Top 7 Digital Transformation Challenges [2025]

Digital transformation is the adoption of digital technology and digital processes to improve organizational operations and deliver value to customers. It typically involves the use of IoT, AI, the cloud, and big data technology to optimize business processes, improve customer experiences, and drive innovation.

Why businesses must transform to thrive in today's landscape

According to a recent PWC Pulse survey, 60% of top executives see digital transformation as the most important driver of business growth.

Businesses are becoming more aware of the value of digital transformation, and are investing heavily in it to stay competitive. What is alarming, however, is that 70% of all digital transformation efforts fail, and the consequences are often severe. A successful digital transformation initiative involves a comprehensive change that goes beyond merely adopting new technologies or processes; it requires a fundamental shift in how a business operates. Understanding and addressing these digital transformation challenges is crucial for a successful for business to survive in their digital transformation journey. In this blog post, we’ll explore the key digital transformation challenges businesses face.

Understanding digital transformation

Digital transformation challenges often arise when organizations fail to align their strategies with these objectives. A successful digital transformation strategy can lead to increased efficiency, improved customer experience, and a clear competitive advantage. By leveraging digital tools and technologies, businesses can streamline operations, foster innovation, and create more personalized and engaging customer interactions. In essence, digital transformation is not just about adopting new technologies but about rethinking how businesses operate and deliver value in the digital era.

Here are some of the top digital transformation challenges businesses face:

1. Inadequate strategy and execution plan

Before embarking on a digital transformation journey, the golden rule is to have a solid strategy and execution plan for the digital transformation process. An inadequate plan is one of the common digital transformation challenges, as it can lead to confusion, lack of direction, and wasted resources, negatively impacting your digital transformation journey.

Experts advise businesses to take a “sprint approach” rather than aiming for large-scale digital transformation. In other words, implement the changes in stages, evaluating the success of each step before moving on to the next. It is better to assess and pivot as needed than to fully implement a comprehensive solution that does not work.

A well-defined digital transformation strategy and the implementation of effective digital transformation solutions are critical to the success of any digital transformation initiative. There are numerous available references on digital transformation approaches to assist organizations throughout the process. We recommend starting with our step-by-step guide to digital transformation for CIOs.

2. Lack of buy-in from stakeholders

Organizations undergoing digital transformation must ensure that stakeholders shift their mindsets. We can all agree that change is challenging. When organizations don’t consider the importance of employee buy-in, digital transformation challenges are likely to intensify, and digitization efforts may fail.

Employees must be on the same page as management, and regularly engaged in the transformation process, so they understand the reasons and best practices for every implementation. Furthermore, the core team driving the transformation must maintain transparency with stakeholders throughout the process. Digitization can sometimes feel like a threat to employees, owing to a reduction of manual labor. Management should be willing to listen to feedback, accommodate employee suggestions, and find a mutually beneficial middle ground.

3. The baggage of obsolete processes

Beginning the digital transformation journey while remaining saddled with outdated processes is a critical mistake businesses often make. This is one of the major digital transformation challenges organizations must address to achieve optimal outcomes. A thorough evaluation of existing processes, followed by decisions on what to eliminate, optimize, and rethink in the context of integrating digital technologies is necessary.

Businesses must be willing to let go of redundant processes to pave the way for new process automation. This is essential for creating an optimal outcome and will help you create a thorough and effective execution plan, as discussed above.

4. Legacy systems and difficulty integrating them with new technologies

The truth is, that most enterprise companies stack their tech on top of legacy systems. These systems are expensive to maintain and, more often than not, create data silos due to the difficulties of integration. Managing legacy systems effectively is one of the prominent digital transformation challenges businesses face. Implementing digital solutions is essential to overcome these challenges, enhance security, and manage data effectively.

It’s important to understand that, even though legacy systems come with challenges, most companies use them to run their core processes, and it takes work to phase them out. Management has to make informed decisions about how to go about this and take the necessary steps to redefine, rebuild, and replace existing technology.

The key is not to aim for a drastic and abrupt transition but to modernize your legacy systems with cloud solutions in focused and specific areas. In this way, businesses drive growth and foster confidence over time.

5. Failure to prioritize training and adoption

While strategy is critical, proper execution is also vital to an organization’s digital transformation success, helping to overcome digital transformation challenges. As you upgrade systems, you’ll also need to update employee skillsets. Companies must invest in training, hiring, and retaining qualified employees with the necessary skills during the initial months. Additionally, leveraging the right digital tools can streamline processes, improve efficiency, and enhance the overall digital transformation experience. A well-defined digital transformation strategy and the implementation of effective digital transformation solutions are key to achieving these goals.

6. Talent shortages and skill gaps

Talent shortages and skill gaps are significant challenges in the digital transformation journey. The demand for digital skills often outpaces the available talent pool, making it difficult for organizations to recruit, retain, and upskill employees. Critical areas such as data analytics, artificial intelligence, cybersecurity, and enterprise architecture are particularly affected by these skill gaps. To overcome this challenge, organizations need to become talent incubators, investing in continuous training and development of digital transformation programs.

Embracing a flexible workforce model that includes freelancers, consultants, and subject matter experts can also help bridge the gap. By fostering a culture of continuous learning and adaptability, businesses can ensure they have the necessary skills to drive their digital transformation initiatives forward with the help of digital technologies and data analytics.

7. Measuring ROI and ensuring sustainability

Measuring the return on investment (ROI) of digital transformation initiatives is crucial to ensure sustainability and demonstrate tangible returns to stakeholders. Establishing key performance indicators (KPIs) for digital transformation and regularly monitoring the impact of digital initiatives is essential.

Organizations must prioritize investments in digital initiatives that demonstrate a clear ROI and continuously evaluate and refine strategies for maximum efficiency. By effectively managing the digital transformation process and prioritizing the right digital initiatives, businesses can identify and mitigate potential risks and challenges, ensuring a smooth and successful transition.

Additionally, implementing eco-friendly technologies, optimizing energy consumption, and adopting green computing practices are crucial for minimizing environmental impact and ensuring sustainability. By focusing on both financial and environmental metrics, businesses can ensure their digital transformation efforts are not only profitable but also sustainable in the long run.

Overcome the challenges of digital transformation

Businesses must transform to maintain a competitive advantage, but their success depends on their approach. A mindful and considerate approach helps companies avoid common pitfalls and position themselves for success.

Being equipped with the right tools for transformation is as important as overcoming the challenges mentioned above. Identify the solutions that suit your specific plans and requirements. Low-code is one solution with proven success enabling and accelerating business transformation initiatives.

Case study: Cloud Solutions' digital transformation journey

Cloud Solutions is a group of companies that focus on bringing digital transformation to businesses of all sizes. They use Zoho as their primary tool to help their clients improve their processes and achieve their goals.

How they streamlined business processes with Zoho Creator

Cloud Solutions partnered with Zoho Creator to build custom applications for their business needs. Zoho Creator is a low-code application development platform that can help you digitize your business and overcome many of the most common digital transformation challenges faced during their journey.

They established an in-house ZCreatorLAB to maximize the platform's potential. The team, comprising diverse experts, developed various apps, including a WhatsApp management tool and a custom quote calculator. The quote calculator, in particular, showcased the platform's ability to handle complex data and logic, automating processes and improving efficiency. Overall, Zoho Creator empowered Cloud Solutions to streamline operations, enhance collaboration, and deliver superior customer service.

Discover more on how Cloud Solutions transformed the client's operations: Read the case study here

Final thoughts

Successfully navigating the complex landscape of digital transformation requires a strategic approach, technological prowess, and a deep understanding of organizational needs. By addressing the digital transformation challenges outlined in this blog post and leveraging innovative solutions like low-code platforms, businesses can unlock the full potential of digital transformation.

Remember, the journey towards digital excellence is ongoing. Continuous learning, adaptation, and a commitment to innovation are essential to staying ahead in the ever-evolving digital age.