Why Most Digital Transformations Will Fail

The engines of IT Marketing recently spun out a buzz phrase that's now gaining vogue in many businesses: Digital Transformation. While the exact definition varies depending upon who is currently pushing it, the notion can be summarized roughly as follows:

Organizations run on data, and in the twenty-first century, your organization needs to be able to take advantage of all of that data to remain competitive in the marketplace. By transforming your company to work more digitally, all of that data can be leveraged to gain a deeper understanding of customers, markets, competitors and trends. This digital transformation is something that every company needs to do to not only survive but thrive in the new economy.

This sounds like a stirring mission statement, full of high concept and call to actions, partially because there is a lot of truth in it. Most companies and organizations today are not making full use of the data resources they have, are becoming increasingly silo'd and locked down, and the vast bulk of all companies today will fail if they can't get a handle on what they are doing with the data within their organizations, especially against competitors who do successfully utilize what's around them.

However, such digital transformations are far from trivial to undertake, in great part because it requires changing both infrastructure and culture within an organization, in part because most managers, especially at the middle tiers of an organization, recognize that such a digital transformation may very well result in them having less control, rather than more, of their particular divisions, and in part because most managers tend to have a rather dated view of data and information within their purview that leaves them with a number of misconceptions about what creating a fully digitally transformed company looks like.

The prevailing metaphor for data is that it is a liquid - it flows in streams, collects in pools and lakes, goes through pipes, gets frozen, and so forth. From the perspective of system engineering, this viewpoint makes sense, because in general the challenge in building IT systems is accessing, moving, collecting and transforming data. Plumbing is something that IT people have been doing for more than fifty years, and not surprisingly they have become very good at it.

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