Why 9 out of 10 digital transformation projects fail

Digital transformation may be the inescapable buzz phrase of the moment, but new research shows that successful projects are few and far between.

Digital transformation essentially means the strategic attempts by a business to significantly change its business model by leveraging digital technology. Think Ford turning to self-driving vehicles under new CEO Jim Hackett, or asset manager UBS building its own robo-advice service. The main aim is to not do a Kodak and become a dinosaur, or to be disrupted by an Uber.

Research released by NoSQL database vendor Couchbase today (pdf) shows that nine out of 10 digital transformation projects fail.

The survey reports that despite 95 percent of respondents agreeing that the aim of digital transformation should be to offer end-users a truly unique experience, 90 percent of digital projects failed to meet expectations and only delivered incremental improvements.

The research was conducted by Vanson Bourne, surveying 450 CIOs, CTOs, and Chief Digital Officers tasked with digital transformation at organisations with 1,000 employees or more across the US, UK, France and Germany.

There is a palpable fear among the respondents, with 89 percent saying their industry is either being disrupted by digital technology, or such disruption is only a matter of time.

This mirrors a famous 2014 study from the John M. Olin School of Business at Washington University, which estimates that 40 percent of Fortune 500 companies on the S&P 500 will no longer exist in 10 years.

The research also found that the average spend on digital transformation projects is $5.7 million (£4.4 million) per year.

Why does digital transformation fail?

The problem is that businesses the size of Ford have to keep the lights on, and the investors happy, all while innovating in the face of a rapidly changing technology landscape and consumer expectations.

The most pressing issue, according to respondents, was a lack of agility when developing new applications. Large organisations have complex processes, heavy regulatory and legal requirements, and legacy technology to contend with.

Startups can “move fast and break things” and scale quickly using cloud vendors like Amazon Web Services (AWS) and its various database options; the National Health Service (NHS) cannot.

NoSQL database vendor Couchbase, naturally, blames the traditional database for the majority of project failures. The white paperbacks this claim up by stating that 84 percent of respondents said it had “digital projects delayed or even scrapped due to limitations of their legacy database”.

The report found 29 percent had to reduce the scope of a project due to the cost of making changes to legacy technology, while 14 percent have had to delay projects significantly.

One interesting finding was that enterprises surveyed said they have to wait an average of 28 hours before their databases could take advantage of data, which makes real-time data use within customer-facing applications unattainable.

Lack of resource and the complexity of using multiple technologies were also cited as issues.

Spencer Izard, chief analyst for enterprise technology practice at Ovum believes that organisations tend to fail with digital transformation projects because they are fundamentally underprepared.

“No matter the industry or country the common theme in regards to digital, for organisations who have started their journey, is that they were often unprepared in understanding the technological baseline and organisational appetite that should be established to digitally transform,” he told Computerworld UK.

“At its core, digital transformation is about leveraging data as a strategic asset,” Izard added. “Databases play a vital role in this evolution from a technology perspective but the aggregation, integration, and analysis of data is at the heart of digital transformation.”