How Organizational Structures Obstruct Digital Transformation

The term “digital transformation” brings to mind shiny new technologies. But technology is the means to transformation, not an end in itself. Rigid internal structures impede many organizations' digital transformation efforts.

Organizational alignment was cited as the main challenge for organizations meeting their goals and objectives, according to a November 2018 survey of 126 US IT leaders conducted by IT services firm TEKsystems. The survey indicated that at many organizations, there is a lot of friction between technology and business departments.

Changing how teams collaborate has enabled British multinational telecommunications company Vodafone to “be more responsive to what the market and our customer are telling us,” said Milan Jain, principal digital marketing manager, who spoke to eMarketer as part of our upcoming Collaboration for Digital Transformation report.

Jain notes that in the past Vodafone, like most companies, was not organized around the customer journey. “It’s always been inward looking,” Jain said. “We have traditional marketing, sales, operations, branding, awareness, but the customer journey cuts across all of the above, which was a fundamental challenge to our siloed way of working.”

Other research confirms that schisms between different departments obstructs digital transformation efforts. Harvard Business Review polled 799 company executives from various industries worldwide and found that organizational silos were the top barrier to digital transformation. In a similar study of 200 US IT executives by research firm IDG, 59% of respondents said that tech silos were one of the top roadblocks to transformation of their IT infrastructure.

“No matter how much more data you get, the silos still prevent you from fully realizing the value of that data-transformation project,” said Siara Nazir, head of digital marketing at design software company Autodesk.

In an effort to release and tweak products more efficiently, Autodesk created work pods that include people from many different departments within the company. This allows each geographical region the company does business in to have easy access to a website optimization analyst, automation specialist and marketer. Eliminating silos led to quicker product releases, according to Nazir.

“We are able to launch anywhere between 20 to 25 programs in a two-week period that previously took us at least two months to do,” she said.

No matter how much more data you get, the silos still prevent you from fully realizing the value of that data-transformation project.

Siara Nazir
Head of Digital Marketing, Autodesk

Commerce-tech company Pitney Bowes also tried to eliminate rigid divisions between different departments. To get multiple departments working closer together, it created a “cross-functioning team” that includes the heads of multiple company departments including tech, marketing and finance, according to CMO Bill Borrelle. Each week the team has a session that is entirely devoted to one specific topic, such as the internet of things (IoT). Each department head pitches in during the deep-dive session before moving on to an entirely different topic the following week.

“They're all prepared to leap on the topic,” Borelle said. “That's the cultural leg that works, infiltrating other [organizational] levels after these meetings happen.”

eMarketer PRO subscribers can check out the full Collaboration for Digital Transformation report when it comes out later this month.

Not sure if your company subscribes? You can find out here.