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Change Resistance Hamstrings Digital Transformations

May 6, 2021

About 68% of enterprises that embarked upon digital transformation have not realized the envisioned outcomes, according to Everest Group. A majority of enterprises attribute this shortfall in return on investment to having an undefined or ineffective change management strategy, with 58% of enterprises citing change resistance as a key obstacle.

These findings and more are shared in Everest Group recently published report, Digital Services State of the Market Report 2021: Fostering Value Through Rearchitecting Change Management. In addition to offering a full analysis of the Digital Services market, the report explores current change management strategies and exposes what works and what does not. Everest Group provides a framework for the future of change management, Organizational Change Management, and describes the implications for service providers and enterprises.

Key findings:

Digital services landscape

The digital services landscape evolved in maturity and saw acceleration in adoption in 2020. There were increased and scaled engagements leveraging next-generation technologies for business continuity and resilience. Cloud (49%), artificial intelligence (AI) (41%) and analytics (11%) were the top 3 key enabling technologies included in digital services deals. Cybersecurity was another key area of investment.

The top 3 objectives of investments in digital services were (1) reinventing stakeholder experience, (2) improving operational efficiency and (3) modernizing applications and infrastructure. Enterprises report a high level of benefits realized for investments in new-age technologies especially Internet of Things (IoT), AI, and analytics to enhance stakeholder experiences.

Accelerated transformations, unrealized outcomes

As digital transformation became the default route to remain relevant, enterprises faced incomplete value realization, manifesting in slow adoption and resistance to change, eventually taking the form of attritions, unfavorable organizational culture and negative transformation outcomes.

To counter the resistive forces, enterprises need to implement a fit-for-purpose change management strategy, that ensures early and active involvement of internal stakeholders, manages resistance proactively, leverages technology to smoothen the change curve, and creates an ecosystem to embrace the change.

Innovation in change management

As enterprises realize the need to shift focus toward managing change and ensuring success from digital transformations, innovations in the change management strategy become imperative.

Investment in facilitating technology, governance initiatives, data literacy, effective coaching, and innovating communication channels ensure that the organizational change management strategy is adopted and embraced without resistance.

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