategy, where the transformation is broken down into smaller, manageable phases, often proves to be more effective than a comprehensive, one-time change.

This approach allows for mid-course corrections and the incorporation of lessons learned from earlier phases into subsequent ones. Throughout the entire transformation process, thorough testing and quality control are crucial. This applies both to modernizing existing applications and to developing entirely new systems. Rigorous Quality Assurance ensures that all systems function correctly, meet the defined requirements, and minimizes the risk of errors or failures after implementation.

9. Complexity of legacy systems

The complexity of legacy systems presents a significant challenge for many organizations. One of the biggest issues is the lack of adequate documentation regarding the operation of these outdated applications. This makes understanding and adjusting the systems extremely difficult. The situation is further complicated by the fact that employees with specific knowledge of these systems are often no longer available, as they may have moved to other companies or retired. Furthermore, the technologies on which these systems are based are outdated, making modernization even more complex. This combination of factors results in a tangled technological legacy that can significantly hinder the digital transformation of companies.

10. Lack of support for employees

For a successful digital transformation, it is crucial that employees know how to work with new systems. Providing adequate support plays a key role in this. Organize workshops and training sessions, and provide clear online step-by-step guides. Additionally, it is important that someone is available at the workplace to answer questions and provide support. After all, employees are a decisive factor in the success of new systems, and sufficient training and proper guidance can make the difference between failure and success.

Do you want to achieve a successful digital transformation?

A digital transformation is a complex and challenging process that requires careful planning and execution. To increase the chances of success, it is essential that your company proactively identifies and addresses potential stumbling blocks in a timely manner. A strong focus on the human factor, smart technology choices, and good collaboration with your colleagues and any external partner(s) are crucial in this process.

Hiring an external partner with expertise in digital transformation can make a valuable contribution to the success of the project. An experienced IT partner not only provides the necessary expertise and skills, but also offers an objective view of the transformation process. This helps to identify blind spots, mitigate risks, and accelerate the entire transformation process.

NetRom is an experienced IT partner that can provide support in all these aspects. With more than 25 years of experience in digital transformation, NetRom can make a difference for your company. We are a nearshoring software developer with a pool of over 500 highly skilled and experienced IT specialists working from our own NetRom Campus in Romania. Fill in the form below and discover how we can support you in successfully realizing your digital transformation.