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Why digital transformation often fails and how to get it right

13th January 2023

From building new network links for a hybrid workforce to beefing up cybersecurity to ward off new online threats, there is no question digital transformation (DX) efforts have been accelerated in the past three years during the pandemic.

In today’s fifth industrial revolution, technologies such as big data, artificial intelligence (AI), augmented reality (AR), self-driving vehicles, and the Internet of Things (IoT) are already making a great impact.

Vietnam, for example, completed the modernization of its national ID system in March 2022 as part of the government’s transformation plan. Using NEC’s Automated Biometric Identification System (ABIS), the existing national ID system now features the latest in biometric technologies and enables citizens to easily and securely identify themselves to access services such as social insurance.

According to a report by the United Nations in August 2022, Asia-Pacific has now shifted into a digital by default paradigm, where the choice is no longer about whether to tap into digital transformation but rather how to improve its adoption and performance. Notably, 96 % of the Asia-Pacific population is covered by mobile broadband, and financial technology (fintech) is becoming a small but important part of the digital landscape. In 2021, the transaction value for digital payments in the region reached US$4 trillion, with US$6.7 trillion projected by 2026.

However, despite the momentum, DX does not always bring success. Not every effort ends up producing the results that an organization expects. Indeed, according to the interim summary of Japan’s Ministry of Economy, Trade and Industry’s DX Report 2, approximately 90 % of DX projects fail to achieve intended results.

Based on findings by the Harvard Business Review, NEC has found These key factors can be broken down into the following.

  • Project management: Failure to designate when projects begin and end; promoting DX as a one-shot project instead of a process that is continually transforming a business; focusing investments on new businesses and neglecting existing businesses; unclear objectives and strategies; lack of leadership 

    Process: Failure to deploy data analytics to gain a better understanding of customers; focusing on conventional paradigms without exploring new ideas; targets are too ambitious and do not consider customer requirements and competitor readiness; no time is spent on recovering the cost of investments

    Penetration and retention: Inability to embrace failure and its lessons; resistance to change; unable to prioritize engagement

NEC recommends two major approaches to overcoming these challenges and successfully implementing DX. One is the traditional waterfall approach where a DX agenda and roadmap for the entire company and each functional area are established; followed by conceptual planning, solution planning, and a transformation preparation phase; and then finally the execution and establishment of that transformation. The other approach is to promote agile change through a series of verifications and updates, similar to the lean startup approach used in new business development after the DX agenda is finalized. Depending on the nature of the DX theme, either a waterfall approach or a lean startup approach will be necessary. For example, for customer experience transformation or new business development, a lean startup approach is used because it is necessary to proceed while verifying value, but a waterfall approach can be used for mission-critical areas such as system construction.

NEC offers a suite of DX offerings that incorporate these approaches to solve the challenges facing customers in promoting DX. One of these is Future Creation Design—a DX offering provided by the DX Consulting Service to accelerate digital transformation through NEC’s four design services: Business Grand Design 60 Days, Experience Design 60 Days, Technology Experiment, and Service Branding Design 60 Days. All these services aim to leverage the power of DX to develop businesses and re-engineer business processes.

One example of this transformation is MWS Christalite Methodist Home (CMH) in Singapore. In 2022, the non-profit organisation worked with NEC to digitalize much of its administrative work and processes that were manually carried out, such as patient details that had to be manually taken down and entered into a computer system. This change led to improved efficiency and smoother workflow.

During a 3-day workshop with NEC, CMH staff were also inspired to think out of the box and develop ideas to improve their day-to-day challenges. One solution born from this was having a laptop connect to a blood pressure machine to capture the data for easy documentation and to reduce errors.

As this example shows, digital technologies have already made a significant impact as enablers today but intangibles such as corporate culture and change management are still crucial in determining which organizations succeed and which do not. NEC will continue to deliver valuable solutions to customers through DX offerings designed to help organizations achieve success in DX and continue to thrive in a post-pandemic world.

Chika Hamada
Senior Marketing Communications Executive
NEC Asia Pacific

Having joined NEC Corporation from 2017, Chika Hamada has been crafting her marketing experiences by exposing herself to multiple aspects in marketing. As a product marketer, she has been looking at ways to improve customer journeys, especially in relation to system platforms. As a field marketer, she oversees the promotion of public safety initiatives across various fields including aviation, finance and hospitality, to enhance customer experiences through digital transformation.

She recently joined NEC APAC as a Senior Marketing Communications Executive based in Singapore, to drive NEC’s marketing efforts in Southeast Asia and is in also in charge of digital marketing to boost corporate brand value. Chika is also dedicated in promoting NEC’s sustainability efforts.  

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