Failed digital projects ‘cost almost £1.5 million’

Digital transformation initiatives on the UK high street are falling flat at a cost of almost £1.5 million, a new report has found.

Fujitsu’s latest research, the Digital Transformation PACT, discovered that around £827,000 is being spent on projects that collapse, while a further £663,000 is wasted on those that end up getting cancelled.

The global report on the state of digital transformation in retail surveyed 1,600 businesses around the world and 150 businesses in the UK.

It found that in the UK, some of the problems in implementing successful digital initiatives included lack of alignment with business objectives, people not having the skills and attitudes to embrace the new technologies and a culture that stifles innovation.

With ‘digital disruptors’ entering the market and growing customer demand for a more augmented shopping experience on the high street, all retailers surveyed acknowledged that they need to use new technologies, such as artificial intelligence and internet of things, to make their stores stand out.

They agreed that the ability to change will be crucial to their businesses’ survival in the next five years (84 per cent).

However, Fujitsu’s research showed that more than half (53 per cent) said that they are facing challenges, including a clear lack of digital skills in the organisation.

“Retailers face pressures from customers, competitors and new digital disruptors entering the market, which has them running from all sides to try and compete,” said Jat Sahi, digital lead retail, EMEIA at Fujitsu.

“The number of failed and cancelled projects should be nearly zero if they used modern approaches, but what’s been made evident is that they are lacking the right components to make their digital transformation plans a success,” he added.

According to Fujitsu’s study, it is not enough to have the latest technologies and applications without a culture of innovation and a digitally-skilled and progressive workforce who are excited to support a business move into a new era of retail.

Only by focusing on all these elements will retailers be able to innovate successfully and see the benefits to their bottom line, employees and their customers.

The survey showed that retailers are undertaking a number of initiatives to ensure they are equipping their workforce with the right skills. More than half are looking at reverse mentoring programmes, where younger employees share digital skills with older employees.

Many retailers (44 per cent) are up-skilling through training programmes and apprenticeships (39 per cent).

When it came to the most important factor for realising their digital strategy, 37 per cent of retailers said having the right processes, attitudes and behaviours within the organisation is essential. Yet, as a result of lacking the right technologies in the organisation, more than two-thirds (69 per cent) said that shadow digital projects – those developed without official consent from head office – are a serious problem.

Worryingly, more than two-thirds (68%) said fear of failure is a serious hindrance to their organisation undertaking digital transformation.

Mr Sahi said: “Retailers cannot brush off the impact digital disruption is having and is going to have on their business as, when implemented with the right strategy, there can be significant rewards.

“Making the most of digital requires more than just the latest tools. Retailers need the right skills, processes and partnerships to ensure that the technology they are implementing has the right people and strategy behind it to see success.”