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5 Digital Transformation Challenges & Recommendations in 2024

Digital transformation is revolutionizing every industry in the world. As companies recover from the Covid-19 pandemic, digital technologies play a key role in paving the way towards more efficiency, resiliency, and sustainability.

Implementing digital technologies in your business is a challenging process. A recent study conducted on CIOs and CTOs from USA and UK revealed that 60% of companies’ digital transformation ability is not enough for the future.  

This article explores some major challenges that companies face while digitally transforming their business and how they can overcome them. 

1. Talent shortage

Almost every job role requires digital skills now. The demand for digital skills in non-technology companies significantly increased, as shown in Figure 1. A recent study also identified a shortage in the availability of talent with digital technologies. According to another study, companies lack the understanding of the digital skills they require while recruiting employees. These disruptions create significant challenges for companies as they digitally transform their businesses in the post-pandemic world

Recommendations: Companies can use outsourcing to bridge the skill gap. Outsourcing includes working with third-party recruitment agencies to add additional talent to the team. Companies with limited resources and an inability to expand their workforce can also assign projects to third-party organizations. 

Figure 1.

2. Employee pushback

The hesitation of accepting new digital solutions is also a significant challenge while digitally transforming a company. Some employees might feel threatened about their job security as new digital technologies are implemented in the business, leading to resistance towards digital transformation. 

Recommendations: Companies can overcome this challenge by adopting an organizational culture that invites change rather than resisting it, and this must start from top management. This can be achieved by implementing a change management strategy that uses effective communication of the importance of digital transformation with all employees. 

Another way to reduce pushback is to implement high-code or low/no-code solutions based on employees’ abilities and requirements. 

3. Security risks

As the pandemic has accelerated digital transformation, companies that rush the implementation of digital solutions can make their businesses vulnerable to increasing cybersecurity risks. An organization can work with hundreds of SaaS vendors and verifying the security level of all of them can be a challenge. According to a survey, 82% of employees believed their companies experienced a breach after digital transformation. Achieving a secure digital transformation has become a major challenge for businesses worldwide. Another reason for this increased risk is the rising use of shadow IT.

Recommendations: Companies can overcome these challenges by implementing patch management and identifying vulnerabilities and risks in third-party applications. Improving your existing cybersecurity strategy or outsourcing cybersecurity can also be a solution. 

RPA also provides various solutions to improve cybersecurity. For more, check out our article on RPA in cybersecurity.

4. Limited funds and budget clarity

Implementing digital solutions can be an expensive process. For instance, Axa, a European insurance company, invested $950 million in two years for digital transformation. The financial damage of the pandemic has been substantial on businesses and governments around the world. Many companies have reported significant losses and budget cuts. Nowadays, many digital solutions are implemented based on an agile methodology which means that the scope keeps changing and has additional costs attached to it. Improper planning and project management can create scope creep and lead to exceeding the budget.

Recommendations: To overcome these challenges, companies need to create a comprehensive financial strategy while planning to implement any digital solutions. They also need to calculate long-term benefits and ROI before approaching the project. 

5. The challenge of agile transformation

Implementing digital technologies is not enough for a successful digital transformation. A company needs to change its organizational structure and make it more flexible and agile to facilitate digital transformation. Making your organizational culture more agile is easier said than done: according to a survey, 96% of agile transformation projects fail. Figure 2 illustrates some challenges identified by a recent report:

Figure 2. Challenges in achieving agile transformation in an organization

Source: 15th State of Agile report

Recommendations: One way of overcoming these challenges is implementing a flexible architecture with the ability to manage diverse technologies that can help achieve agility at an organizational level. Companies such as Spotify and Netflix are good examples of an agile organizational structure.

To learn more about digital transformation, you can check:

You can also check our sortable/filterable list of digital transformation consulting companies to find the fit that best suits your business needs.

If you have questions about digital transformation challenges, let us know:

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Cem Dilmegani
Principal Analyst
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Shehmir Javaid
Shehmir Javaid is an industry analyst in AIMultiple. He has a background in logistics and supply chain technology research. He completed his MSc in logistics and operations management and Bachelor's in international business administration From Cardiff University UK.

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