Barriers to Digital Transformation: what they are and how they can be overcome

9 min

Technological advances and innovations are providing invaluable support to companies that have embarked on the Digital Transformation journey. However, there are cases where organizations slow down or stall after the initial momentum. This is where a well-thought-out strategy can make all the difference. A clear and well-structured plan can prevent critical junctures from occurring, anticipate risks and implement the necessary actions to overcome them. But what are these obstacles that threaten the achievement of the goal? Let’s analyze them together and find out how to remove them.

Antonio Grasso's Book

Digital Transformation: a synergy between technology and corporate culture

Let’s start by saying that new technologies have a certain appeal, not to mention the enormous potential they offer. From speeding up activities and processes to automating repetitive actions, their contribution is streamlining many organizations. This is why an increasing number of companies have already embarked on, or are preparing to embark on, the journey of Digital Transformation. It is an opportunity that has become indispensable in today’s market.

However, as with any coin, there is a downside that we cannot ignore. Before delving into the obstacles of Digital Transformation, it is useful to briefly summarise the concept and its benefits. Digital Transformation is the journey of adopting digital technologies across all areas of a business to improve efficiency, innovation, and customer experience.

A key player in this transformation is the IT department, which has to design solutions that transform traditional business processes and activities into automated and digital ones. Subsequently, all business units will need to be equally involved in assessing how digital can benefit each area of the business. As we will see, this is one of the challenges that not all companies can overcome.

The benefits of Digital Transformation are considerable. First and foremost, the adoption of digital technologies can improve operational efficiency. Manual and redundant processes can be automated, reducing human error and increasing overall productivity. Secondly, digital transformation offers new opportunities for innovation. Organizations can use data and analytics to identify new market trends, develop new products and services, and improve the overall customer experience.

Finally, Digital Transformation ensures that companies maintain a competitive advantage in the ever-changing global marketplace. Organizations that embrace digital technologies can adapt more quickly to market changes, meet customer needs, and partner with technologically advanced companies.

The challenges of Digital Transformation

The benefits of Digital Transformation affect operational efficiency so much that, because of the speed at which services are produced or secured today, we cannot let our fears stop us. Knowing the challenges that lie ahead along the way helps companies to plan all the steps correctly so as not to be found unprepared.

Of course, the challenges of Digital Transformation are not the same for all companies. Each company has specific hurdles to overcome related to its structure, the products or services it sells, the people it employs, and its investment capacity. However, consulting firms such as The Boston Consulting Group have been able to identify seven obstacles, based on interviews with a large number of companies, that are generally common to different organizations embarking on the Digital Transformation journey. Let’s analyze them and discover effective strategies for successfully overcoming them.

obstacles to Digital Transformation

1. The lack of alignment between business and technology

As mentioned earlier, most companies choose to adopt innovative technologies to speed up activities and optimize processes. However, if there is a lack of coherence between strategies, business objectives, and the technologies to be implemented, there is a risk that the new flow will fail or stall.

This challenge stems from an atavistic problem in companies. In most organizations, the IT department is merely a support function for the business. It steps in when a process or activity needs to be changed or digitized without knowing the flow into which it will be integrated. Instead, technology and business need to create a shared vision for the technological transformation of the business and then work together on strategy, investment, implementation, and governance to ensure that all efforts continue in that direction.

Without such alignment, there is a risk of financial constraints, resistance to change, conflicts of interest between different business functions, or problems integrating disparate systems and processes.

How do you address this challenge? By taking a holistic approach and fostering a culture of collaboration and mutual understanding between business managers and IT professionals to identify common goals and develop a shared strategy. When designing an operating model, it is important to ensure that investments and implementations are aligned with the business technology vision. Governance should be consistent and touch all dimensions of the business: processes, applications, data, and procurement. This strategy will be the basis for Business Process Reengineering, i.e. the radical redesign of business processes.

Let’s also remember to carefully assess the financial, human, and organizational implications of our digital initiatives, taking into account potential risks and growth opportunities. Only in this way can we achieve greater agility, improved operational efficiency, and a solid foundation for our digital maturity.

2. Agility in name but not in reality

Agility is the next challenge. Often companies delude themselves that they are agile because they have implemented a few superficial methodologies or simply digitized a type of activity. However, true agility requires a much deeper and more grounded approach. It means embracing a cultural change that involves all levels of the organization, from top management to individual employees. It is not enough to declare oneself ‘agile’ without making the necessary changes to organizational structures, decision-making processes, and corporate mindsets. Without this solid foundation, agility remains an illusion, with no tangible impact on the day-to-day operations and overall efficiency of the business.

Coming back to Digital Transformation, a critical aspect of business agility is precisely the integration of technology into processes. Many companies still rely on outdated systems and platforms that are unable to support dynamic and lean operations. The use of legacy technology and resistance to change are preventing the business from evolving toward an agile model.

Organizations that want to be truly agile must invest in modern technology solutions that enable process automation, virtual collaboration, and rapid access to information. Only with a solid technology foundation is it possible to achieve real and sustainable agility, reflected in speed of product delivery and customer satisfaction.

3. Data issues hinder scalability

When talking about digital transformation, one cannot ignore the data that is the lifeblood of this process. Part of the obstacles, in fact, relates to how data is collected, processed and analyzed.

Let’s start with the fragmentation of data within the enterprise. The data itself, the data infrastructure and the analytics capabilities often reside in vertical silos, isolated between different departments or business units. This fragmentation creates a number of barriers to the scalability of digital initiatives. For example, if an organization wants to implement an advanced analytics solution that requires data from multiple internal sources, it needs to activate horizontal communication channels. If data analytics capabilities are spread across different vertical silos, it becomes difficult to gain insight and fully utilize the potential of data to make informed decisions and drive digital transformation.

In addition, the data infrastructure itself may be limited or not designed to support scalability. Without a robust data infrastructure, digital initiatives may experience performance issues, slowdowns and limitations in data management and integration.

Another important piece is the lack of centralized and shared analysis tools, which can limit the ability to explore data, identify trends and patterns, and gain an in-depth understanding of your business.

The first step is to define a comprehensive data management strategy that breaks down vertical silos and promotes a culture of data sharing and integration. This is where data governance and data literacy strategies come in. Data governance establishes policies, procedures and controls to ensure data quality, integrity, security and compliance. This is essential for making decisions based on reliable data and reducing the risks associated with the misuse or inappropriate use of data. At the same time, Data Literacy promotes the understanding and ability to interpret and use data effectively, enabling employees to derive meaningful information and make informed decisions. In an increasingly data-driven era, these skills and practices are essential for structuring a scalable data infrastructure and improving information analysis and processing.

Knowing the obstacles of such a complex path as Digital Transformation is the first step a company must take to initiate this indispensable change. Share on X

4. Architectural complexity

We now come to architectural complexity. Companies that have an extremely complex and rigid technological architecture slow down the transformation process by accumulating significant technical debt.

What is meant by the technological architecture of a company? The set of systems, applications, platforms, and infrastructures that support an organization’s digital operations. When this architecture becomes overly complex, often due to uncoordinated additions and changes over the years, the ability to adapt quickly and nimbly to new requirements becomes extremely difficult.

Furthermore, one can incur the accumulation of technical debt, i.e. those complications that typically arise in software development projects when complexity is not adequately reduced. This increases the complexity of the system, making it difficult to make future changes and updates. Furthermore, technical debt can compromise the quality and reliability of digital solutions, generating security and stability problems. Finally, the cost of repaying the technical debt increases over time, requiring significant resources that could be better spent on innovation and progress.

To overcome this obstacle, companies must consider a strategic approach to technology architecture. This means simplifying existing solutions, investing in modern platforms, and embracing modular and scalable design principles. Such an approach requires time and resources, but it is crucial for an effective and sustainable digital transformation.

5. Lack of technological talent

Human resources also come into play. The shortage of technology talent is a significant barrier to Digital Transformation. Today, the demand for specialized IT skills exceeds the supply available in the labor market, creating a situation where companies have to compete to attract the best technology talent. This has a direct impact on organizations’ digital and technology transformation initiatives. It can also lead to project delays, reduced efficiency, and missed business opportunities.

In addition, the search for talent is taking place in a highly competitive market. This makes it even more difficult for traditional organizations, which often have to compete with tighter budgets and internal restrictions, to retain the technology talent they need.

To meet this challenge, companies need to invest in in-house training, collaborate with universities and research institutes, implement professional development programs, and adopt policies and incentives that attract IT talent. Or they can rely on outsourcing technology professionals. Working with professionals from outside the organization can reduce costs, meet skills needs and accelerate Digital Transformation while maintaining a competitive advantage.

6. Difficulties in engaging small and creative suppliers

The challenges to Digital Transformation are not only internal. In these times, companies are also finding it difficult to access small and creative suppliers. Traditionally, large organizations have partnered with established and proven technology suppliers. However, this approach often limits access to the more innovative solutions and niche expertise that smaller, agile suppliers can offer.

At the same time, small suppliers aiming for creative solutions want to collaborate with agile and flexible companies. Slow decision-making processes and a conservative corporate culture can also be an obstacle. Lengthy approval procedures, bureaucracy, and a lack of flexibility can slow down the whole process of selecting and integrating digital suppliers, preventing companies from quickly grasping the opportunities offered by emerging technology.

How to overcome this challenge? By adopting a more open and flexible approach to finding and acquiring technology suppliers. Not only that, they must also redefine their decision-making processes and approval policies, simplifying and accelerating them to enable rapid integration of digital suppliers. The ability to tap into a wide range of specialized suppliers will allow companies to access the most cutting-edge solutions, ensuring an increased competitive advantage.

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7. Growing threat to computer security

As with any self-respecting radical change, cybersecurity must never be neglected. The defense strategy for the company’s data and systems must be defined at the outset of the transformation process and kept up to date.

A cyber attack can indeed cause significant disruption to operations. Such attacks can come from external hackers, cybercriminal groups, or even malicious internal employees. These breaches can cause financial damage, loss of reputation, theft of sensitive data, and disruption of services, with serious consequences for the organization.

Legacy defenses, often based on outdated systems or traditional security approaches, may be inadequate to deal with new threats. Lack of regular updates, lack of awareness, and lack of an integrated security strategy can leave organizations extremely vulnerable. In addition, the process of adopting new technologies, such as cloud computing and IoT, can create new entry points for attackers if not managed properly.

To address this challenge, companies must:

  • implement advanced and up-to-date security solutions;
  • promote a security culture among employees;
  • adopt an identity and access management practices;
  • constantly monitor corporate systems and networks.

Therefore, the team of experts that will accompany the company towards the Digital Transformation must also include cyber security experts. Only through robust and proactive cyber security can organizations mitigate emerging threats and ensure business continuity during change.

Overall, the Digital Transformation is a complex challenge for companies, but it can bring significant benefits if addressed correctly. Companies need to invest in cultural change, digital skills development and cross-departmental collaboration to successfully complete such a complex and all-encompassing transformation. In addition, IT security and organizational agility are critical to the successful implementation of digital solutions. With a clear vision and a well-defined strategy, companies can overcome obstacles and enjoy the benefits of Digital Transformation.