Why digital transformation initiatives fail

Despite enormous investment in technology, the results are sobering. A Gartner survey from 2024 revealed that only 48% of digital initiatives meet or exceed their intended business outcomes. In other words: more than half of digital transformation efforts fail to deliver the impact organizations hoped for.

So why is this happening? And, more importantly, what can manufacturers do to avoid becoming part of that statistic?

The transformation paradox

The paradox is clear: while digital technologies are more advanced and accessible than ever, success rates remain stubbornly low. At the same time, CIOs and operations leaders are increasing their technology budgets, convinced that digital transformation is a strategic imperative.

This disconnect is often the result of two common pitfalls:

1. Treating transformation as a project, not a journey: Too many organizations approach digitalization as a series of isolated projects, a pilot here, an upgrade there with the hope that incremental improvements will add up to transformation. In reality, transformation is never “done.” It is a continuous cycle of improvement, iteration, and adaptation.
2. Focusing on technology instead of outcomes: It is tempting to start with tools: a new MES, predictive analytics, or AI for quality control. But without a clear link to business outcomes, these initiatives often become “technology for technology’s sake.” Real transformation happens when investments are explicitly tied to drivers such as reducing downtime, increasing throughput, or enabling regulatory compliance.

Beyond technology: The human and organizational challenge

One of the biggest misconceptions about digital transformation is that it is primarily a technological undertaking. In reality, technology is only one piece of the puzzle.

• People: Transformation requires cultural change. Employees may resist new systems if they do not understand the purpose or fear disruption to their daily work. Leadership must set a clear vision, communicate benefits, and create trust. Without buy-in from people, even the most advanced technology will fail.
• Processes: Digitalization amplifies inefficiencies if processes are poorly designed. Streamlining and standardizing workflows must happen alongside technological adoption. Otherwise, digital tools risk becoming expensive layers on top of broken processes.
• Technology: While not the whole story, technology remains critical. The right solutions must be scalable, interoperable, and aligned with long-term business goals. Quick fixes often create silos that are difficult to integrate later.

When people, processes, and technology are addressed together, organizations create a foundation that can support lasting digital change.

The cost of failure

When digital initiatives fail, the cost is not just financial. Failed projects erode trust, both internally and externally. Employees become skeptical of new initiatives. Leadership questions ROI. Customers may experience inconsistent quality or delayed deliveries.

Perhaps the biggest cost is the opportunity lost. While one company struggles to get beyond pilots, competitors move forward, scaling successful initiatives across plants and regions. In industries where margins are thin and competition is global, these delays can have long-term consequences.

What successful companies do differently

So, what separates the organizations that succeed from those that don’t? Our work across the manufacturing and process industries highlights several recurring success factors:

1. They define their “why” early: Whether it’s quality, efficiency, sustainability, or traceability, successful companies are clear about the drivers behind their transformation. This clarity guides priorities and investment decisions.
2. They build a roadmap, not just projects: A roadmap provides structure: from laying the foundation, to integrating systems, to leveraging data, and ultimately to autonomous operations. Each step builds on the last, ensuring progress is sustainable.
3. They measure continuously: Key performance indicators (KPIs) are defined for each phase. For example: improving data availability in early stages, reducing downtime with predictive maintenance in later stages, and achieving autonomous quality control at maturity.
4. They embrace continuous improvement: Transformation is iterative. Successful companies revisit their roadmap regularly, adapt to new technologies, and respond to changing business needs.
5. They prioritize people and change management: Cultural resistance is a given. Companies that succeed invest in training, communication, and collaboration across functions.

A case in point

Consider OKQ8, one of Sweden’s largest fuel providers. Their production operations relied heavily on siloed systems, with data often exchanged via spreadsheets and email. The inefficiencies were obvious: duplicated work, delayed decision-making, and limited insight into operations.

By developing and implementing a next-generation Terminal Management System, OKQ8 transformed its data flows. The new solution not only drove operational efficiencies but also improved collaboration and customer service. Importantly, the project succeeded because it was more than a technology upgrade, it was part of a broader vision to align processes, people, and systems around shared goals.

Moving forward

The reality is that digital transformation is difficult and the statistics prove it. But failure is not inevitable. Organizations that align people, processes, and technology; that define their “why” early; and that follow a structured roadmap can dramatically increase their chances of success.

Digital transformation is not about technology alone. It is about creating value, continuously, over time. And for manufacturers, it is about securing competitiveness in an industry where standing still is the fastest way to fall behind.