Only 30% of Digital Transformations Succeed - Make Yours One of Them
When I learned that 70% of digital transformation programs fail to achieve their intended goals (Boston Consulting Group, Forbes), I was discouraged to say the least. I have been working in the digital transformation space my entire career. I needed to understand what differentiated those organizations that succeed from those that do not if I was going to be in a better position to support and advise my clients. So began my discovery.
To understand what makes for a successful transformation it helps to understand why they fail in the first place. This knowledge should help us understand where our programs are most vulnerable so that we can begin to take corrective action. The first step is to better understand what the problem is. What is a digital transformation? What does success looks like? What does the high failure rate actually mean? Once we understand what the problem is, then we will explore why transformations fail and where we can begin looking for answers.
What do we mean by digital transformation? It is so much more than implementing software - it’s about people, process, culture and new ways of working. Soumyasanto Sen in his 2020 book Digital HR Strategy describe digital transformation as “…having digital technology become the backbone of new products and services, new ways of operation, and new business models”. A more recent definition from McKinsey described Tech & AI transformation as “the process of developing organizational and technology-based capabilities that allow a company to continuously improve its customer experience and lower its unit costs; and over time, sustain a competitive advantage” (Rewired (2nd Edition), E. Lamarre, K. Smaje, R. Levin, Wiley, 2026). From an HR perspective, I like to think of digital transformation as the perpetual pursuit of excellence in the delivery of digital products and services that create better places to work with more capable and agile workforces.
What do we mean by digital transformation success? In 2022 the Boston Consulting Group did a study of digital transformation programs to better qualify and quantify success and failure (BCG, 2022). First, they established three criterion for digital transformation success:
Were the program targets met (and value created)?
Was the expected value delivered on time?
Was sustainable change achieved (as per leader aspirations)?
Using this scale of success, they then evaluated 895 digital transformation programs and arrived at the following results:
30% achieved success - the target values were met or exceeded and sustainable change was created
44% failed moderately - some value was created but targets were not met, and limited long-term change was realized
26% failed significantly – less than 50% of targets were met and no long-term sustainable change was realized
This research is important as it helps us as HR practitioners better understand and appreciate the real threat of transformation failure. If we are not resolutely focused on why we are transforming the business in the first place - what needs to be delivered and by when - we are literally setting ourselves up for failure.
Now that we have clarified what digital transformation is and what success and failure look like, let’s examine why failure happens in the first place so we can address it more proactively.
How I went about understanding why digital transformations fail.
I have been leading digital transformation programs and projects for 25 years. Whether I was an implementation consultant, a project manager, or a portfolio manager I have always been helping organizations navigate the challenges of digital transformations. In 2023 I decided it was time to look at the research to see if there were some clear patterns that explained why some transformations succeeded while others did not. I read several books and articles written by many leading thinkers in this space. I began documenting the themes and mapping them across my sources (see References at the end of this post). In the end I was able to amass what I would call a mini meta analysis and found there are 12 common reasons (risk factors) why organizations fail to achieve their expected results (see Figure 1). The risk factors are stack-ranked based on the number of times they were cited in the literature (the coloured numbers shown in the figure below).
Figure 1. 12 Stack-ranked Reasons (Risk Factors) Why Digital Transformations Fail
12 Risk Factors
12 factors that impede digital transformation success (in order of citation frequency):
Talent Gaps – no formal resource planning , inadequate internal skills and expertise
Program Strategy - no defined digital transformation vision, strategy, multi-year program roadmap or value realization plan
Change Management - insufficient planning and execution of change management strategies, poor communications about program goals/benefits/progress, failure to provide necessary end-user training
Technology Strategy – no defined technology strategy or roadmap, outdated technology and infrastructure, unable to keep pace with the technology changes impacting HR
Leadership & Governance – not having: digital-savvy leaders to make key digital investment decisions, support from CEO to mid-mgmt., clear governance model for strategy/process/data decisions
Legacy Culture – not supporting a shift in mindset from the old ways of working (siloed, risk averse, centralized decisions) to the new (nimble, empowered teams, digital/growth mindset)
Design Methods – prioritizing a technology ‘lift and shift’ over employee needs and experience, focus on providing a high touch vs. smart touch HR service model, ignoring legal and regulatory considerations
PMO Capability – immature project management office, no consistent way to deliver digital programs that focus on business value and user experience, misaligned implementation approaches (e.g., hybrid, agile)
Underfunding - failing to develop a compelling business case to drive the right level of investment for digital transformation success
Target Operating Model (TOM) – Inadequate consideration for transformation impacts to the legacy operating model - how people, process and tech components will work together differently post launch
Vendor Management – unclear vendor mgmt. strategy, too little involvement (vendor distrust) or too much involvement (deference), inadequate consideration for how best to integrate partners and contingents
Data Management – poor data quality, security and governance
These are clearly points of risk along the digital transformation journey, however, I prefer to think of these as digital proficiency or capability risks. By framing the risk factors as digital proficiency risks we are in a better position to do something about them. In other words, what digital proficiencies do we have, and which do we need to develop?
Anyone of these digital proficiency risks can disrupt a program if left unaddressed. When several proficiency risks are present, not only is there a greater chance of program failure, but the compounding effects can increase threats to your program exponentially. It’s no wonder digital transformations are difficult. The good news is, when we’re aware of the proficiency risks, we can do something about them. Let’s explore where you can start looking for answers.
Where to begin your analysis?
If we map digital proficiency risks against the typical digital delivery teams, we can be more targeted in where and how to begin mitigating the risks. In general there are five program or project teams:
HR Operations Leadership - the team responsible for sponsoring the transformation, prioritizing the work, funding the effort and assigning resources
Project Management Office (PMO) - the team responsible for planning and executing the associated projects
Change Management Office (CMO) - the team responsible for engaging stakeholders and end-users and preparing them for the realities of the new target operating model (TOM)
Product or Functional Teams - the teams responsible for creating business value by delivering products (solutions and services) like talent acquisition, learning and development that solve business challenges and enhance employees’ experiences
Platform or Technical Teams - the teams responsible for providing technical capabilities (custom development, integrations, data) to products and the enterprise
The following RAS (Responsible, Approves, Supports) chart (Figure 2) identifies the digital proficiency risks, the type of risk (strategy, people, process, or technology), and the program/project teams that are to be managing these risks. As you can see, HR Operations leadership and PMO are good places to begin exploring your digital proficiency risks in more depth.
Figure 2. Digital Proficiency Risks & Governance
Now it’s time for some self-analysis. Review the 12 digital proficiency risks above and consider what your organization’s strengths and gaps are. Is there clear alignment as to which teams are approving vs. responsible for the area of risk? What can you do to learn more about the probability and impact of the risks? What can you do to mitigate the most critical risks/gaps?
If you are interested in exploring ways to mitigate these risks for your transformation program, please contact us.
-Kevin Copithorne
References:
Digital HR Strategy, Soumyasanto Sen, Kogan Page, 2020
Rewired (2nd Edition), E. Lamarre, K. Smaje, R. Levin, Wiley, 2026
Why Digital Transformations Fail, Tony Saldanha, Berrett-Koehler, 2019
Reasons why digital transformations fail - downloaded November 10, 2023 (OpenAI - Feb, 7 2024):