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You are here: Home Focus To fully benefit from digital transformation, European businesses must first overcome these challenges

To fully benefit from digital transformation, European businesses must first overcome these challenges

28 September 2021, 13:34 CET

"The 2020 effect" was more pronounced in Europe compared to the rest of the globe. Affected by the full force of the pandemic, enterprises, in particular, had to deploy disaster recovery and mitigations strategies in record time, and digital transformation played a crucial role in survival.

Business deal - Photo by krakenimages on Unsplash

Without remote work and digital services, many companies would not be around today, and EU lawmakers are well aware of this. In 2021, the European Parliament adopted the Digital Europe programme, which aims to invest in digital infrastructure so that modern technologies can be brought closer to individuals and businesses. The plan is to allocate €7.6 billion in five key areas of digital transformation (supercomputing, AI, cybersecurity, digital skills, and ensuring a wide use of digital technologies across the economy and society). Digital transformation is also an essential part of Europe's economic recovery plan and, according to official guidelines, member states should allocate at least 20% of the recovery budget to digital transition.

In general, European businesses have had a positive experience with digital transformation. According to one study, 83% of businesses that invested in technology in 2019 did so because they believed it would help them keep up with the competition. However, only 13% said that the investment paid off and that they could see the benefits. Further research from McKinsey showed that less than 30% of digital transformation ventures are successful.

That didn't happen because digital transformation itself is flawed. On the contrary, when approached in the right way, digital transformation can improve the odds of success by boosting productivity, security, and collaboration. However, investing in digital transformation just because it's the cool thing to do can do more harm than good. To make the most out of the transition, businesses must have tech-savvy leaders in place and invest only in the digital features that match their requirements and align with their long-term goals. In particular, these are the top 4 factors that could threaten the efficiency of digital transformation.

Lack of digital skills

Successful digital transformation cannot be achieved if the teams involved don't have digital skills. Unfortunately, there isn't a homogenous image across all of Europe. While in some countries digital skills are common, others are struggling to come to terms with the new normal and understand how to transition to digital services. For example, according to recent data, Scandinavian countries rank high in digital competitiveness rankings worldwide, with rates over 90%, whereas Croatia and Slovakia are in the 50% percentile. The European Union is aware of these discrepancies and estimates that around 94 million European workers are expected to need digital training as an integral part of their occupation.

Indeed, out of McKinsey's 21 keys to successful digital transformation, five are related to the workers' digital skills and the role of IT leaders in bridging the gap between digital and traditional services. Not only can these leaders ensure a smooth transition, but also help employees learn new ways of working. If European businesses want to remain competitive, they need to recruit the right business leaders and then allocate time and money to training the existing workforce.

Investing in the wrong tools

Digital transformation can be achieved through the implementation of various tools, such as:

  • Customer Relationship Management (CRM) tools
  • Business Process Management (BPM) tools
  • Communication and collaboration suites
  • Cloud storage services
  • Project management tools
  • Custom business apps

All of these tools can be beneficial, but it's important to note that not all businesses are created equal. A tool that helps one business grow might hold another business back if its features don't match the right requirements. Let's take the development of business apps, for example. Many business owners assume that Microsoft's PowerApps is the best service for building custom business apps without hiring a team of developers. However, this is not the only option available out there, and many businesses will find that using a PowerApps alternative can accelerate the time to market while providing more versatility and ease of use.

The key to success isn't to copy exactly what other businesses are doing but to analyse your requirements and invest only in those tools that make sense for your business model and that can provide value for money.

Not having a clear strategy.

The lack of a clear strategy is one of the most common reasons why digital transformations fail. In the past year, digital transformation has become a buzzword, kind of like Fintech and blockchain, so many leaders have decided to embrace it, but without knowing exactly what they're doing. This is one of the biggest digital transformation mistakes.

Digital transformation done just for the sake of fitting in, without assessing your needs and capabilities first, will be not only confusing, but also ineffective. In order for it to work, you should work closely with a consultant and answer the following questions:

  • What aspects of your business could be improved by digital services?
  • What are your company's short and long-term goals, and how can digital services help you achieve them?
  • Are these goals consistent across the entire organisation?
  • Where should you start with digital transformation?
  • What are the biggest challenges on your digital transformation journey?
  • What technologies should you invest in?
  • How will you track the performance of digital transformation?
  • Who will be involved in the transformation?
  • Is digital transformation compatible with your business model, or will you have to change it?
  • How will you address cybersecurity?

Lack of communication

Contrary to popular belief, digital transformation isn't a C-suite endeavour. Everyone should be immersed in this process, from management to customer support, marketing, and production. Moreover, the scope of digital transformation must be clearly understood and communicated across the entire company from the very beginning so that everyone can have a chance to give their input. Otherwise, people won't know exactly why things are changing and why it's important for them to change. Studies show that companies where communication isn't present are three times less likely to report a successful digital transformation project. The success chance is also three times greater when executives use digital channels to communicate with remote workers and involve them in the process.

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