Approximately 70% of all digital transformation initiatives fail to achieve their goals, often because companies chase shiny new tech while forgetting to address fundamental problems. I experienced this firsthand during a three-year project.
As part of a team with several consultants and research experts, I was involved in the nearly $1 billion transformation of one of the world’s largest tourism companies.
What sounds like AI and blockchain primarily involved tasks like unravelling decades-old legacy systems and dismantling silo structures. It wasn’t glamorous, but it was transformative. Together with my colleague at Deloitte Canada, I was able to initiate a paradigm shift, from a traditional supply chain mindset to a supply network approach.
Big plans, big challenges
The tourism group’s extensive transformation initiative was triggered by a wake-up call from a top executive. In 2015, the manager publicly admitted the company was decades behind in terms of technology. So the parent company ordered a modernization of all subsidiaries, and management promptly allocated hundreds of millions of dollars to migrate all areas to modern platforms, from procurement to warehousing. As project managers, we quickly realized this digital dream meant one thing: chaos.
On paper, it was simple: replace legacy systems, standardize processes, and integrate data across the company. In practice, we were dealing with a 30-year-old organization that accumulated many layers of processes. Employees simply had to make do with outdated methods.
For example, the purchasing system was a patchwork of homegrown tools and spreadsheets that different teams customized to their own needs. Each department — parks, hotels, restaurants, retail — operated in its own bubble. Projects were often implemented in isolation, with benefits accruing only to the teams that implemented them. This led to a multitude of disjointed solutions. We gradually identified these strategic mismatches between technology investments and business requirements as the project progressed.
The complexity was also compounded by the size of the company, which is more like an ecosystem of 180 locations worldwide having to be supplied daily with diverse goods from company-owned and external warehouses, as well as from suppliers. So it wasn’t a simple linear supply chain, rather a widely branched network of internal units and partners. And virtually every part of the organization was intertwined with this network, so changes in one area could impact suppliers, warehouses, and even the customer experience. Accordingly, we communicated to management from the outset that this transformation was socio-technical in nature, and that we were changing a living organism, not a machine.
This was also underscored by the project’s first major initiative — the introduction of a new source-to-pay procurement platform. Not just an IT project, it involved six different departments, each with its own processes and priorities. Bringing these into one system required resolving some long-standing conflicts. For example, finance wanted strict controls, while operations wanted more flexibility. We had plans to improve efficiency and transparency, but we faced equally significant pushback getting everyone on the same page.
From supply chain to supply network
Early on, we made a subtle but significant shift in our overall mindset. Instead of talking about a supply chain, we began thinking in terms of a supply network. This transformed our approach from abstract complexity to more effective management, and as a first step, we captured how orders, data, and decisions flow within the company. The findings confirmed that, above all, better coordination was needed, and more than fancy new algorithms.
In fact, we also learned that complexity isn’t always a bad thing, but rather a reality that must be accepted. Our complex, adaptive supplier network system consisted of many self-organizing parts. If we tried to ignore these dependencies and force simplification, we would’ve only created new problems. One manager also warned against piling more complexity on an already convoluted environment, and instead work on strengthening existing connections between all members of the organization. So we shifted our focus and formed cross-functional working groups with representatives from all affected departments to address each key process to ensure everyone was pulling together, rather than just pulling their own.
An example of network thinking in practice was the way we eliminated discrepancies between hotel operations and the rest of the business. Initially, hotels managed guest bookings and supply requirements almost independently of each other, and were unaware of new product launches or events that could lead to a surge in demand. The lack of coordination between hotels and other departments led to some nasty surprises. For instance, on busy weekends, key offers would be out of stock because the hotel team was unaware of a promotion, a classic case of strategic misalignment. To address this, we established new communication channels and integrated planning sessions, effectively reintegrating hotels into the overarching supply network. We began treating internal departments as part of the network rather than as isolated kingdoms.
We also examined feedback loops within our system and discovered some were vicious cycles that exacerbated misalignment. We found that when stakeholders were poorly engaged in the design of a new process, for instance, the resulting solution didn’t meet their needs. This lack of fit then led to further stakeholder disengagement, resulting in even lower participation and poorer outcomes.
Research later confirmed a pattern of weak stakeholder engagement, outdated technical skills, and structural issues led to misalignment and further project problems. We recognized this dynamic and established a rule that end users must be involved at every stage of design and implementation. We also temporarily decommissioned some core infrastructure that repeatedly caused failures, rather than build new features on a shaky foundation. Gradually, we transformed some vicious cycles into virtuous ones, where initial successes built trust and led to greater stakeholder acceptance for the next phase.
Stakeholder and system work
The most difficult part of this transformation wasn’t the technology but getting people to collaborate in new ways, which required a greater focus on stakeholder alignment and change management. So my colleague first established a strong governance structure. A steering committee with leaders from key functions like IT, operations, finance, and merchandising met biweekly to review progress and resolve conflicts. This wasn’t a token committee, but a body with authority. If there were any issues with data exchange between marketing and supply chain, they were addressed and resolved during the meetings.
By bringing all stakeholders together, we were also able to identify discrepancies early on. For example, when we discovered a new feature in the inventory system could slow down employee workflows, the operations manager reported it, and we immediately adjusted the rollout plan. Previously, such issues might not have been identified until after the full rollout and subsequent finger-pointing between IT and business departments.
The next step was to focus on communication and culture. From previous failed projects, we knew that sending a few emails wasn’t enough, so we tried a more personal approach. We identified influential employees in each department and recruited them as change champions. We informed them not only about what would change, but also why, and how their work fit into the larger network. This transparency helped us gain allies. Employees began to see the transformation not as an IT mandate, but necessary development.
We also made training and co-evolution a central part of the program. Co-evolution, in this context, means that technology and organization adapt to each other over time. When we introduced our new procurement platform, for instance, we realized a need to reorganize teams and redefine roles to fully utilize capabilities. And we merged some purchasing and logistics teams under a single process owner, which required greater collaboration on a day-to-day basis. We also updated job descriptions. Purchasers, for example, were now expected to analyze data from the system rather than just place orders, so we invested in their training. User feedback also led to software adjustments, like a dashboard for hotel managers to record inventory. These adjustments were sometimes chaotic, but ultimately produced results.
Throughout the project, we consciously considered two dimensions of change: structural and organizational. Our research later showed these two dimensions must be synchronized with the complexity of the network to avoid strategic missteps. In practice, this meant always offering workshops, coaching, and sometimes incentive structures when introducing a new system or process to encourage adoption. So when we introduced a centralized delivery planning process, we also adjusted the local managers’ performance targets so they no longer only included local efficiency but also network-wide metrics.
At the end of the three-year program, not everything was perfect, but we achieved clearer governance, better data transparency, a unified core system for procurement and warehousing, and departments that communicate with each other. Perhaps more importantly, we fostered a new mindset that embraces complexity and emphasizes continuous learning.
Digital transformation wasn’t a one-time project; it became a permanent competency of the organization. As researchers and consultants, it was a hectic journey but it demonstrated that what’s truly critical to the success of digital transformations is the unglamorous work to solidify foundations and align people.
Takeaways for IT decision makers
While every large-scale transformation is unique, focus on the fundamentals, not gimmicks. Modernizing core systems and processes often yields the greatest long-term benefits. Then involve employees early and regularly. Technology doesn’t change companies, it changes people. Invest in change management from the start, and communicate the reasons for change, empower change champions, and involve end users. Also, think in networks, not chains. Promote cross-functional and cross-company transparency. Create a map of how value flows through your company and partner network to identify bottlenecks and hidden dependencies. This systems view helps design a transformation that improves the whole, not just individual parts. It also makes you more resilient.
Large-scale digital transformations can seem overwhelming and unattractive. But taking them on pays off, and our tourism group is now prepared for future innovations.
Read More from This Article: Hard lessons from a chaotic transformation
Source: News