The Three Main Hurdles to Digital Transformation for Leaders

October 31, 2017

ARC Advisory Group conducted research in Q4 of 2016 to understand how companies were dealing with the “great digitization”. Their overarching conclusion: Digital Transformation is happening much faster than most leaders anticipated, and the pace of change is accelerating. Smart connected sensors, digital networks, artificial intelligence, and advanced analytics are turning scores of data into actionable information.  What does this translate into on the front-lines for most companies? According to ARC research, customers are moving more and more to buying “outcomes” vs. the traditional product.  Remember the saying that customers don’t want to buy a ¼” drill bit, what they really want is a ¼” hole? The equivalent of this in the digital world is that customers will pay for the value the product or service provides – not the product or service, per se. Think of your local tire company selling based upon “% of tire tread wear” (the outcome) vs. actual tires (the product). Imagine your business – big or small – having to re-think what value you bring to your customers and developing new outcomes and outcome-based pricing.


Whether you’re selling products, services, or outcomes, you need to know how you’re going to overcome the three primary hurdles Digital Transformation. The top three hurdles ARC Advisory Group found are:

  1. Cyber security/data security
  2. ROI on digital transformation initiatives
  3. Management vision and buy-in.

Cyber-security, data-security, privacy and confidentiality topped the list with 55% of all respondents citing this as their number one concern. Certainly, all of the data breaches we read about are driving this concern – despite an excellent track record across industries for Cloud-based implementations. But don’t overlook #3: Management vision and buy-in.


Another recent study completed by the Capgemini Digital Transformation Institute in March-April 2017 surveyed 1700 people in 340 companies across several industries. Here are the key questions and the responses from this study. The responses are broken down by Leadership and Employees. Note the disconnect between these two groups.


  • We have a culture of innovation, experimentation and risk-taking
    • Leadership: 75% Employees: 37%
  • Discussions around novel business initiatives that leverage newer technologies are open to all employees
    • Leadership: 76% Employees: 41%
  • We easily collaborate across functions and business units
    • Leadership: 85% Employees: 41%


So, what is this telling us? That perhaps the biggest issue to a successful digital transformation isn’t the technology adoption – but the way your people work and collaborate in your company. And from the survey data, there is a huge gap in perception between what Leadership thinks and what Employees think.


Digital Transformation is often called the Industrial Internet of Things (IIoT), Smart Buildings/Smart Cities; Smart Manufacturing; the 4th wave of the Industrial Revolution; and Cloud-based XaaS (Anything as a Service). Whatever you choose to call it, it’s here. And for companies that intend to compete in the future, now is the time to define and implement how you will operate in this Brave New – digital – World!


Is your company a “game changer” or just trying to stay in the game? The opportunities are endless — if you can rethink the customer experience with your product and services of the future. Failure to do so will invite challenges to your existing business model by industry disruptors. No industry is immune to disruptive change.

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