Rohit Thakral, CEO at Target Integration, discusses Spar's €78m tech blunder and the importance of a structured approach to digitalisation.

Beloved across Ireland for their breakfast rolls, Spar Retail Group is the latest high-profile business to suffer a failed digital transformation.

In November the company disclosed that its South African operations had incurred heavy losses of 1.6 billion Rand (€78m) due to a disastrous SAP enterprise resource planning (ERP) system launch just over a year ago.

Worryingly, Spar’s story is not unique. In fact, despite the buzz around digital transformation, McKinsey estimates that only one in seven businesses undertaking digital transformation projects witness sustained performance improvements.

Big or small, there are countless stories of botched digital transformation projects that have cost companies dearly, both financially and in terms of reputation.

Done right, digital transformation can help transform a business, breaking down operational silos, accelerating expansion and automating time consuming tasks to boost productivity and your bottom line.

But it’s not just about adopting new technologies; it’s about reinventing business processes and models. However, the path to successful digital transformation is fraught with challenges.

The failure matrix

The failure of digital transformation projects typically arises from a confluence of several interrelated factors that can derail even the most well-intentioned initiatives.

One of the primary reasons is the absence of clear and well-defined goals. Without a clear vision, digital transformation efforts can become directionless, leading to misaligned objectives and scattered resources.

Closely tied to this is the issue of leadership support. Successful digital transformation requires robust backing from the top levels of an organisation. When leadership is not fully committed or lacks an understanding of the digital landscape, initiatives often lack the necessary momentum and resources.

This lack of support can also lead to ineffective change management, a critical component in guiding an organisation through the transition. Effective change management not only facilitates the smooth adoption of new technologies but also addresses the inherent resistance to change that often surfaces within organisations.

This resistance can stem from a variety of sources, including fear of the unknown, discomfort with new workflows, or attachment to legacy systems.

Another significant hurdle is the gap in necessary skills and expertise. Digital transformation requires a range of competencies, from technical know-how to strategic thinking. Many organisations embark on this journey without adequately assessing or developing the skills required to navigate the digital terrain. This skills gap can lead to ineffective implementation and utilisation of new technologies.

Finally, a poor understanding of the current state of the business and how digital transformation aligns with and enhances business capabilities can lead to misaligned projects.

Organisations often underestimate the need to conduct a thorough analysis of their existing processes, workflows, and systems. This oversight can result in a misfit between the adopted technologies and the actual needs and capabilities of the business.

PPT framework

Several key considerations are crucial for success, which are encapsulated within the PPT framework - People, Process and Technology.

The first and arguably most crucial pillar is People. The success of any digital initiative relies heavily on the engagement, adaptability, and skills of the people involved. This includes not only the employees who will be using new technologies but also the leadership team responsible for driving the transformation.

Fostering a culture of digital literacy, continuous learning, and adaptability is essential. Employees must be prepared for the change, equipped with the necessary skills, and supported throughout the transformation journey.

The second pillar, Process, involves re-evaluating and redesigning business processes to leverage the benefits of digital technology fully. It's about aligning new digital tools with the company's workflow, objectives, and strategy. This alignment is crucial for ensuring that digital tools are not just added to the existing structure but are integrated in a way that enhances and streamlines business processes.

The final pillar, Technology, is the enabler of digital transformation. This involves the selection, implementation, and management of digital tools and platforms that support the business's goals.

However, technology should not be viewed in isolation. Its selection and application must be closely aligned with the people who will use it and the processes it will enhance. The challenge lies in choosing technologies that are scalable, cost-effective, and capable of meeting both current and future needs.