Digital transformation projects are usually billed as a way for businesses to leapfrog their competition, cast off old-fashioned ways of doing things, and reinvent themselves for the future. But what happens when these projects go wrong?
The most common impact of a digital transformation failure was to create a fear of failure for future similar projects, according to a survey of executives.
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More alarmingly, the second most likely impact was 'complete department shutdown', which was listed by over a quarter of execs who had experienced a failure.
The nine likely negative consequences of an IT failure included loss of customers and market share, financial losses, and staff redundancies and resignations, the survey by enterprise software company IFS found. "The grim reality is that, when IT programs fail, executive heads roll." the IFS report said. One in four of the execs said their company had experienced a digital transformation project failure.
The consequences were also felt in the long term: nearly half of companies said it took between one and two years to recover from an IT project failure, while a third said it took between two and three years to recover after such a setback.
Among those whose transformation projects overran, nearly half (46%) had budgets cut in other areas, while a third reported a headcount freeze, employee discord and saw investment in similar projects deterred.
Despite the risks, executives are still keen to invest in digital transformation projects, largely because the positives (just about) outweigh the negatives.
Across the survey 71% of execs said projects were delivered on time, with just over half reporting that they delivered the expected results. Just over half of respondents (52%) said they would increase their spending on digital transformation, compared to 18% who said they were going to spend less. Respondents who cited 'economic outlook' as a disruptive factor for their business were 20% more likely to be planning to increase spending on digital transformation.