
From blank screens, lackluster revenues, and rising costs, Walgreens’ high-tech dream to transform traditional glass coolers into modern smart coolers become a nightmare and it cost the company a cold $200 million.
As reported by Bloomberg, Walgreens turned to the then-named Cooler Screens (now CoolerX) to install smart doors in several hundred outlets. The hope was to build advertising sales and increase product sales through better shopper engagement. However, as reported, the digital doors didn’t function as expected, and by the end of December 2023, many doors didn’t work.
Also reported, the doors generated roughly $200 each annually, well below Walgreens’ hopes, and the door’s data proved inconsistent, blamed on a mix of product shortcomings and some glitchy Walgreens’ tech. The initiative ended up being cancelled, with a lawsuit in the courts.
Of course, digital transformation failures always occur, some big and some small:
Target’s Failed Expansion Into Canada
In 2013, Target attempted to expand into the Canadian market by opening 133 stores. It was an aggressive entry into Canada, but by early 2015, the Minneapolis-headquartered retailer decided to close its stores and abruptly exit the Canadian market. Several reasons were attributed to the failure, including its overly aggressive opening locations and a lack of understanding of the Canadian market. However, the significant challenges the company faced with its inventory management and distribution software, among other software issues, were also primarily attributed to the failure.
The Spanish-Owned UK bank TSB’s IT Migration
TSB tried to migrate its IT systems to a new platform. The migration resulted in widespread technical glitches, locking customers out of their accounts and causing significant disruptions in banking services. The migration took place over the weekend of April 20-22, 2018. While the data migration itself was successful, the new platform experienced severe technical failures and outages.
The system failure affected all of TSB’s branches and a significant proportion of its 5.2 million customers. Customers were locked out of their accounts for weeks, money disappeared from accounts; some customers could see other customers’ accounts and couldn’t access many banking services, including branch, telephone, online and mobile banking. The initial disruption lasted five days, with some customers facing issues for months.
TSB did not return to business-as-usual operations for eight months. UK financial regulators fined TSB millions for operational risk management and governance failures. TSB also paid nearly £33 million to impacted customers, and the bank spent over £300 million for the initial migration and almost £250 million to fix the situation.
Revlon’s ERP Implementation
In early February 2018, cosmetics maker Revlon kicked off a new enterprise resource planning system (ERP) installation. As widely reported then, Revlon’s digital transformation effort was flawed by deficient planning and execution. And the botched implementation throughout more than 20 countries upset Revlon’s production line.
Ultimately, the company was hit with a $64 million loss due to unshipped orders, its stock price fell nearly 7%, and the ERP failure ended in a rare lawsuit from investors who sought compensation for damages.
Miller Coors ERP Implementation
In another infamous ERP deployment, beverage maker MillerCoors attempted to streamline seven separate SAP installations and ran into significant trouble.
MillerCoors experienced a significant ERP implementation failure in 2015-2016, which led to a $100 million lawsuit against HCL Technologies.
The difficulties were reportedly caused by poor planning, low staff and several missed significant milestones. The November 2015 rollout proved flawed with defects, and attempts to remedy the situation fell short. Costs increased by $9 million, and by mid-year 2016, MillerCoors pulled the plug on its services provider, HCL, who the company said didn’t correctly staff the project and missed deadlines.
With neither side admitting fault, that case settled out of court.
Why did these digital transformations fail? Essentially, it boils down to a lack of planning, poor focus on change management, perhaps overambitious goals and a lack of alignment with business objectives.
Still, a lot of businesses experience failures in their digital transformation efforts. According to a 2021 examination by Boston Consulting Group, only 35% of companies globally succeeded in their digital transformation efforts.
In 2021, only 35% of companies worldwide achieved digital transformation goals—a slight improvement from 30% in 2020.
How to Achieve Successful Transformations
Tim Crawford, CIO strategic advisor at research and advisory firm AVOA, advises organizations to focus on business outcomes over technology. “Digital transformations fail when they’re “digital for the sake of digital” without clear business goals. CIOs need to be business leaders first, using technology to drive outcomes like revenue expansion and market differentiation.
Phil Weinzimer, author of Strategic IT Governance 2.0: How CIOs Succeed at Digital Innovation, would agree and advises business technology leaders to develop a strategic governance model that aligns projects with business goals, identifies and reduces risks, and ensures proper project selection and execution.
Whatever the objectives or the technology involved, Andy Logani, chief digital officer at global analytics and digital solutions provider EXL, advocates utilizing a mix of approaches to find innovative ideas for initiatives, using structured methods to quantify value and hold teams accountable for achieving desired outcomes.
Finally, get the foundations in place. Bentzi Aviv, global head of fintech solutions at software and services provider Amdocs, advises “uplifting the business core” by moving business logic and customer-facing capabilities to a digital layer, which enables gradual modernization without disruptions.
Crawford also stresses the importance of investing in data preparation and infrastructure before implementing transformative technologies such as AI, to ensure they’re leveraged effectively.