A stark warning from Siemens executive Tony White explains why many companies digitize but don’t transform: they mistake adopting new technology for genuine operational change. This gap between action and outcome is critical in 2025, as massive cloud and AI investments often fail to deliver expected returns.
The core of the issue lies in a fundamental misunderstanding. Digitization is simply converting analog processes to a digital format. True digital transformation, however, is a complete reinvention of a company’s operating model, centered on data, agility, and creating new value.
Many initiatives begin with a narrow focus on a single tool or pilot project. However, as Siemens demonstrates with its own Digital Enterprise portfolio, real value is only unlocked when software, automation, and culture evolve in unison, a strategy highlighted by their recent showcase of industrial AI innovations at CES 2025 manufacturingtomorrow.com.
Why digitization stalls
Transformation projects often fail not because of flawed technology, but due to deep-seated organizational issues. Companies underestimate the complexity of legacy systems, delay involving key stakeholders, and suffer from inconsistent leadership, which erodes accountability and momentum. These human and structural factors are the primary blockers to success.
Industry analysis reveals a staggering 70% failure rate for large-scale transformation initiatives. A review of high-profile failures, including Babylon Health’s 2023 collapse and the Australian Securities Exchange’s abandoned platform in 2024 DigitalDefynd, points to recurring, predictable obstacles:
- Underestimating legacy complexity: Old systems create unforeseen technical debt and integration hurdles.
- Poor stakeholder engagement: Postponing input from end-users until late in the project guarantees resistance and rework.
- Eroding leadership accountability: Frequent changes in executive sponsorship leave projects without a clear champion or vision.
Tony White (Siemens) Quote: ‘Most companies think they’re transforming – they’re actually just digitizing.’
White’s point emphasizes that governance is more important than gadgets. Successful transformation programs integrate technology with new performance metrics and incentives. Reinforcing this, a 2025 analysis of best practices identifies leadership-driven culture change, cloud-native architecture, and continuous employee upskilling as the strongest predictors of success Clouddle.
Practical takeaways for executives aiming for true transformation include:
- Establish a unified data model: Before investing in more AI tools, create a single source of truth for enterprise data.
- Prioritize scalable pilots: Fund small, user-focused projects built with an API-first design to ensure they can grow.
- Align incentives with outcomes: Tie executive bonuses to cross-functional adoption rates, not just the launch of new features.
Ultimately, these steps reinforce the core message: true transformation is a fundamental business reinvention that is powered by technology, not a technology project in search of a business case.
