Digital Transformation Challenges for Businesses to Overcome in 2022

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Yuliia Podorozhko
Market Researcher

Over the past several years, digital transformation has become a hot topic for businesses in all sectors. Large and medium-sized businesses are prioritising their future-proofing strategies with direct investments in digital modernisation and innovation globally expected to reach US$7 trillion by 2023. Within a few years, digitally transformed businesses will generate US$53.3 trillion — more than half of the global gross domestic product (GDP). 

We can see it’s important based on these figures, but what does digital transformation mean specifically?

Broadly speaking, digital transformation is the integration of digital technologies and practices, which results in tectonic shifts in business operations and how customers are served. Not to be confused with digitisation (the shift from analog to digital), or digitalisation (the greater use of big data to drive decision-making), digital transformation is a complete change to how businesses operate, and the constant adaptation of business models to incorporate technologies.

Digital transformation framework. Source: Research Gate

At MadAppGang, we help companies expertly navigate the digital restructuring process and build software that keeps them competitive for many years to come. For example, we modernised the Evergen platform, a green energy company, and built an app for Getswif, an innovative fintech project. 

These companies, like many others, faced the challenges that come hand-in-hand with digital transformation. MadAppGang’s experience on the cutting-edge of technology has taught us a thing or six about how to mitigate these challenges, and we’re sharing that information with you here. 

But first, let’s examine why some transformation plans end up failing while others succeed.

Why digital transformation may fail

Digital transformation is a necessity in 2022, however, the road to change is not an easy one. While some companies seem to be on the right track, many don't achieve their digital transformation goals. Among the main reasons, as noted in a Google post, are the overall complexity and a lack of resources and internal skills.

At MadAppGang, we tend to think that the main cause of failure is poor planning. Let us illustrate with an example. The US chocolate company Hershey’s spent a lot of money on a centralised enterprise resource planning (ERP) system. It turned out, however, that the enterprise couldn’t process the nearly US$100 million in orders when it went live. Initially, an incorrect timing estimate led to inadequate testing, which led to the first domino falling, followed by myriad others.

Today, prominent companies like Google provide plenty of tips on how to avoid the common pitfalls when remodelling companies. Additionally, there are proven methods that lead to streamlined processes, and help to build a robust restructuring and re-engineering strategy. We'll discuss them in more detail later, but first let's look first at four digital transformation challenges that even large companies face in 2022.

Key digital transformation challenges in 2022

Top transformation constraints your company may face. Consider these carefully and integrate potential solutions into your transformation roadmap to both protect and scale your business. 

Funding

Traditional funding models with an emphasis on a specific business case don't work as well with modernisation initiatives. Redesigning a business is a long, complex process involving many unknown factors. As such, judging success by return on investment (ROI) in six months, for instance, isn’t a suitable barometer. Likewise, it would be a big mistake to have a very limited budget that you need approved by several departments prior to use.

To implement digital transformation successfully, companies should adopt a flexible funding strategy, which allocates funding in bite-size amounts, which minimises risks and encourages buy-in. For instance, you can use the portfolio funding approach. Rather than funding individual projects that pay for themselves, you can fund digital initiatives across multiple business units within one portfolio. Typically, individual projects do not have a strong ROI, but a portfolio will. Also, a venture capital approach might be beneficial. A lot of startups use it, corresponding to each round of funding (Series A, B, C) with a milestone or stage of growth.

The continuous evolution of needs

As the world and digital industry evolve, the needs of both companies and customers continuously change. In times of great turmoil, such as the Covid-19 pandemic or the war in Ukraine, these processes are most visible. The most obvious example is the need for a shared digital workspace that is accessible from anywhere. Multinationals including Microsoft, Google, and Epam had to relocate impacted staff in Ukraine to other locations in the region or abroad. A stable digital work environment was key to minimising the interruption to normal work activities. 

It's clear that business and software adaptability is the number-one priority. So, you need to consider this at the early stages of your digital transformation planning. Choose the right technologies and strategy, continuously monitor the market and trends, abandon rigid budgeting, and so on.

Technology

The technology challenge of digital transformation is a two-part problem. First, instead of benefiting from low-code and no-code development and cloud providers’ facilities, companies spend significant resources developing basic capabilities of limited competitive value. Second, new technologies can be daunting and overwhelming in terms of data integration, platform implementation, and the end-user experience. To overcome this obstacle, it makes sense to plan user-friendly, intuitive interfaces right from the beginning of a transformation project.

In addition, you need to choose the right technical stack (tools and programming languages) for your project. Python is a great programming language for machine learning (ML) services, for example. However, when developing microservices, performing backend development, or working on server-side applications, it's smarter to choose Golang. This is a well-structured, easily readable language suitable for large projects and scaling. But to find the right solution for your project, make sure you get expert help before you start your transformation journey.

Expertise and talent

Digital transformation and innovation require specialists from fields such as programming, design, data analytics, development and operations (DevOps), Agile managers, and so on. To move any new initiative through development successfully, these experts should have relevant experience and be able to overcome siloed decision-making processes. A high-performing IT crew is key to your success. However, building such a team in-house is a difficult task, especially given the current shortage of qualified personnel. Approximately 54% of organisations are unable to meet their digital transformation goals because they lack qualified employees. 

How to effectively overcome challenges with digital transformation

Despite all the digital transformation challenges you might face, success is in reach if you follow the right approach and plan well. Preparing a solid plan for your project that contains: market research, ROI estimations, and consideration of ever-changing customer demands, the evolution of technology. You’ll also need a flexible budget to implement innovation quickly. In order to tackle the technology challenge, consider a cloud-native approach because it allows you to use all the latest tools and makes your business more agile. 

At this point, building a team of experts remains the most difficult problem. Nonetheless, outsourcing technical consultants, managers, or a whole development team such as MadAppGang is a viable solution. With our experts as your main or supporting team, you can develop complex cloud solutions, and reorganise your business so it’s flexible and responsive to the changing landscape and customer needs. 

With our tier-one experience and a winning team of technology experts and support staff, MadAppGang is comfortable handling even the most complex transformation projects. . Contact us and we'll help bring your ideas to life.