In 2018, enterprises large and small poured $1.3 trillion into digital transformation efforts. Roughly $900 billion of that went to projects that failed, according to business leaders surveyed by McKinsey.
When they pinpoint where their efforts fell short, several common themes emerge:
- Short-term improvements fizzled over time
- Initiatives failed to take root across the entire enterprise
- Employee performance and engagement did not improve
- Cross-functional collaboration was limited or nonexistent
- Lack of accountability stymied adoption
To understand how to overcome these challenges, it’s useful to look at takeaways from the 30% of companies whose digital-technology projects met their objectives. Here are four examples of successful digital transformation initiatives:
Example #1 (U.S. Department of Energy) — Don’t just upgrade; consolidate
For companies using outmoded software, digital transformation seems like it should be a one-and-done proposition: simply upgrade your tech. But that won’t help you optimize your operations in the digital age.
Consider the U.S. Department of Energy (DOE). Roughly 14,000 DOE employees and more than 95,000 contractors collect, manage, and distribute crucial energy data to federal agencies, researchers, utilities, and energy companies. Some of this information is highly classified, such as data relating to nuclear asset management. Other data requires lower-level security clearance, while much of it is unclassified data such as wind and solar measurements that utilities depend on for planning and real-time decision-making.
As these massive data streams scaled up beyond the capabilities of DOE’s legacy software, the agency faced an urgent challenge: how to consolidate and integrate IT management systems to ensure the right data gets to the right stakeholders at the right time. To achieve this, it replaced multiple outdated software products with ServiceNow’s cloud-based digital workflow platform, creating a single console for all IT service management (ITSM) operations.
Beyond centralizing records for all IT processes, this enabled customized process automation to meet a variety of needs for both internal DOE employees and external data sources and consumers. Result: 40% savings on IT management costs. According to Donald Adcock, the former CIO who oversaw the multiyear project, the initiative has significantly improved both overall IT service delivery and data security.
Example #2 (Magellan Health) — Focus on people, not the tech
For many companies, the goal of digital transformation projects is to offer seamless, satisfying customer experiences. But technology in itself can’t deliver on the promise. People do—from customer service teams to product developers and data analysts. Keep your employees engaged and happy, and your chance of delivering top-notch customer experience increases exponentially.
Case in point: Magellan Health, a Fortune 500 specialty healthcare company whose 11,000 employees serve more than 55 million members. While they worked to alleviate patients’ health problems, Magellan’s workers suffered their own pain: dealing with an antiquated, inefficient HR call center. All HR services they needed—benefits, payroll, and leave—ran through a manual ticketing system with slow response times due to a heavy caseload.
To automate routine processes and field HR requests more efficiently, Magellan created a self-service portal called VERN—Virtual Employee Resource Network, complete with an impish red-headed chatbot (named, of course, “Vern”) to help workers navigate the system. If a particular request is too complex for Vern to handle, he connects the employee with a human HR specialist and facilitates easy-to-track ticketing on the portal.
Since VERN went live, the caseload of Magellan’s HR team has dropped 40%, freeing teams to focus on higher-value tasks such as strategic planning and recruitment. Best of all, the time to resolve HR requests has dropped by 75%.
Example #3 (CarMax) — Foster bottom-up collaboration
Winning buy-in at all levels of the organization is a hallmark of digital transformation success. It’s tough to pull off. Take CarMax, the largest used-car retailer in the U.S. Rather than imposing new technologies on its ground troops, CarMax proactively involved them in reinventing the manual processes they use every day.
Every year, CarMax workers appraise more than two million cars, conducting a 125-point inspection before putting them on the market. In the past, this was a manual, time-consuming, highly repetitive process. Juggling clipboards and cameras, appraisers photographed vehicles and filled out paper checklists in sometimes harsh weather conditions. Then they entered data by hand in computers at each CarMax branch.
To solve that problem, CarMax asked its appraisers to design a handheld mobile device to snap photos of the car, read and record the vehicle’s VIN, and prepopulate standard data that appraisers previously had to enter manually. Best of all, the mobile platform allowed CarMax workers to appraise vehicles remotely, so customers never have to leave their homes. Adoption by employees was a no-brainer because they were integrally involved in its creation.
The company took note of this success. Previously, its IT developers had been highly centralized. CarMax has since reorganized the IT function, embedding 60% of developers within business units throughout the company. That makes it much easier for the developers to collaborate directly with employees on integrating tech into their daily workflows.
Example #4 (DBS Bank) — Think like a startup
Culture change is a common obstacle to digital transformation success, especially for decades-old companies with siloed business functions and entrenched legacy processes..
DBS Bank, a 51-year-old banking and financial services giant based in Singapore, met that challenge head-on. As the first step of its digitalization journey, DBS launched a sweeping cultural reinvention. Its objective: become “digital to the core.”
DBS leaders strove to make the company feel and function like a 22,000-person startup. They created an innovation department whose sole focus was fostering culture change, rather than designing digital products. They analyzed other large companies that had achieved success in their digital transformation efforts for inspiration. And they forged partnerships with forward-leaning fintech startups.
To become digital to the core, DBS made reskilling mandatory for every employee. It adopted agile DevOps methodology companywide. And it encouraged creativity among its workers with monthly hackathons for mobile app development and other digital banking innovations.
The startup mindset has paid dividends in improved time to market, product innovation, and waste reduction through automation, according to Chief Operating Officer Paul Cobban. “We took out 250 million customer hours of waste,” he explains. In one year, the company’s customer satisfaction score climbed from lowest to highest for any bank in Singapore.
DBS recently launched Digibank, a mobile-only banking service, in India, serving millions of customers without a single brick-and-mortar branch. That’s nimble for a half-century-old banking institution.