Why do digitalization projects fail?

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Why do digitalization projects fail?

A topic that is rarely discussed because it is difficult to present is the failure of digitalization projects. On the one hand this is understandable, since nobody likes to publicly emphasize the failure of a project that is driven forward with a lot of energy and possibly also a lot of money. On the other hand, the professional exchange loses a lot of experience. Similarly, the danger of a repetition cannot be countered by other participants for similar reasons. Therefore, some of the practical experiences gained in everyday consulting will be presented here and some of the reasons for the failure of projects will also be presented. 

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But first the question arises: What are digitalization projects? In this article, we will look more generally at the types of projects that attempt to create added value for companies or departments through the use of digital infrastructure, software-supported processes, the relocation of data streams, or the equivalent. As a rule, these are aimed at maintaining or expanding an existing competitive advantage in the market, as well as increasingly taking into account the challenges of demographic developments in the labour market.

"Let's do something digital"

There is no doubt that the will to carry out a project is an integral part of a project. It is also the right motivation with which companies and those involved in digitalization projects should start such a project. Here, concrete needs of employees and management for the improvement of workflows, planning and similar are recommended. Of course, it is not always possible to assume a unified view of all participants right from the start - coordination needs are the rule here and should be welcomed in every case.

However, if a project starts with one-sided (usually "from above") actionism in the direction of "Everyone is doing something digital now, we have to do that too", this is not necessarily the perfect motivation for subsequent projects. Bad advice is also given if the start of a project is based on the fact that " Everyone is doing this now", "Competitor XY is already much further ahead" or something similar. Internal possibilities and motives should always be found and used first. 

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Misguided investment planning 

- ROI consideration investment courage is missing -

One question that is often asked at the beginning of a project, especially by conservative companies, is when a new digitalization strategy will pay off and what risks arise from an upcoming investment. These questions alone are evidence of a certain reluctance to courageously tackle new paths that may be perceived as unknown. At the same time, dedicated consultants and experts are trying to clearly identify possible risks, quantify investment needs and quantify the associated savings. However, this approach is not always applicable and not always reliable. The main reasons for this are that the entire internal structure of the company changes, especially in the case of comprehensive strategy adjustments. This process - even if it is carried out professionally and implemented with high quality content - always represents such an intervention that the results cannot be fully assessed in advance. Another reason that leads to the failure of promising projects is overambitious expectations of the resulting savings and improvements. ROI ( Return on Investment) expectations of 12-24 months play a particularly important role here. It is often forgotten that many - especially comprehensive projects - influence the company's long-term orientation and are intended to keep it competitive in the long term.

Heave ho! Variant - We have to change!

Within the framework of digitalization strategies in companies, a radical rethinking is often planned - often by the motives already mentioned - and a corresponding attempt is made. This is where the inexperience of internal decision-makers in such issues often takes revenge. Comprehensive, complex restructurings are planned, new processes devised and, if possible, all implemented in a single step. This approach is doomed to failure in almost all cases. Although a comprehensive, holistic view of the desired goals and of course of the activities required to achieve them is highly recommended, implementation in a single step is generally practically impossible. Here a step-by-step and planned Approach. If possible also the use of intermediate goals is absolutely necessary. 

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But why?

On the one hand, it is incredible difficult to really specify very large projects from the very beginning completely correctly and completely through. On the other hand, small mistakes always hinder the progress of the "big picture" and at some point everyone waits for everyone - there is no more project progress. The idea of many managers to make a change like one flips a light switch is inappropriate at this point (see also https://www.diva-e.com/de/news/cdo-insights2019/). Neither does a software project behave like the purchase and commissioning of a new machine that is installed and ready for operation at a fixed time. Rather, one must speak here of a comprehensive, long-lasting process, which ideally continues on and on in order to keep up with the progressive further development of the market. 

Employee Base

Many large digitalization projects have a direct impact on the day-to-day work of the employees involved. Such an intervention does not always meet with a constructive reaction ready to cooperate. For the implementation of digitalized processes, the improvement of data handling and the integration of various automation options, the cooperation of the colleagues directly affected is particularly important. As a rule, you know the processes surrounding you best, are able to assess existing potential and are the first to recognize problems that arise in your daily work. 

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Unmotivated employees of the specialist departments who do not want to get involved in the ongoing development of an ever changing process are a serious danger to the success of a project. Instead of appropriate and well-founded criticism of technical and organisational imperfections, a "I don't care" or "everything used to be better" attitude quickly emerges. This is easily suited to massively slow down constructive progress or to bring a project to failure.

Especially in the case of ambitious projects with short introduction phases, high conversion rates and a lot of structural change, this can lead to a sustained weakening of employee motivation.

This is a particularly serious fact, since the employees, as carriers of the know-how and support the innovative strength of a company, represent important elements of the sustainable orientation. Small, step-by-step planned, small changes in which the effort to actively involve the employee in the change process and to make the added value immediately noticeable are often more successful. 

Away from Demand

A further reason for the failure of digitalization projects is the failure to meet the needs of the company or the stakeholders. This sounds a bit abstract at first, as every project should focus on their specific requirements. However, it is quite easy to fail. One must remember that many participants whose needs are to be processed in such a project have little experience in the field of digital processes. It is therefore difficult for them to formulate their requirements and needs in such a way that it becomes possible for the implementing project participants to actually fulfil them. One can of course argue differently and say that those - here in particular external consultants who are supposed to support the changeover from outside - have too little knowledge about the actual processes and requirements.

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Either way, it is necessary to formulate these clearly and definitively and to transport them to those responsible. Far too often, shortcomings in the planning become apparent in the middle of the changeover process or only after it has been completed. This often leads to complex, expensive and often demotivating adaptations of the created solutions. The best way to prevent this from happening is to check the requirements with the persons involved on a regular basis in small steps. Here, errors can be quickly discovered and eliminated in the process before they have a profound effect. Of course, it is also important not to get too involved in details and to always keep an eye on the progress of the overall project. 

Another way to plan ahead of demand is to commit yourself too much to a certain technical possibility and to continue to pursue it even if it is no longer possible to achieve the goals you have set yourself. Predefinition can be based on existing software and hardware landscapes or on financial parameters. However, this does not always lead to the failure of projects. The early exclusion of technical and organizational problems can, however, greatly increase the risk of this happening. An open approach and the regular reflection of requirements and possibilities offer the chance to leave the chosen path before it ends in a dead end. 

Soon, a Detail professional Approach on how to start a Project properly will be Illustrated  here.

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