Why the Digital Transformation Industry Is Broken

After more than 25 years in the digital transformation and ERP consulting space, I have come to one conclusion that becomes harder to ignore every year: this industry is broken.

I still love this work. I love helping organizations navigate major transformation initiatives. I love the strategy, the complexity, and the opportunity to help companies improve how they operate. What I do not love is watching the same structural problems hurt customers over and over again while much of the industry acts as if those problems are normal.

Some of these issues are relatively new. Others have been building for years. Together, they have created an environment where customers are spending more, taking on more risk, and often getting less control and less value in return.

Here is what I believe is broken, why it matters, and what leaders can do about it.

1. Customers are paying more without getting proportional business value

One of the biggest structural problems in the industry today is that software vendors are selling dramatically more cost without a matching increase in business value.

The shift to cloud software is a big part of this. So is the broader push toward AI-driven platforms and subscription-based technology models. In theory, all of this sounds modern and strategic. In reality, it often means customers are signing up for higher long-term costs with only modest incremental value.

Cloud subscriptions do not behave like traditional on-premise investments. They do not get depreciated and fade into the background over time. They keep billing. They keep increasing. Once your data, workflows, and operating model are tied into a cloud platform, those costs become extremely difficult to escape.

That might be easier to accept if organizations were seeing a dramatic jump in business outcomes. In most cases, they are not.

Many companies can justify modernization from a strategic standpoint. They may need to stay current. They may need to reduce technical risk or maintain vendor support. What they often cannot justify is the pure ROI. The cost curve keeps climbing, but the business value curve has not climbed with it in the same way.

That is a problem. This industry has done a poor job of proving that the extra cost of cloud and modern enterprise platforms consistently delivers enough additional value to justify the long-term financial burden.

2. Customers are losing optionality

Another reason this industry feels broken is that customers are steadily losing options.

On the surface, it may look like organizations still have plenty of choice. There are multiple vendors in the market. There are multiple products to evaluate. There are multiple ways to architect a solution.

The problem is what happens after the decision is made.

Most major vendors are pushing customers toward the same destination:

• Move to the cloud
• Consolidate onto a single platform
• Buy more from the same ecosystem

That approach may simplify the vendor’s roadmap and increase the vendor’s revenue, but it also reduces customer flexibility.

The more deeply you commit to one cloud provider, the harder it becomes to switch later. The more modules you buy from that vendor, the harder it becomes to integrate other solutions that may actually be better for parts of your business. The more standardized your environment becomes, the more dependent you become on the path that the vendor wants you to follow.

This is not just a theoretical concern. It is one reason legal and regulatory scrutiny is increasing in parts of the market. Some large vendors are being accused of limiting customer choice, discouraging third-party alternatives, and creating behavior that looks increasingly anti-competitive.

Whether those claims succeed legally is one question. From a customer standpoint, the bigger point is simpler: optionality matters.

Leaders need to think beyond what fits today. They need to think about what preserves flexibility tomorrow. In many cases, that means resisting the pressure to go all-in on one vendor for everything.

Yes, a more diversified architecture can create technical complexity. That complexity may still be worth it if it reduces long-term business risk and preserves strategic choice.

3. Organizations are giving up control without fully realizing it

A third structural problem is that organizations are surrendering more control than they realize.

This usually does not happen deliberately. Nobody says, “Let’s hand over part of our competitive advantage to a software vendor.” Yet that is effectively what many organizations are doing.

When companies move from highly customized environments to standard cloud platforms, they often give up the workflows, processes, and system behavior that made them different in the first place. They trade control for standardization. They trade flexibility for vendor-managed simplicity.

That tradeoff is not always bad. Some customization should absolutely disappear. Some legacy complexity adds no value and should be retired. The problem is that many organizations stop the analysis there.

Not all customization is a waste. Some of it is intellectual property. Some of it reflects years of learning, refinement, and operating discipline. Some of it is the reason customers choose you over competitors.

When companies abandon those differentiators in the name of standardization, they may be solving a technical problem while creating a strategic one.

This is especially common when decisions are led too heavily by technical priorities without enough executive attention on business model, competitive advantage, and long-term positioning. A cloud platform may look cleaner from an IT standpoint while simultaneously eroding the very things that made the business successful.

That is why this cannot be treated as just a technology decision. It is a leadership decision.

4. Customers are helping vendors improve their products, sometimes at their own expense

Another issue that does not get discussed enough is how often customers are helping vendors more than vendors are helping customers.

Take AI as one example. Many software vendors are training their AI capabilities using customer data, customer workflows, and customer usage patterns. That may improve the product over time, but it also means customers are contributing to the evolution of a platform that will then be used by other customers, including competitors.

Take co-innovation as another example. A customer identifies a capability gap. The vendor agrees to co-develop a solution. The customer helps fund the enhancement or participates in shaping it. Later, that capability becomes part of the vendor’s standard product.

If the enhancement is for a generic, non-differentiating process, that may be perfectly fine. If it reflects something unique to your business, you have to ask a different question: why would you pay to help a vendor productize your advantage and sell it to the rest of the market?

This is where leadership teams need to get sharper. Not every improvement should become a shared asset. Not every co-innovation opportunity is good strategy. The fact that a vendor is willing to build something with you does not automatically mean it is in your best interest.

5. The industry keeps repeating itself

One final reason I believe this industry is broken is that too many people in it keep doing the same things and expecting different results.

I include myself in this critique. I have been in this industry for decades. Many of the people around me have too. Experience has value, but it also comes with baggage. It creates patterns. It creates assumptions. It creates habits that can be hard to challenge.

Too much of the industry still defaults to the same playbook:

• Trust the major vendors
• Accept the standard implementation model
• Lead with technology before operations
• Underestimate the people side of change
• Assume modernization automatically equals value

Those patterns have not delivered better outcomes. Failure rates remain stubbornly high. Projects still go over budget. Organizations still struggle to realize expected benefits. Yet the industry continues to recycle the same logic.

That is why I believe we need more independent thinking, more fresh perspectives, and more people willing to challenge the assumptions that have become too comfortable.

This is not about dismissing experience. It is about recognizing that experience alone is not enough if it keeps reinforcing broken patterns.

What leaders should do differently

If you are leading a digital transformation or ERP initiative, the first step is to stop assuming the market is structured around your best interests. It is not. Vendors are incentivized to grow revenue, increase lock-in, and standardize delivery. That is their job. Your job is to protect your organization.

That means asking tougher questions:

• Are we increasing cost faster than we are increasing value?
• Are we locking ourselves into one path too early?
• Are we giving up flexibility we may need later?
• Are we abandoning intellectual property in the name of simplification?
• Are we helping a vendor strengthen its product more than we are strengthening our own business?
• Are we making decisions that preserve optionality over the long term?

It also means challenging the assumption that the most “modern” answer is always the best one. Sometimes it is. Sometimes it is not. A good digital strategy is not about following hype. It is about making deliberate choices that support your operating model, your economics, and your competitive position.

The industry can improve, but only if we acknowledge what is broken

I do not think this industry is beyond repair. I do think it needs a more honest conversation than it usually gets.

The current model benefits vendors, implementation firms, and the broader ecosystem in a lot of ways. That is one reason these structural problems persist. The people who feel the pain most directly are the customers, often years after the original decisions were made.

That is why leaders need to be more skeptical, more strategic, and more willing to challenge the default path being sold to them.

This industry does not get fixed by accepting the same assumptions that created the problem. It gets fixed by putting customer interests back at the center of the conversation.