June 21, 2019 Last updated June 20th, 2019 63 Reads share

Why Are So Many Companies Behind on Digitization?

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The availability and functionality of digital platforms have revolutionized countless industries. Companies, through the use of cloud-based software, can operate more productively, keep their records more secure, and eliminate the need for physically stored records all at the same time.

For some industries, digitization (the conversion of information and systems into a digital format) is more than just a benefit—it’s a real need. For example, digitization in the healthcare and pharmaceutical industries is as much about patient privacy and security as it is about productivity and cost savings.

Yet with so many benefits on the table, millions of companies are behind on digitization, lacking the technological infrastructure, the talent, or the will necessary to make the change. Why is this the case, and what can we do to motivate these companies to transform?

Common Obstacles to Digitization

These are some of the most common objections and limiting factors preventing companies from digitizing their systems:

  • A lack of dedicated funding. First, it may not be in the budget to upgrade an entire system. Digitizing old records is a time-consuming project, and one that will pull you away from more profitable efforts, at least temporarily. On top of that, new technology—despite all its cost-saving benefits—can still cost thousands of dollars per machine (plus the cost of new software) to implement. If a business doesn’t have that extra cash lying around, they may be reluctant to make the investment. This is usually a top-down problem since the decision makers (either a CFO or a board of directors) are unwilling to budget.
  • Underestimation of cost savings. New technology is designed to make your life easier—and save your business money. Some companies are reluctant to move forward because they aren’t aware of these cost-saving benefits, or because they drastically underestimate them. Digitization makes file and information storage much more efficient, completely eliminates the need for some costly services (like physically mailing information to people), and increases the amount of work each employee can do over the course of the day. While not all technologies will immediately pay for themselves, most will net a positive impact—and that positive impact is woefully underestimated.
  • Bias toward older systems. Thanks to status quo bias, people much prefer doing the same things (and changing nothing) over introducing a new change. Even if the older system is riddled with security problems and inefficiencies, it’s still the solution that’s comfortable. This tends to be a bigger problem in companies that have existed for many years; the people at the top have been around for decades, and have an “if it ain’t broke, don’t fix it” mentality. Because the system still works the way it was originally designed, they don’t see a need to replace it—even if the replacement system is objectively better in at least one key way.
  • Wide organizational problems. Some companies struggle with digitization because of how wide their organization structure is. They may have several dozen locations all around the country, or they may have a large team of people relying on different components of the system throughout the day. Instituting a major digital change often requires a relatively quick changeover, and coordinating hundreds to thousands of people to work in tandem for that changeover can be exceptionally problematic. Some entrepreneurs would rather risk the pitfalls of their current system than deal with that logistical nightmare.
  • A lack of talent and resources. Digitization and digital transformation strategies require someone with technical proficiency to oversee the implementation of those new systems, both to ensure they’re set up in a way that maximizes their longevity and to troubleshoot any problems. If a company doesn’t have an IT expert or CTO on staff, their first job is hiring the right talent. And if the people doing the hiring don’t know what to look for in that hire, they may be conflicted on how to move forward.
  • Fears and limitations in training. Training existing employees on how to use new technology can be difficult, no matter how intuitive that technology seems at first or how many resources you can dedicate to training. Some of your older, more seasoned employees may actively resist the idea of learning a new system, and even your most enthusiastic tech supporters may struggle to use your new systems correctly. Formally documenting an SOP and starting the training process early can help, but this is still an obstacle in the eyes of potential tech adopters.
  • Regulatory restrictions. Companies and organizations in some industries face strict regulatory restrictions, which dictate how information is stored and accessed. Healthcare providers, for example, must comply with patient privacy laws, and finding a system that’s simultaneously efficient, easy to use, and compliant with regulatory standards can be challenging. If the old system is still compliant, administrators may try to squeeze more life out of it.
  • Security fears. Some leaders are reluctant to change over to a new digital system because they’re afraid of cybersecurity threats. The threat of a data breach is real (and incredibly costly), but the irony here is that most digital systems are already inherently better than their paper-based counterparts.

Motivating Change

It can be hard to motivate a change to new technology in an organization that appears unwilling to transform, especially if they’re afflicted with multiple obstacles simultaneously. However, there are some strategies that can help you.

Your first job is to track down the root cause(s) of your administrator’s resistance to change. You won’t be able to take action unless you understand the motivations for their resistance. Once you do, you can come up with an action plan for how to address those individual points. Always use numbers to prove your point; for example, you can point out the objective security improvements a digital system would bring, or calculate how long it would take to see a return on the initial investment in a new digital system. The increased pressure should at least spark further consideration, if not a full reversal of their former policy.

Digitization

Larry Alton

Larry Alton

Larry is an independent business consultant specializing in tech, social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn

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