Thought Leadership

Understanding the Key Digital Transformation Risks and Challenges

Digital transformation has become a trending buzzword in every industry and market. Over the next few years, most businesses, regardless of their size and niche, are expected to fast-track their digital technology initiatives and modernize their IT infrastructures, processes, and teams.

However, all of this is easier said than done. A McKinsey report claims that over 70% of all digital transformation programs are unsuccessful due to various reasons – employee resistance, lack of capital, poor strategy, insufficient IT capabilities, etc.

Key Digital Transformation Challenges

There’s much more to digital transformation than integrating and adopting new and improved hardware, software, technologies, and processes. The most important aspect of the transition involves adopting entirely new, innovative ways of carrying out core business activities and improving overall efficiency.

In that context, below are the five key digital transformation challenges businesses face today:

1. Limited Expertise

The biggest challenge for most organizations looking to transform their technologies and processes is the lack of expertise. Most general or non-IT workers may not have the skills required to implement new solutions and practices. As a result, businesses would have to invest heavily in training and push their timeline forward, which could slow down their progress.

2. IT & Digital Skill Gap

Many businesses looking to digitalize their processes and adopt more advanced solutions may not have the required internal IT expertise for successful transformation. In the post-pandemic age, the digital skill gap in the market has been exacerbated by the scarcity of experts in core competencies.

For example, many organizations have basic IT resources. However, most SMEs lack expertise in cloud, data analytics, digital experience, cybersecurity, etc. Moreover, finding the right people has become more challenging and expensive due to the ever-growing demand.

3. Isolated Decision-Making

Departmental disconnection or isolation can negatively impact digital transformation. Both issues pose barriers at every transition step, from strategy development to implementation. The issue arises from disconnected teams focusing on their problems, not the organization's problems as a whole.

As a result, the lack of a unified vision and strategy can affect the decision-making process and restrict organizational efficiencies.

4. Insufficient Budget

Digital technologies and solutions are expensive. As a result, one of the most crucial challenges organizations have to overcome is raising sufficient capital for their venture. Unfortunately, most businesses faced significant losses during COVID-19 and are still struggling to reach breakeven after that.

The key issue here is perception. Most traditional companies consider technology expenditure to be an operational expense. However, if they start looking at it as a strategic investment, they can prevent delaying or impeding future agility and adaptability by not allocating sufficient financial resources.

5. Cultural Mindset

Traditional organizations with manual processes and legacy infrastructures usually have trouble leaving their comfort zone and entering the growth zone. They have an old-school mentality, meaning they don’t like change and frown upon new technologies and practices. Hence, a cultural one is one of the most significant digital transformation challenges.

To enable a smooth transition, everyone in the hierarchy needs to be on the same page and be ready to learn new things and adopt new habits and practices.


Digital transformation is different for every company. If you understand this, you can drastically improve the chances of a successful transition. The 70% of companies that fail to achieve their transformation objectives do so simply because they don’t handle change well.

By learning about the key digital transformation challenges and risks in this article, you can avoid most of the pitfalls hindering your initiatives. More importantly, you can use them to improve your transition and unlock new levels of growth with modern solutions and capable human resources.

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