These are the 5 Roadblocks to a Digital Transformation

While HR organizations are making progress on improving key digital capabilities, there’s still plenty of work to be done, according to new research from The Hackett Group.

The 2019 Key Issues survey, which polled roughly 150 executives in the U.S. and abroad (most were at large employers with annual revenue of $1 billion or greater), found improvements have been slow and gaps remain, but also that HR leaders are being challenged to tackle multiple issues critical to helping the organization achieve business strategy objectives.

The research found that most HR organizations remain behind the curve in addressing areas that are central to achieving enterprise goals, including: developing executives who can lead in volatile environments; supporting enterprise digital transformation; and dealing with critical talent/skill shortages. While some key development areas are targeted for improvement in 2019, others, like finding solutions to skills shortages, retaining key staff and strategy execution are not likely to receive the attention they need, the report found.  Mainly, progress may be slowed by the expectations of flat HR budgets and head counts.

According to Max Caldwell, The Hackett Group’s principal in charge of its people and HR transformation practice, many organizations are engaging in digital transformation, embracing the adoption of emerging technology to help resolve these shortfalls and achieve next-generation HR capability. But as the research shows, most HR organizations are off to a slow start.

Among other findings, only about a third of HR organizations say that digital transformation has had a high impact on helping them attain enterprise objectives or significantly improved their service delivery models and performance. This is expected to improve dramatically, however, over the next two to three years as the pace of digital technology adoption increases. HR is expecting to see the most substantial gains in areas that include modernizing core ERP platforms (42 percent adoption growth), robotic process automation (2.5x growth), data visualization tools (59 percent growth), and virtual digital assistants/chatbots (2.4x growth).

In terms of its ability to support the enterprise, the research found that HR organizations say they have low ability within five critical areas, which then create challenges to digital transformations. Three have remained consistent: developing executives who can lead in volatile environments; enabling successful business strategy execution; and enabling digital transformation, while two are new: support for enterprise customer-centricity and the ability to address talent and skills shortages.

The Hackett Group’s Caldwell says powerful forces are reshaping the business and people agenda, including digital and artificial intelligence, a “boundaryless” talent ecosystem with more diverse and contingent workers, and an environment of continuous change.

“These forces are pushing HR leaders to adopt leaner, more agile, more digital operating models,” he says. “And many organizations are finding it difficult to unlock the full value of the HR business partner role, which is key to HR’s ability to add strategic value.”

Caldwell notes that the skills required of HR professionals are also changing dramatically, saying HR leaders and business partners need not only to be strategic and completely wired into the business, they also need to bring greater creativity, adaptability and digital savvy to the table.  For example, HR needs to deepen its expertise in areas like data science, smart automation and user-centered design.

“I think the next several years are going to be an incredibly exciting time,” Caldwell says, adding that the opportunities for HR to lead, innovate and deliver greater value to the business–and to employees and contributors–are “tremendous.”

“The most successful HR leaders will be those who see the opportunities, not just the challenges,” Caldwell says, “and bring a combination of vision and pragmatism to transform the HR function.”

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Tom Starner
Tom Starner is a freelance writer based in Philadelphia who has been covering the human resource space and all of its component processes for over two decades. He can be reached at [email protected]