Why DX programs fail
Digital transformation (DX) is one of the hottest buzz words in business with organisations planning to accelerate their DX efforts and spending forecast to grow. So why are so few DX projects succeeding?
Research compiled in 2025 claims a stunning 84% of digital transformation initiatives fail. Other studies quote similar findings of failure and under-performance. Perhaps it’s because we’re looking at DX the wrong way. We’re stuck trying to apply old ways of thinking to new problems. Let’s break down some of issues.
Four ways transformation goes off track
1. Rigid procurement hinders innovation
Traditional procurement is based on fixed deliverables, rigid timelines, and tightly controlled budgets. This approach doesn’t work for rapid transformation. Innovation by its very nature is agile, responsive, and iterative. Traditional project teams are forced to define fixed deliverables before they truly understand the problem or possible solutions. And the effort to modify deliverables mid-project can be like starting the procurement all over again.
This conflict between rigidity and agility is the number one culprit blocking successful transformation projects today. Rigid procurement can force teams to spend time and money delivering a product or feature, because that’s what the contract says. But it could be the wrong feature, or one that doesn’t meet user needs. When we are limited by strict contracts, often written months or years in advance, failure is the most likely (and most costly) outcome.
2. Prioritising ‘cost’ over ‘value’
While managing costs is an essential part of any project delivery, the primary focus of a DX program should be to deliver ‘value’. Cost management is a short-term, binary construct eg the cheapest option in the shortest timeframe. The concept of value is broader – reputational value, market advantage, process optimisation, regulatory compliance, customer satisfaction, predictive intelligence capability etc. Spending time and money to achieve value has long-lasting benefits which far exceed short term cost savings.
3. Over-reliance on individual contractors
Individual contractors may have skills and experience, but they are still individuals. Transformation success requires a cohesive team—a group of skilled professionals who work together to complete tasks efficiently and transfer their knowledge so capability is retained after project close.
Think about it - when you build a house you hire a builder with a team that has built a house before; you don’t hire individual contractors from a street corner. Why wouldn’t you approach your digital transformation program the same way?
4. Insufficient leadership
Transformation projects thrive under strong leadership. BCG claims 90% of failed DX projects cite a lack of ‘effective agile leadership’ as a factor (1). Leaders must navigate the delicate balance between flexibility and accountability. Flexibility allows teams to adapt to changing requirements, while accountability ensures quality and efficient delivery. And strong supervision keeps everyone in sync. It aligns teams with business outcomes, ensuring they march toward the same goal. Good leaders continuously weigh costs against value. It’s not about penny-pinching; it’s about maximising return on investment to deliver value.
A new mindset for transformation success
We need to break away from traditional procurement and delivery approaches and start thinking in terms of business value.
We need to build capabilities to drive outcomes, not hire people to fill roles.
References
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