BCG: Only 1 in 3 digital transformation projects are successful

21 April 2021 3 min. read

Only one in three Australian companies are fully benefiting from their digital transformation efforts according to a study from consulting firm BCG, with six factors in combination identified as the best predictor of success.

A recent study report from global strategy and management firm Boston Consulting Group found that only one third of local corporate digital transformation programs could be considered a success, with targets met or succeeded and sustainable change created. On the flip-side, 20 percent of such projects were deemed outright failures, with less than half of the targets met and no sustainable change created. Globally, that figure pushes out to more than a quarter.

“Our research shows that more than 80 per cent of companies plan to accelerate their digital transformation plans, against the backdrop of a global pandemic having accelerated the urgency of digital transformation for businesses,” stated DigitalBCG global leader and report co-author Tom Reichert. “But our research also shows that only 30 per cent of digital transformations have achieved their objectives, which is to say that they met or exceeded their target.”

Digital Transformation Success Scores

BCG reached its conclusions after surveying 825 senior executives from around the world, along with analysing data from 70 projects it had itself worked on in recent years with leading global companies – finding that those in the top bracket created 66 percent more value and met 120 percent more of their targets than those in the bottom echelon. Boiling down the results, the consultancy was then able to identify six key factors that contribute to success.

Of the 35 or so factors assessed around commitment, strategy, approach, governance, and resourcing, the six that stood out were, briefly; an integrated strategy with clear transformation goals; leadership commitment from CEO through middle management; deploying high-caliber talent; an agile governance mindset that drives broader adoption; effective monitoring of progress toward defined outcomes; and, investment in a business-led technology and data platform.

According to BCG, it’s crucial that all of these six factors are addressed in combination to deliver the greatest chances for success, with the firm calculating an 80 percent success rate when each of these boxes are checked – 21 points higher than if five of the factors are met and almost double the success rate if only four are in place. The average of its study was just three to four of the factors in place, with less than one in five projects succeeding with only half covered.

Companies need to perform well on all six factors to be succesful

Furthermore, the six-factor formula holds for all types of digital transformation projects, as well as across regions and industries. Local report authors and BCG senior partners Patrick Forth and Stefan Mohr cite Telstra’s four-year ‘T22’ strategic and digital transformation project as among those considered a success, while the telco is also leveraging its own digital experience and expertise to aid other Australian corporates in their digital transformations.

Speaking with the Australian Financial Review on the project (which was formulated with support from management consulting rival McKinsey), Forth in particular pointed to Telstra having set clear strategic goals with clear outcomes as well as gaining buy-in from middle management. One tactic suggested by BCG to maintain accountability is for companies to go public with targets and progress reports, with Telstra also having adopted such an approach.

On the material benefits of getting transformations right, Forth concludes; “In the short term, digital technologies and ways of working offer productivity improvements and better customer experiences. In the medium term, digital opens up new growth opportunities and business model innovation. Successful transformations also set companies up for sustained success; they won’t have to digitally transform again as they master continuous innovation.”