Achieving success with an ERP or other digital transformation is complex and even risky. From aligning stakeholders to managing expectations, the journey is arduous and full of potential pitfalls. According to Gartner, as many as 25% of recently implemented ERP initiatives will fail by 2027.
However, success isn’t impossible when it comes to digital transformations. Often the risks of not taking on a digital transformation are worse than the risk of project failure. With the right approach and commitment of focus in key project areas, businesses can come out on top.
In this blog, we share insights from our recent iT2 DX Talks podcast where our own Dan McGrew sits down with Ed Gustenhoven, CIO at Daltile. Ed has over 20 years of experience leading ERP and transformation projects across industries like consumer packaged goods and manufacturing.
With a career spanning giants like Pabst and Momentive, Ed brings a wealth of knowledge on what it takes to succeed.
Transformation Project Failure: A Risk Worth Avoiding
ERP projects are undoubtedly complex. However, they present incredible business opportunities to realize organizational goals and create efficiencies. Relying on inefficient or legacy systems can lead to missed opportunities, increased cybersecurity risks, and undermine the competitive edge.
A study of global banks found that banks that have embraced digital change to become digital leaders in their industry are creating much more shareholder value than the banks hesitating to transform.
Between 2018 and 2022, banks undergoing digital transformations saw average annual shareholder returns of 8.1%—nearly double the 4.9% achieved by slower adopters.
The benefits of a successful transformation are clear; however, what is often not very clear is how to get a transformation project safely over the finish line. Let’s dig in to what Ed identifies as the key ingredients for ensuring transformation success and avoiding the common pitfalls that lead to project failure.
5 Key Lessons to Ensure Digital Transformation Project Success
1. Invest in Comprehensive Project Planning
Successful digital transformation projects start with a robust and detailed plan. The planning phase is where the foundation for success is built. A clear roadmap ensures alignment across teams and sets realistic expectations for outcomes, timelines, and resource allocation.
At this stage, it’s crucial to involve all stakeholders—business leaders, IT teams, and even third-party consultants—to align on goals and responsibilities. This collaboration ensures that no critical considerations are overlooked, and every part of the business has a voice in shaping the transformation.
Moreover, thorough documentation is a cornerstone of effective planning. As Gustenhoven puts it, “Document the hell out of it.” Blueprints, workflows, and communication protocols should be mapped out in detail, serving as a guide to keep everyone on track throughout the project lifecycle.
Gustenhoven also highlights the importance of socializing the plan early and widely. “Invite everyone and their brother and sister to phase one,” he advises. Even if some participants don’t engage fully, the effort to include them fosters a culture of transparency and collaboration, which can be a game-changer for long-term success.
2. Treat the Project as a Business Initiative, Not an IT Project
One of the most common pitfalls in digital transformation is treating it as a purely technical endeavor. Every digital transformation project is a business project, not just an IT project, technology is merely a tool to serve and execute organizational goals.
When a transformation is viewed as an IT project, it risks becoming disconnected from the actual needs of the business. By framing the transformation as a business initiative, companies ensure alignment between IT teams and business units and help bridge the gap between technical capabilities and the practical needs of the organization.
Tips on How to Treat Transformations as Business Projects:
- Involve business leaders early: Ensure executives and department heads are actively involved in defining goals and priorities. Their insights will anchor the project in real business needs.
- Make business outcomes the North Star: Instead of focusing solely on technical metrics like system uptime or data migration speeds, measure success by outcomes such as improved customer experiences, faster decision-making, or increased operational efficiency.
- Foster cross-functional collaboration: Break down silos between IT and business units by forming interdisciplinary project teams. This approach ensures that the solution meets practical business requirements while staying technically sound.
- Secure business sponsorship: Assign leaders from the business side as champions of the project to drive accountability and maintain focus on organizational goals.
3. Overcommunicate to Build Alignment and Buy-In
In any change management project, communication is the glue that holds the project together. Open, transparent, and frequent communication ensures that every stakeholder—whether at the executive level or on the front lines—understands the project’s goals, progress, and their role in its success.
Transformation projects involve multiple moving parts and stakeholders with diverse perspectives. By consistently sharing information, teams can build trust, reduce resistance, and ensure that everyone is working toward the same objectives.
Ultimately, communication is about creating alignment and inspiring confidence in the project’s direction. When people feel informed and valued, they’re more likely to contribute meaningfully and support the transformation.
4. Educate Stakeholders and Embrace Change Management
Resistance to change is one of the most significant hurdles in digital transformation projects. Employees are less willing to embrace change than ever. In 2022, only 43% of employees were willing to embrace change, down from 74% in 2016.
People are naturally inclined to stick with familiar processes, especially if they’ve been using them successfully for years. Overcoming this inertia requires education, empathy, and a well-executed change management strategy.
Stakeholders at all levels—executives, department heads, and end-users—need to understand why the transformation is happening and how it will benefit them and the organization as a whole. When people see the value they can add to the process, they’re more likely to embrace the changes instead of resisting them.
Steps to Effective Change Management:
- Educate early and often: Begin by explaining the “why” behind the transformation. What business goals will it achieve? How will it improve daily workflows? Share this vision repeatedly to build buy-in.
- Address concerns with empathy: Listen to stakeholders’ fears and frustrations about the changes. Acknowledge their concerns and provide specific solutions to help ease the transition.
- Provide training and support: Equip employees with the knowledge and tools they need to succeed in the new system. Comprehensive training programs and ongoing support can significantly reduce anxiety about adopting new processes.
- Highlight early wins: Demonstrate the benefits of the transformation by showcasing quick successes. For example, improvements in efficiency or access to better data can serve as tangible proof that the changes are worthwhile.
5. Adapt to Evolving Needs and Prioritize Flexibility
No matter how well-planned a project is, change is inevitable. Business priorities shift, new challenges emerge, and unforeseen factors—such as market demands or internal restructuring—can impact the course of the project. The key to long-term success is embracing flexibility and building adaptability into every stage of the transformation.
A rigid approach often leads to frustration and failure, especially in the fast-paced world of digital transformation. Instead, teams should view the project plan as a living document that can be adjusted as needed to align with evolving business goals.
Why is Flexibility Crucial?
Technology is changing rapidly and the “set it and forget it” approach is no longer viable. As such, digital transformations aren’t one-and-done events—there is an ongoing process of evolution. While major changes may pause once a project is complete, smaller adjustments and optimizations will continue as the organization grows and adapts.
Flexibility ensures the project not only delivers on its initial promises but also positions the business to respond to future challenges and opportunities. By embracing adaptability, businesses can turn transformation projects into dynamic tools for continuous improvement.
Transform with Confidence: Work with iT2 for SAP Transformation Projects
Navigating a SAP digital transformation is no small task, but with iT2, you’re in expert hands. Our team brings the knowledge, tools, and proven strategies needed to align your business, streamline planning, and adapt to change.
By partnering with iT2, you’ll gain a project advocate in addition to highly skilled and experienced SAP experts. Our people can offer the guidance and support needed to tackle challenges head-on and set your project up for lasting success.
Ready to transform with confidence? Reach out and book a free consultation. Let’s achieve your business goals together.