The Risks of Digital Transformation: What to Watch For and How to Fight Back

Even a process as beneficial as digital transformation doesn’t come without certain risks. After all, digital transformation is a significant process that impacts every part of a business from its culture to its strategy to its daily operations. It stands to reason that, in the midst of all that change, there are certain risks inherent in the process. Having a clear understanding of what these risks are and how to address these risks sufficiently early in the process, however, can make quite a bit of difference in minimizing or even eliminating much of the potential trouble.

What Are the Risks of Digital Transformation?

Understanding the risks of digital transformation going in will represent the best path toward protecting your business against the potential issues these risks can pose.

Misaligned Expectations. One of the most significant risks of digital transformation comes in before the process even starts. It’s easy to expect too much out of digital transformation; after all, we’re talking about a process that requires the complete realignment of the company on virtually every level. With that kind of change at even a company’s very DNA level, it might seem that there’s nothing digital transformation can’t do. However, some things are beyond digital transformation. For instance, it generally can’t work quickly. Those who go in expecting digital transformation to turn a company around are likely to end up shuttering said company. A complete digital transformation can take anywhere between three and seven years.

New Threats. Digital transformation brings with it not only complete change to a business and its culture, but also the introduction of digital technologies where such may not have been used before. This introduction of new technology can bring with it several new potential threats to the company, starting with the ever-present risk of cyber attack. Hackers crave data; it represents not only opportunity to some, but also a challenge to others. Whether the hackers simply want to see if they can breach your systems, or they have active designs on your stored data, digital transformation can increase the risk of hacking by having more points of potential entry and more data being collected, analyzed and stored therein.

One of the ways around this issue is to work with an experienced security partner. A digital transformation expert or third party who’s seen it all before will greatly reduce the risk of any of your new technologies creating vulnerabilities.

Unexpected Consequences. If one thinks of a company as a collection of moving parts—and everything from business school to popular culture has reinforced this perception for decades—then it’s easy to see where a complete change in culture and operations might create unexpected conflicts where there weren’t conflicts before. There’s a potential in any digital transformation effort for new problems to emerge, especially depending on the individual status of the digital transformation. For instance, those companies which incorporate Internet of Things (IoT) systems as part of a digital transformation bring on new risks of cyber attack, as noted previously. With IoT systems, there are more potential points of failure for security. That company isn’t just a more attractive target as noted earlier, it’s a more vulnerable target thanks to the new potential points to breach the system.

Resistance to Change. A company that changes from the ground up will undoubtedly find itself running afoul of elements of the company that don’t want to change. This, in turn, can cause a range of issues; if the employees are resistant to change, but senior management is in favor, some of those employees may leave. They may create new security hazards as they bring in unauthorized tools to work around the change and continue working in a fashion they’re more closely acquainted with. Meanwhile, if elements of senior management are resisting the change, then a whole new set of threats emerges. The company may see factions form which puts elements of the company at loggerheads. Senior management can bog down the process in a range of ways, which can lead to cost overruns and potentially even massive waste by outright abandonment of the project.

No One’s Sure What Success Is. One of the biggest potential risks of digital transformation is that the project may get continue indefinitely with no real defined end in sight. We’ve already noted that a complete digital transformation can take the lion’s share of a decade to complete, so this risk is especially insidious as problems in the process may not be clear until years of time and resources have been spent herein. Without reasonable goals to pursue, the long-term nature of the digital transformation may ultimately work against success here.

Having a project manager either on staff or on call via your digital transformation partner will be crucial here. A person responsible for oversight will help set short term and long term goals to better measure your progress, and a third party technology expert can help you do just that.

What to Do When You Need Help Addressing the Risks of Digital Transformation

Certainly, knowing the risks of digital transformation is a significant step forward in not only planning for, but also addressing these risks as they occur. Some risks, however, require significant expertise to properly foresee, and for that kind of expertise, get in touch with us at UTG. We offer a complete checklist for gauging if a company is ready for a digital transformation, and beyond that, we can also offer help in making the digital transformation run as close to plan as possible. Just reach out to us to get the process started and make your digital transformation the best it can be.

Eric Dykes

Eric Dykes

Eric was co-founder and CEO of United Technology Group, LLC (UTG), acquired by Coretelligent in 2019. In that role, he directed the company’s vision and strategy in partnership with co-founder Brian Miller and the company’s board. As the SVP of Operations for the Southern Region, he has operational responsibilities for this crucial geographic region.

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