How to Avoid Digital Transformation Failure: Clients and Vendors

Written By: Eric Kimberling
Date: December 16, 2021

Avoiding a technology failure is critical for any organization about to embark on a digital transformation. What exactly can organization do to ensure that they're avoiding failure and potential lawsuits with software vendors or system integrators?

Let’s look at some ways to avoid failures.

We work with a variety of organizations that are at different points within their digital transformations, even businesses that are trying to triage an implementation failure. Garnering lessons and findings from these case studies, we tend to publish and focus our content on how to avoid failure and what organizations should do to mitigate any potential risks.

One side note, before we get into the steps to take to avoid digital transformation failure, is that Third Stage often provides expert witness services to lawsuits. When there is a lawsuit, either the plaintiff who's the implementing organization, or the defendant, who's typically the software vendor or system integrator, will hire us to be an independent expert to testify on why the project failed.

Set Realistic Expectations

The first thing you can do, and this is arguably the most important thing tactic is to ensure that project expectations are realistic. In our expert witness and project recovery work, we find that oftentimes identify unrealistic expectations as the root cause of a botched implementation.

For example, if an organization thinks that it's only going to take 12 months to implement your technology but ultimately, it's really going to take them 18 or 24 months, this is a significant problem. Even before they begin this company is set up for failure because there is no possible way they can achieve their objectives.

When timelines are stretched, organizations typically start cutting things like organizational change management, business processes, data migration, and integration. All the initiatives are ultimately going to make the project successful suddenly become a casualty of the fact that there were unrealistic expectations. Now, the business is scrambling to make up lost ground in an attempt to meet those expectations that were never realistic to begin with.

If there's one key accept to achieve a success, avoids failures, and any potential lawsuits are, ensure that expectations are accurate. Something to watch out for is a software sales rep, as it can be attractive to downplay the time, cost, and risk associated with implementation, even if this is not exactly accurate.

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Align Contracts with Demos

An important detail that often gets lost in the client software evaluation process is aligning on contracts with demos. The vendor can come in, successfully test the product, and ultimately purchase the package, but soon realize the formal contracts don't reflect the product shown in the demos. This is a very common dynamic throughout the sales cycle.

A vendor may have the best intentions of showing what products, modules, and parts of the system are the best fit for the business.  However, what oftentimes ends up happening is the procurement or contracts group has the wrong details in the contract. The organization then buys the wrong version of the software which can cause major delays in any digital transformation.

Both the vendor sales rep and client should stay actively involved in ensuring that the demo process, reflects the RFP response, as well as the final contracts.

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Acknowledging Software Weaknesses

As software vendor that's trying to sell software and services, it's easy to focus on the strengths of the service. These sales stakeholders are not necessarily incentivized to spotlight or showcase the weaknesses of the systems or the deficiencies on the delivery team.

No software system does every function for every business extremely well. Ultimately, the way I look at it as an agnostic consultant is that every software product, provider, system integrator, and every consulting firm has weaknesses.

When it comes down to it, being transparent about potential shortcomings is going to build more trust between vendor and client during the sales cycle. Customers are going to be more likely to buy from vendors that are honest. This open dialogue is also going to make any misalignment regarding the software solution less likely.

Leverage Tech Agnostic Support

Another thing both organizations and software vendors can do is to leverage technology-agnostic support. For example, a lot of software vendors, system integrators, and technical consulting firms will hire our team at Third Stage to come in to be that objective advisor to help customers through their journeys. This can be a good way to build trust as well as offer an unbiased validation of if a product is a good fit.

Considerations such as integration between systems, deploying complementary technologies, change management strategies, can provide the overall program management to ensure that your client is successful. These additional strategies can be instrumental and crucial to a successful digital transformation.

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For Vendors: Fix Compensation Systems

The next item on my list is specifically targeted to vendors and is a little bit more difficult to change, especially if you're not an executive within your organization. This recommendation is to fix the overall compensation system, which drives the majority of the problems within the vendor community regarding digital transformation challenges and failures. What I mean by this is, most vendors and system integrators are incentivized heavily to sell software and they receive a big check typically upfront when the sale is made.

If there is a multi-million dollars software subscription at stake, sales reps are going to make a lot of money upfront if they close that deal. It doesn't necessarily matter whether the organization actually deploys that technology effectively, what really matters in terms of current compensation systems is whether the sale is made.

Internal compensation systems are largely broken and create these perverse incentives to close a deal at all costs without considering how successful or what the customer impact may be.

Vendors, fix those compensation systems and incentivize your workforce on customer success rather than just selling software.

Validate Working for The Right Company

If you are in the digital transformation industry, there's only so much you can change within the organization you work for unless you're high up in the organization. Ultimately, it may come down to you doing some self-exploration to determine whether you're really at the right company or not.

Some questions you can ask yourself:

  • Are you philosophically aligned with that organization?
  • Are you ethically aligned with the organization?
  • Do you feel like the organization you work for represents your customer's best interest and is dedicated to ensuring that your customers are successful?

If it turns out that you're not at the right place, it may be time to rethink where you are. Maybe it's time to look at other opportunities. There are plenty of software vendors and solution providers in the marketplace today.

It may be that it's time to look for other options which may be difficult of course, but it’s worth thinking about when integrity, customer service, and feeling good about the work you do or systems you sell.

Resources

I hope this content has provided some thought-provoking recommendations to consider in order to avoid potential implementation failures. I encourage you to download our 2021 Digital Transformation Report which features best practices and additional guidance on technology-agnostic reviews.

Please reach out to me directly if you have any questions on how to avoid digital transformation failure. I am happy to be an informal sounding board as you move through your digital transformation journey.

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Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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