Skip to content

Digital Transformation Challenges in 2021: How To Address Them?

Digital Transformation Challenges in 2021 - KMS Solutions - 730

Digital transformation has been playing a crucial role to ensure business success in recent years. According to a recent article by TechTarget, the trends of digital transformation will continue from 2020 into 2021, except with a significant difference where businesses will begin to undertake proactive, strategic transformation initiatives, instead of just reacting to changes in a passive posture.

With ambitious plans and successful digital transformation examples, together with more advanced technical capabilities than ever before, businesses are highly motivated to embark on their transformations projects. Still, from technology to the people and management aspects, there are prominent difficulties that can hinder the transformation process that companies need to consider.

In this article, let’s examine some of the common challenges related to digital transformation and also how to overcome them to realize the transformation benefits for your business.

Why Digital Transformation?

Digital transformation enables businesses to improve operational efficiencies by using new technologies and keep up with the market competition - especially in the new digital economy, delivering custom-tailored experiences to customers through new or modified business processes.

Digital transformation can benefit businesses in various ways, like improving cross-departments collaboration, enhancing customer experience, and driving data-driven decision-making. The advantages of digital transformation are undeniable. For example, the fast-food giant Mcdonald’s has been able to leverage digital technology to reach customers and drive sales growth. McDonald’s Stock price was also up 14%.

Leveraging a wide range of new digital technologies including mobile devices, data and analytics, social media, cloud computing, AI and machine learning, etc. is necessary to deliver transformational and beneficial results to businesses, such as: 

  • Improvement and continuous delivery of best-case customer experience;
  • Actionable insights and data-driven decision makings;
  • Agile innovation and business flexibility; Etc.

However, merely adopting technologies will not guarantee digital transformation successes. There are many reasons that can lead to transformation failures. Still, it’s worth noting that while there are challenges, companies are still able to correct course and become successful in the future. Let’s consider some of the common challenges below.

Key Digital Transformation Challenges

1. Lack of In-House IT Resources

In-house IT resources are imperative for any successful digital transformation endeavor. Yet, building an IT team takes time and requires tech acquisition expertise. This is especially harder during the time when there is a heavy shortage of IT talents in the local regions of many developed nations.

According to Gartner, the Covid-19 pandemic has accelerated many organizations’ digital initiatives and a lack of digital skills may jeopardize companies without a digital talents plan. Specifically, a Gartner Survey mentioned that more than half of CIOs Plan to Increase their organizations’ Full-Time Employees in IT to Accelerate Digital Initiatives in 2021.

Some of the specialized expertise lacking include:

  • Advanced data and analytics
  • Cybersecurity
  • Data Scientists and Machine Learning Engineers
  • DevOps Engineers


As a result, many companies turn to off-shore resources and consider hiring a digital team of IT specialists to take on their projects and/or work alongside their in-house team. Not only can off-shore technology partners help companies to quickly fill up the technical skills gaps, but they can also provide additional technical recommendations based on previous experience working on similar projects.

2. Constant Evolving Market Demands

In the past 12 months, a lot of digital, online activities have replaced traditional ones such as shopping, working, and face-to-face meetings, food delivery, banking, etc. Thus, the market and customer demand are also changing as a result. Digital transformation is no longer just an option but critical to business success.

Instead of just simply assuming the technologies needed to compete and fulfill the market trends, as well as customer demand, it’s essential that companies take time to conduct research, including what their competitors and/or market leaders are doing, to define the best suitable technology specifically required for their business industry.

3. Budget Constraint

Among the critical issues when it comes to digital transformation is the budget resources. Companies need a well-defined budget plan to ensure project scope creep will not happen. 

It’s highly likely that the transformation project can take a wrong turn at various moments, and in order to avoid it, companies will need to have a thorough understanding of the digital solutions (such as Digital Applications and Platforms Solutions, Bank Tech Solutions for Digital Banks, etc.) which they are going to adopt and implement.

Having a long-term strategy in place, with clearly stated objectives and realistic milestones can help projects to stay within budget and meeting timelines.

4. Data Strategy

Customer data is absolutely critical for digital transformation. Being able to effectively apply advanced data analytics can help businesses extract valuable insights about their business performance and customers’ behaviors, as well as future market trends, etc. enable better decision making.

However, vast amounts of business data (both structured and unstructured data) can come from many disparate sources and formats making the process of capturing and managing such a huge volume of data a challenge. Furthermore, it’s worth noting that different businesses require different data categories, therefore, one type of data (e.g. text) is not exactly better than another (e.g. video).

So, the focal point here is how data can address long-term business challenges and achieve long-term transformation goals. 

Having a solid data strategy focusing not only on storage and maintenance but also analytics and beyond can help businesses to manage and avoid such problems.

5. Internal Business Culture

It’s important to adopt new technologies and methodologies, but it’s even more important to make sure that your employees understand why these changes are necessary.

Companies may need to explain and communicate to their employees, making sure that everyone understands and becomes a part of the new process. Unnecessary complicated organizational structures and inflexible management can actually slow down an organization's transformation progress. In particular, this couldn’t be further from the truth in 2020, when organizations have to adapt to the working from home model.


Download Report

The remote working model requires companies to quickly adopt digital tools, leveraging advanced technologies (such as video conferencing via Zoom, remote project management) to ensure business continuity, sufficient productivity, and results.

Thus, focusing on technology is not enough. Paying attention to the people aspect, including organizational structure and management, can facilitate the digital transformation process to be carried out quickly and more effectively. An adoption and training plan is also necessary to ensure a smooth transition, fitting the business culture.

Successful Digital Transformation

Digital transformation has an undeniable impact on business growth and the economy as a whole. However, challenges have to be properly addressed before benefits can be realized. 

The more prepared you are, the better positioned you will be to derive benefits out of available digital opportunities.

Our team of experts can help you at every step of this business transformation journey, with our full-packaged Digital Application and Digital Team Service. Contact us and get started today.

If you want to learn more about Digital Transformation and how to accelerate your Business Transformation, subscribe to our newsletter.

Subscribe to our Newsletter