Imagine renovating your house while living in it, and without checking the structural integrity first. Or reconfiguring rooms without understanding how the plumbing and wiring run through your walls and floors. Yet that's how many organizations approach business transformation, and the results are sobering.
New research from SAP in partnership with Oxford Economics reveals a stark reality: barely half of business transformations (51%) go according to plan, and only 57% deliver value worth their investment. While 73% of leaders express confidence in their teams' ability to manage transformation risks, over half (52%) skip initial risk assessments – leaving them vulnerable to avoidable surprises and setbacks – and 43% fail to monitor risks as their transformation unfolds. Let’s call this gap between ambition and execution the “confidence conundrum”.
To unpack this gap, let’s examine three critical dimensions of risk that can make or break a transformation initiative.
1. Organizational risk
The human element is often the biggest risk in business transformation, with success depending on how well people at all levels understand, support, and adopt change. Indeed, the research shows 63% of business transformations hit a wall with senior leadership – the very people meant to champion change – through a lack of clarity on the merits of the transformation.
Resistance can cascade through the organization, with 61% reporting challenges in getting their workforce on board with new ways of working. There’s also a communication paradox: while three in five organizations claim their transformation plans were well-articulated to the broader workforce, only 53% say these plans were clearly defined in the first place.
2. Process, technology, and data risk
A striking 40% lack the agility to implement systems that could improve their transformation efforts. This capability gap is evident in the limited uptake of key transformation tools: less than half have progressed beyond early stages in implementing change management tools (49%), benchmarking tools (42%), or process mining software (36%). Without these capabilities, organizations run the risk of disrupting current processes, losing insight into critical systems, or, worse, causing widespread service outages. To neglect this technical dimension means, essentially, trying to navigate the transformation journey in the dark.
There’s also the data dimension to consider: seven out of ten respondents find it "very" or "prohibitively" challenging to determine if the data they need for transformation is reliable. This typically stems from inadequate data governance frameworks and limited transparency in how data is collected, managed, and used across the organization. Only 52% report that leadership is transparent with employees about data and decision-making related to business transformation efforts.
3. Project execution risk
Execution reveals the final paradox: while 67% of leaders consider risk assessment crucial, only 57% monitor risk throughout the journey. And 69% admit that risk management KPIs are only somewhat well or poorly used or not tracked at all. Scope expands, priorities clash, and initiatives drift off course. The result: 58% of transformations exceed their budgets, and nearly half stall before completion – taking revenue, customer satisfaction, and market opportunities with them.
Four practical approaches to mitigate business transformation risk
We’ve seen how organizational, technical, and project risks can derail transformations. Addressing these requires a holistic approach that builds visibility across people, processes, applications, and data. Here's how to build that visibility:
1. People – turn resistance into results
Start with what matters: clear objectives that connect strategic vision to daily work. Build decision-making frameworks that combine human insight with reliable data. Create collaboration and communication channels that surface issues early and maintain transparency around progress. Factor the onboarding and training stage into your plans early on. Remember: misalignment, friction and uncertainty during the adoption stage don't just slow transformation – they may kill it. Make the people dimension a strategic part of your initiative, not an afterthought.
2. Processes – understand how work actually gets done
First, map what already exists – including unofficial workarounds. Then determine where these processes connect, revealing critical dependencies across your organization. Use this visibility to identify processes that cannot tolerate disruption and use simulation to test changes before they affect live operations. Build governance frameworks that enable rather than block progress, with clear metrics linking process changes to strategic goals and value creation. Make performance monitoring automatic, with clear triggers for review, intervention, and escalation.
3. Applications – map your technology landscape
Start with a complete view of your current technology landscape – what you have (including shadow IT), how it connects, and its business impact. Use this enterprise-wide visibility to spot redundancies, integration points, and technical debt. Plan technology adoption strategically, ensuring each addition strengthens your architecture rather than simply complicating it. Phase implementations to maintain business continuity while modernizing your foundation.
4. Data – monitor what matters
More data doesn’t necessarily mean more reliable insight. While data collection is important, it’s only valuable if you can make sense of it. Create frameworks that connect operational data directly to business outcomes, enabling you to track both transformation progress and actual value delivered. Treated as an active asset rather than a passive resource, data can help turn risk management from a defensive posture to a proactive driver of business transformation.
Risk management: Turning visibility into velocity
Risk management isn't a brake on transformation – it's an accelerator. When organizations establish clear sight across their ecosystem – people, processes, applications, and data – they gain the confidence to move with purpose. In today's fast-changing environment, this strategic approach to risk helps organizations avoid both paralysis and reckless speed. Those who understand this don't just transform more safely; they transform more successfully than competitors who either hesitate too long or rush ahead blindly.
Business transformation: From risk to reward
Don’t let your business transformation become another statistic. Download our guide, "The confidence conundrum: Navigating risk in business transformation," to discover insights including:
- The gap between transformation ambition and execution
- Practical frameworks for identifying and managing transformation risk
- Essential capabilities for de-risking your business transformation journey.