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Why digital transformation projects fail and the path to success

Aug 15,2023 - Last updated at Aug 15,2023

 

A study conducted by McKinsey revealed that 69 per cent of digital transformation projects fail. Despite this high failure rate, organisations, whether governmental or private sector, continue to invest in these projects due to their utmost importance.

Focusing on these issues and reasons will help us understand why such a significant number of projects fail and provide insights to clients and vendors on overcoming these challenges

The most prominent reasons behind the failure of digital transformation projects include:

Insufficiently defined project goals coupled with poor communication and lack of alignment in expectations. Clients and vendors often initiate projects without a shared vision or a detailed scope encompassing business, operational and technological aspects.

Coordination and alignment of the engaged human resources are crucial. Inconsistencies or disharmony can lead to misunderstandings and misinterpretations during project execution.

Sudden and unexpected changes or modifications in the project scope can cause chaos in project schedules and budgets, leading to frustration among all stakeholders.

The absence of clear project requirements can create a fertile ground for ambiguity, fostering incorrect and conflicting interpretations. This exacerbates challenges related to trust and accountability, hindering progress and achievement.

Failure to involve all members of the organisation and neglecting capacity-building contribute to the delaying of many projects before completion.

Additionally, the complex collaboration methodoligies between clients and vendors, coupled with the issues arising during execution, can hamper the project's progress.

For clients, transparency, coordination and open communication are essential. Regular communication with vendors ensures alignment throughout the project lifecycle.

Precision and flexibility are also vital in delineating the project scope. Detailing the project comprehensively while maintaining suitable flexibility for potential changes through open discussions with vendors results in better understanding of the impact of any scope modifications.

Close collaboration with product and project managers who comprehend business needs and technical details, along with documenting project specifications and requirements before and during implementation, greatly prevents misunderstandings or disputes between clients and vendors. This builds trust among all parties and team members. Trust in the chosen vendors’ expertise is crucial to harness updates and feedback.

Appointing proficient project and product managers is equally vital for clients' success. They act as a vital link between clients and vendors, overseeing timelines, budgets and resource allocation, ensuring smooth communication and timely problem resolution.

Equally important, skilled product managers significantly bridge the gap between clients' business requirements and the technical aspects of the project. Their profound understanding of market trends, user needs, and industry standards translates business goals into technical specifications, aligning with the client's vision.

Their collaboration with all parties constitutes a robust leadership framework. While project managers ensure efficient execution, product managers guarantee alignment with strategic objectives. This leadership harmony enhances project coordination, reduces misunderstanding and improves outcomes.

As for vendors, effective communication with clients is crucial. Keeping clients informed about project progress, potential challenges and encouraging them to share their ideas, concerns, suggestions and preferences throughout the project lifecycle is essential. Continuously monitoring scope changes and discussing modifications with clients leads to clear insights into the potential impacts of requested changes, fostering a seamless journey built on trust throughout all project phases.

In conclusion, the substantial cost of failure in digital transformation projects can lead to disappointment for both clients and vendors. Nevertheless, understanding the challenges and opportunities in client-vendor relationships can elevate the chances of success for both parties' projects.

In light of this, I invite clients and vendors to collaborate more effectively. Through joint efforts, knowledge sharing, and transparency, all can create a more successful future for the transformation to a digital economy.

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The writer is the Chief Executive Officer of the ICT Association of Jordan – int@j

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