Why 80- 90% of Digital Transformation Efforts Fail (And What CFOs Can Do About It)
Digital transformation is one of the most overused phrases in business today and also one of the most misunderstood. I’ve seen organizations pour billions into new systems, automation tools, and innovation initiatives, only to watch 80 - 90% of these efforts fall flat.
In finance especially, where accuracy and risk management are non-negotiable, transformation often stalls before it even begins.
So why does this keep happening? And more importantly what can CFOs and finance leaders do differently to avoid becoming another statistic?
In this blog, I want to unpack the biggest reasons digital transformation fails, explore the cultural and technological shifts finance needs to embrace, and share practical strategies that CFOs can adopt to actually lead innovation instead of holding it back.
The Failure Problem: Why Transformation Falls Flat
Most organizations are still trying to measure innovation through the old lens of ROI. If a project doesn’t show an immediate financial return, it’s quickly labeled as a failure. But innovation doesn’t play by the same rules as a traditional capital project.
In my experience, transformation fails because companies:
Apply outdated metrics to entirely new initiatives.
Reward risk avoidance instead of experimentation.
Underinvest in learning and development for their teams.
Treat innovation as a side project, not a cultural shift.
When finance leaders cling to legacy performance measures, they unknowingly suffocate the very behaviors risk-taking, experimentation, learning from failure that drive true transformation.
Rethinking Metrics: From ROI to Learning
If we want transformation to succeed, we need to redefine what success actually looks like. Instead of asking, What’s the ROI on this project? the better questions are:
What did we learn from this experiment?
How many new customers or opportunities did it expose us to?
How many shots did we take?
This is about moving away from binary outcomes (success vs. failure) and adopting a portfolio mindset where every experiment, whether it works or not, adds value through learning.
Think of it like building innovation muscle. Every small test, pilot, or prototype increases the surface area for luck. Over time, those small bets lead to breakthroughs that would never have emerged if every project had to be justified by a rigid ROI upfront.
How Finance Can Convince CFOs to Take Risks
Finance has a reputation for being risk averse and let’s be real, CFOs are no exception. Gartner research even confirms that CFOs’ digital conservatism often leads to chronic underinvestment in technology.
But there are ways to help finance leaders see innovation differently:
Share educational resources: Videos, demos, and case studies build understanding.
Start small: Low-risk experimental bets make innovation digestible.
Find internal champions: Advocates close to decision-makers can influence change.
Visualize ideas: Demonstrations and prototypes reduce uncertainty and fear.
And beyond ROI, I always push finance teams to measure learning outcomes, customer acquisition, and to differentiate between experiments that generate insights vs. those that don’t.
Why Finance Struggles with Strategic Innovation
Let’s be honest, finance professionals aren’t known for their risk-taking. The culture is built around accuracy, control, and predictability. Those qualities are essential for traditional accounting, but they’re counterproductive when it comes to innovation.
To embrace digital transformation, we need a fundamental mind shift:
The back office should be highly automated and transactional.
The CFO’s role should evolve into that of a quarterback for digital transformation, enabling real-time decision-making.
The finance function must be strategic, not just operational guiding where and how the organization should innovate.
This change won’t happen overnight. Today, only a handful of finance organizations are experimenting boldly. But those who are, they're showing the rest of us the way forward.
When to Abandon an Innovation Project
Not every idea deserves to survive. But too often, organizations kill projects prematurely simply because they don’t deliver quick ROI.
I use a different test:
Is the project generating meaningful learning?
Is there internal support to keep pushing forward?
If the answer to both is no, it may be time to pivot or shut it down. But if learning is happening even without immediate outcomes there’s still value in continuing.
Innovation is rarely a straight line. It’s more like a mountain climb, lonely, steep, and requiring persistence (and a lot of internal marketing) to bring others along.
Skills Every Finance Professional Needs
Cultural change isn’t enough. Finance professionals also need new skills to thrive in this digital era:
Robotic Process Automation (RPA): Often the gateway drug to AI, RPA streamlines repetitive tasks and frees up time for higher-value work.
Data analytics: Understanding data flows and insights is becoming table stakes.
Storytelling & visualization: Numbers alone don’t inspire action stories. Learn to communicate with clarity and emotion.
Creativity in presentation: Unique ways of sharing ideas make them more persuasive and memorable.
With these skills, finance professionals can move beyond number-crunching to actually influence strategic decision-making.
Blockchain: A Sleeping Giant in Finance
Blockchain hasn’t fully reshaped finance yet but it’s only a matter of time.
Thousands of developers are building blockchain applications daily.
Ethereum’s public ledger already demonstrates powerful auditing capabilities.
Blockchain could become the new operating system for finance, much like mobile apps transformed technology.
Forward-looking finance teams should start experimenting with blockchain pilots today. Waiting for mainstream adoption is a mistake we’ve seen what happens when companies miss a technological wave (just ask anyone who ignored mobile).
Everyone in Finance Should Be an Innovator
One of the biggest misconceptions is that innovation belongs to a separate innovation team. In reality, every finance professional should see themselves as an innovator.
That means:
Regularly questioning processes and asking, Why do we do it this way?
Encouraging grassroots experiments, even if they’re small.
Leaders being vulnerable enough to admit they don’t have all the answers.
When innovation is democratized, it becomes part of the culture, not just a side project.
Rethinking Talent Retention
Most companies treat retention as locking people in. I see it differently.
Organizations should aim to be star makers developing employees skills and celebrating their growth, even if it means some eventually leave. If your people are in high demand externally, that’s actually a sign you’re doing something right.
Retention then becomes a natural byproduct of empowerment and opportunity. People stay because they’re thriving, not because they feel trapped.
Crypto vs Corporate Finance
Cryptocurrencies are everywhere in consumer use, but in corporate finance, they’re not the main story.
The real focus should be blockchain’s underlying capabilities: secure auditing, transparent ledgers, decentralized data. Current implementations are still clunky, but the direction is clear: blockchain will reshape finance operations.
The Power of Costly Signaling
Great ideas often die because they’re not communicated effectively. This is where costly signaling comes in a concept from behavioral economics.
When you invest extra effort in visualizing or prototyping an idea, its perceived value skyrockets.
Amazon even has a default yes policy for new ideas if you want to say no, you have to justify it. Pairing that mindset with strong visualization ensures ideas get a fair shot rather than being dismissed too quickly.
Banks and Blockchain: From Competition to Collaboration
Banks aren’t ignoring blockchain; they're investing heavily in teams, partnerships, and acquisitions.
The future won’t be banks vs. decentralized finance. It will be a hybrid ecosystem where incumbents collaborate with blockchain innovators. As finance professionals, we need to prepare for this blended reality now.
Remote Work and Innovation: A Tension
Remote work has obvious benefits but let’s not ignore its hidden cost: innovation.
Innovation thrives on serendipity, collisions, and shared energy things that are harder to replicate virtually. Long-term, fully remote work risks turning collaboration into a video game, stripping away the chance encounters that spark breakthrough ideas.
I don’t think we need to go back to rigid 9-to-5 office life. But a hybrid model 3 or 4 days in person strikes the right balance between flexibility and creativity.
The Future Role of the CFO
Perhaps the most important shift is this: the role of the CFO itself must evolve.
Tomorrow’s CFO isn’t just a steward of numbers. They are:
Leaders of digital transformation, not just finance.
Strategic decision-makers at the executive level.
Drivers of real-time insights powered by automation and analytics.
It’s less about the title and more about the narrative. Finance has to move beyond the back office to become a central engine of strategy and innovation.
Shared Services vs Strategic Finance
Yes, some finance tasks like payroll and accounts payable can and should be automated or centralized. But strategic finance? That can’t be outsourced.
The real value of finance lies in interpreting data, shaping strategy, and guiding innovation. That’s not work you can push to a shared service center.
Conclusion: Finance at the Crossroads
Digital transformation in finance is hard and the failure rates prove it. But failure isn’t inevitable.
The organizations that will thrive are those that:
Shift from ROI to learning metrics.
Create cultures of psychological safety where risk-taking is encouraged.
Embrace new skills like RPA, data storytelling, and blockchain literacy.
Democratize innovation so every employee is part of the journey.
Redefine the CFO role as a strategic driver of transformation.
The future of finance isn’t just about numbers, it's about narratives, culture, and courage. And CFOs who embrace this reality won’t just reduce failure rates; they’ll turn their finance teams into engines of growth, innovation, and resilience.
Frequently Asked Questions
1 - What does digital transformation mean in business?
Digital transformation is the use of technology to change how a company operates, serves customers, and creates value. It goes beyond automation; it's about rethinking processes, culture, and strategy to stay competitive in a digital-first world.
2 - What is the biggest enemy of digital transformation?
The biggest enemy is resistance to change. Employee pushback, lack of expertise, unclear strategy, and tight budgets often block progress. Overcoming this means building a clear vision, training people, and ensuring leadership support so innovation becomes part of the culture.
3 - How to overcome the challenges of digital transformation?
Start by defining what digital transformation means for your business and create a clear roadmap. Communicate the vision openly with employees, get their buy-in, and invest in training. Upskilling your team and aligning goals across departments helps reduce resistance and drive success.
4 - What is the most critical success factor for digital transformation?
The most critical factor is alignment between business strategy and the digital plan. Technology alone won’t drive success. Your digital efforts must connect directly with your company’s vision, goals, and customer needs to ensure meaningful and lasting transformation.
5 - What are the three pillars of digital transformation?
The three pillars are People, Processes, and Technology. People need the right skills and mindset, processes must be redesigned for efficiency and agility, and technology should enable smarter ways of working. Together, these pillars create sustainable innovation and growth.
About the Author:
Shawn Kanungo is a globally recognized disruption strategist and keynote speaker who helps organizations adapt to change and leverage disruptive thinking. Named one of the "Best New Speakers" by the National Speakers Bureau, Shawn has spoken at some of the world's most innovative organizations, including IBM, Walmart, and 3M. His expertise in digital disruption strategies helps leaders navigate transformation and build resilience in an increasingly uncertain business environment.