Top 5 Digital Transformation Challenges (and How to Overcome Them)

Companies undergoing a digital transformation have likely enjoyed increased market share and customer engagement, higher employee morale and increased customer revenue, according to the Altimeter Group.

As a companion to our previous article highlighting investments needed for an effective digital transformation, we thought it important to take a look at the potential challenges as well. In a survey sponsored by Jabil, we asked 300 technology and business stakeholders working at manufacturing companies of all sizes around the world a series of critical questions:

What challenges are faced by your company in your digital transformation journey?

Ninety percent of our respondents shared that they are still going through a digital transformation and have more work to do. The level of digitization varied greatly among these manufacturing companies.

As expected, all participants reported that their companies faced challenges. But perhaps what was most surprising was how similar the types of challenges were, no matter the company size. Our participants came from companies ranging from less than 100 employees to more than 5,000. The top five challenges they listed were:

1. Employee Pushback
2. Lack of Expertise to Lead Digitization Initiatives
3. Organizational Structure
4. Lack of Overall Digitization Strategy
5. Limited Budget

Our findings concluded that the challenges were very seldom about the availability of technology. Only a small number reported that current tools and technology were inadequate. The most common issues faced were due to internal factors.

The sentiments were echoed when we took a closer look at the challenges by company size.

Top 5 Digital Transformation Challenges by Company Size
Less than 100 Employees	100-1,000 Employees
Lack of Expertise to Lead Digitization Initiatives Employee Pushback No Overarching Strategy for Digitization Business Partners Unable to Support Limited Budget	Employee Pushback Organizational Structure Gets in the Way No Overarching Strategy for Digitization Limited Budget Lack of Expertise to Lead Digitization Initiatives
1,000-5,000 Employees	More than 5,000 Employees
No Overarching Strategy for Digitization Lack of Expertise to Lead Digitization Initiatives Limited Access to the Required Technical Expertise Employee Pushback Limited Budget	Lack of Expertise to Lead Digitization Initiatives Organizational Structure Gets in the Way No Overarching Strategy for Digitization Limited Access to the Required Technical Expertise Employee Pushback

This means that we are in the same boat, regardless of company size. So how do we face our challenges?

1. Handling Employee Pushback During Digital Transformation

By our very nature, humans like routines - they make us feel comfortable. It is called the comfort zone for a reason. Things can easily start to seem grim when our routines are changed and uncertainty enters our lives. Experiencing a digital transformation is the epitome of discomfort – so it may make employees feel threatened.

It is important to note, however, that sometimes change is a requirement to keep up with the times, because not changing is far riskier. The digital transformation is vital to your company.

You may be unable to completely erase doubt and uncertainty from employees' minds, but you can certainly alleviate them. Being consistent and transparent is key. Keep your employees informed and involved through the whole process. Empower them and paint them a future they can all work towards. By helping your employees understand what's at stake, you can light a fire in them.

That, of course, requires a compelling strategy, which brings us right to it.

2. Develop a Company-Wide Digital Transformation Strategy  

Only 23 percent of manufacturers admit to having a corporate-wide strategy for their digital transformation according to the Jabil survey.

Let's be clear. You need a strategy. As you would with any part of your business, you need to clarify a vision, set goals to reach it and give your whole team a purpose. Without strategy and purpose, you may have been able to keep your head above water but don't count on it much longer.

It is surprising to see that 38 percent of companies surveyed have an individual business unit or product line leading the digital transformation for their organization or vertical. We've said it before and we'll say it again: the digital transformation journey doesn't belong to one individual or department. In fact, success is unlikely when it is designed that way. Departments may be tasked with executing on part of the strategy, but the whole company should be working toward the common goal.

If you are wondering where to begin, always start by thinking of the stakeholders that keep your business alive: your customers. Your company was created to satisfy an unmet need. Let that guide you into who you are, what you do and why you do it in the digital transformation as well.

3. Finding the Expertise to Lead Digitization Initiatives

It takes a combination of talent and technology to go through your digital transformation. One without the other will not cut it. If your current systems are holding you back, it's time to reevaluate your technology partnerships and what they have to offer.

The digital transformation will bring along its own myriad of technical challenges and you need the right people on board. Train your workforce to be digitally literate and help them build the skills needed for innovation. By making early investments in your people, you can stay ahead of the game.

It is possible that you may not have the expertise internally at this moment to take on a digital transformation. This may provide you an opportunity to look outside and find business partners or new hires that will help you on your journey.

4. Don't Let Organizational Structure Dictate Your Digital Future 

The digital transformation is a substantial initiative and may require changes in more than your employees' daily routines. This may mean changing roles, changing departments or an overhaul of your organizational structure.

Consider this. Just because your IT department has always reported to a certain person or function or your sales team was set up a certain way doesn't have to mean it can't change. In fact, making these changes can allow your teams to breathe new life into their existing roles and careers through this transformation.

Your organizational structure should be fluid – because the new frontier of technology, data and the customer experience will require it be so.

5. Managing Your Budget Through the Digital Transformation

Wouldn't it be nice to have an endless pool of financial resources? Unfortunately, that is not the reality. It is likely that you will face budgetary constraints that may limit any part of your digital transformation journey. Be aware and prepared for it.

While the digital transformation may require new, and sometimes substantial, investments in your company, people and customers, remember this is not a race. When you build your strategy, use your budget as a reality check to see how much your company can handle. Develop a plan that involves several phases over several years, if that's what is required. Don't put your company at risk over budgetary issues.

Although these are the most prevalent challenges shared by survey participants, many others exist. Overall, remember to build a strong foundation first – one that drives a broad set of outcomes for your company, customers and employees.

With a mindset of continuous improvement and innovation, all of the benefits of a digital transformation are within reach. Just be sure to tackle the challenges as they come and do your best to prepare in advance.

Written by Erich Hoch, Executive Vice President and CEO, Jabil Digital Solutions.