Why Digital Transformation Projects Fail—A Project Management Perspective ()
1. Introduction
Digital transformation projects have a failure rate of 66% to 84%, costing U.S. companies billions of dollars each year (Koczerga, 2024; Oludapo et al., 2024; Zhang et al., 2022). An estimated global expenditure on digital transformation projects is $3.4 trillion in the year 2026 (Veith, 2023). Research indicates that the risks of project failure include conflicts of interest, project design, political and legal issues, financial constraints, technical factors, mistrust, and executive misalignment (Ceric, 2014; Liu et al., 2010; Rezvani & Khosravi, 2019; Saaidin et al., 2017). High failure rates of digital transformation projects result in wasted financial investment. Organizations must understand the reasons for digital transformation project failure. There is a gap in research as to why digital transformation projects fail, leaving project managers without insight into why more than half of these projects fail. The gap limits project managers’ ability to implement effective solutions that reduce obstacles and improve their success rates.
2. History of Project Management
The management of projects has a long history and continues to evolve; however, the core concept remains intact: a planned sequence of tasks that, when completed, provide value and reach required objectives. In 1951, the United States Air Force created a project office, comparable to a project management office by today’s standards (Johnson, 1997; Morris, 2013). Two years later, specifically in 1953, the first formal project manager position was established (Johnson, 1997; Stretton, 2023). The United States military has played an important role in project management, including the development of the Defense Systems Management College (DSMC) in 1971. The college’s foundational idea was to standardize project management training (Acker, 1986; Gadeken, 2015). The organization has been offering program management courses for over 50 years.
The Project Management Institute (PMI) was founded in 1969, and 18 years later, specifically in 1987, the institute released the first Project Management Body of Knowledge (PMBOK) (Kabeyi, 2019; Morris, 2013; Webster, 1994). The PMI releases versions of the PMBOK every 3 to 5 years because of the continuous evolution of project management. However, these standards have been in place for the last 39 years, while the failure rate of digital transformation has not improved in the last 20 years (Ika et al., 2022). Furthermore, the term critical success factors has ranked among the top 10 keywords used by researchers over the last 37 years (Abbasi & Jaafari, 2018). There is a clear desire among academics and practitioners to solve the problem of high digital transformation failure rates.
3. Perception of Success and Failure
Belassi and Tukel (1996) suggested that the reason for the literature gap for project failure is the lack of clear definitions for success and failure. The lack of definition means success and failure of a project are in the eye of the beholder. The perception of critical success factors for project managers includes setting project goals, defining the project scope, and the project mission (Pinto & Prescott, 1988; Pinto & Slevin, 1987). However, the determination of success or failure can reside with the project team as a whole. Project team members have different experiences that may impact their perception of success or failure (Ika & Pinto, 2022).
Existing studies focus on project teams, stakeholders, project governance, and the like (Ika & Pinto, 2022). When project managers were involved in studies, they were not free to express their perception; instead, they had to align with a predetermined perception defined by others. The background research on high failure rates in digital transformation projects identifies a complex set of challenges that institutions face, ranging from technical and financial limitations to human and cultural factors.
4. Conceptual Framework
The conceptual frameworks used in this study include Lewin’s (1947) 3-stage change management model, digital transformation implementation framework from Correani et al. (2020), Herzberg’s two-factor theory of motivation-hygiene (Herzberg et al., 1993), and systems theory from von Bertalanffy (1972). Lewin’s 3-stage change model focuses on change management within the organization. The first stage is unfreezing, which equates to identifying the need for change and why it is necessary. The second stage, change, is the transition to the new processes put in place. The third stage, refreezing, is a stabilization period, the time when people adjust to the new process. During this stage, it is important that individuals do not revert to old habits or processes.
Correani et al. (2020) developed a framework to help organizations align their digital transformation strategy and implementation. The framework serves as a guide to ensure that key components of the strategy are not overlooked. Such guidance reduces the risk of digital transformation strategy and implementation failure.
The third framework, Herzberg’s two-factor theory of motivation-hygiene (Herzberg et al., 1993), supports the motivation factors for project managers. There are two concepts to the theory: motivators and hygiene. Motivators are intrinsic, which allows a project manager to have some control over their jobs, such as personal growth, interesting work, and the freedom to be creative within their professional roles. The hygiene factor is extrinsic and includes management practices, relationships, compensation, and organizational conditions. A project manager may be motivated to perform their role because they can be creative in their role (intrinsic factor), but dissatisfied with their salary or other extrinsic factors (Herzberg et al., 1993).
General Systems theory was defined in the late 1920s by Ludwig von Bertalanffy (von Bertalanffy, 1972: p. 410). An organization is considered a system; various departments and processes make up the system. Digital transformation projects can impact the entire system or specific parts. Aligning the framework of systems theory to digital transformation projects supports a holistic approach when identifying failures.
5. Method
The purpose of this descriptive phenomenological study was to explore the reasons for digital transformation project failures from the perspective of the lived experiences of U.S. project managers. Shastri et al. (2021) defined a project manager as a professional responsible for planning, executing, and closing projects within an organization; they ensure projects are completed on time, within budget, and meet the specified objectives. There is no consensus in the literature on the definition of project failure or the relationship, if any, between the causes of failure and project types. Hence, the focus for this study was U.S. Project Managers’ perceptions of digital transformation project failure.
The criteria for the participants included (a) being active certified PMIs, (b) a minimum of 5 years of project management experience, (c) a minimum of two completed U.S. digital transformation projects, and (d) having led at least one failed U.S. digital transformation project. Each participant’s Project Management Institute certification was validated through the PMI Certification Registry.
Data collection consisted of a scheduled 60-minute, semistructured Zoom interview with each participant who met the required criteria. During the meeting, the interview protocol focused on the research question: What are the reasons for digital transformation project failures based on the lived experiences of U.S. project managers? The interview questions were:
1) How many digital transformation projects have you completed in your career?
2) What types of digital transformation projects have you led?
3) Without identifying anyone, generally, who were the stakeholders on the digital transformation projects?
4) Without identifying anyone, generally, who were the executive sponsors of the digital transformation projects?
5) How long did the digital transformation projects take to implement?
6) In your experience, what are the reasons for digital transformation project failure?
7) Have you found those reasons to be consistent with other digital transformation failed projects?
8) In your experience, what are the differences between successful and failed digital transformation projects?
9) Prompts (only if necessary): Can you tell me more? Can you give me an example?
Post-interview, each participant validated their interview data. Upon participant approval, Kiger and Varpio (2020) qualitative thematic six-step data analysis process was followed to identify themes within the data until the 13th interview reached saturation (Mwita, 2022).
The 13 participants interviewed met the previously defined selection criteria. Post-interview, each participant validated their interview data. Six-step data analysis process of Kiger and Varpio (2020) was followed to identify the themes (Mwita, 2022). Data saturation occurred after 10 interviews, as no new themes emerged in the final three interviews (Levasseur, 2026).
6. Results
Eight themes emerged from the data analysis: lack of preparation, ineffective change management, unrealistic business expectations, poor organizational collaboration, lack of early transparency, underestimating the timeframe and requirements, poor communication among stakeholders, and lack of user experience.
6.1. Theme 1: Lack of Preparation
Project preparation is one of the first steps in digital transformation. Seven of the 13 participants suggested that a lack of preparation is a reason for digital transformation project failure. Participant 7 stated, “…it’s one thing to be blindsided, but it’s another to not do the due diligence at the front end to understand what roadblocks might be up ahead.”
6.2. Theme 2: Ineffective Change Management
The ineffective change management theme highlights that inadequate or poorly timed change management can contribute to project failure. Seven of the 13 participants suggested that ineffective change management is a reason for digital transformation project failure. Participant 7 stated, “The business-as-usual people aren’t taken through the change management to understand what is changing, how it’s changing, how it impacts their processes and roles, as well as making sure that there’s appropriate documentation.”
6.3. Theme 3: Unrealistic Business Expectations
Business expectations may differ from the project’s reality. According to 6 out of 13 participants, unrealistic business expectations can cause project failure. Participant 1 stated, “Unrealistic business expectations paired with technology limits” can contribute to a high volume of failures. Participant 8 suggested that the executive level has unclear or disjointed ownership of tasks, which leads to digital transformation project failure.
6.4. Theme 4: Poor Organizational Collaboration
Poor organizational collaboration is a breakdown in coordination and alignment across departments and leadership levels. Participant 10 stated, “It is just organizational buy-in if you don’t have the buy-in from all the leaders…one leader has one goal, and the other leader has another goal, and it’s impossible to get them to mesh.” Five out of 13 participants identified poor organizational collaboration as a reason for digital transformation project failure.
6.5. Theme 5: Lack of Transparency Early on
Lack of transparency early on highlights the lack of open communication and delayed stakeholder involvement. Five of the 13 participants identified a lack of transparency early on as a reason for the failure of digital transformation projects. Participant 1 stated that “transparency early on, especially, is going to help build trust with the team.”
6.6. Theme 6: Underestimating the Time Frame and Requirements
Underestimating the timeframe and requirements was identified by 3 of the 13 participants. The theme highlights unrealistic timeframes and requirements, creating an incomplete understanding of project needs and increasing the likelihood of digital transformation project failure. Participant 6 stated, “Failure from the sales end is where a lot of the issues with requirement solicitation start.”
6.7. Theme 7: Poor Communication between Stakeholders
Three of the 13 participants identified poor communication between stakeholders as a reason for digital transformation failure. Participant 1 stated that “stakeholders may not be sharing the same message about a digital transformation project, which reflects miscommunication among the teams.” Participant 11 indicated, “I can’t tell you the number of times we’ve gotten to go live and there have been several significant misses just because we didn’t talk to the people who are going to actually use the product as much as we should have.”
6.8. Theme 8: Lack of User Experience
Three of the 13 participants identified a lack of user experience as the reason for the digital transformation project failure. Participant 9 articulated the importance of user engagement during their interview:
Having the folks that are actually using the system involved in early testing, having their buy-in, and it comes down to communication. How you communicate to them. Of course they’re not developing it, but making sure that at every stage, whether it’s the requirements, whether it’s development, or whether it is testing, you have some sort of business buy-in from the folks that are actually using it. They’re able to see the system to see it develop; they can give their input. That also helps a lot with being successful, because when they come to the final product 2 years later, whatever it is, they’re not surprised by it.
Participant 12 stated, “If the original issue isn’t resolved, or if the outcome benefits a different problem than what was identified, that’s a failure, regardless of how technically impressive the solution may be.”
7. Discussion
The key findings from the study include eight themes based on the thematic data analysis of participant interviews. In the previous section, the themes were introduced, along with supporting participants’ quotes from the interviews. This section describes each theme and whether it aligns with existing literature.
7.1. Theme 1: Lack of Preparation
This theme confirms past research while also extending it. The importance of team buy-in was not identified in the literature. Kiselev et al. (2020) and Zaman et al. (2022) posited the importance of governance being addressed during the project preparation phase. Aranyossy et al. (2018) identified stakeholder management as a critical success factor. Keil et al. (2002) discussed that when roles and responsibilities are not clearly defined, it increases the chance of failure.
7.2. Theme 2: Ineffective Change Management
The ineffective change management theme highlights that inadequate or poorly timed change management can contribute to project failure. The participants highlighted that last-minute changes have an impact on the project and the humans involved. This theme extends previously existing knowledge in this area.
7.3. Theme 3: Unrealistic Business Expectations
Based on the data analysis of participants’ interviews, competing priorities, executives setting unrealistic delivery expectations, unclear or disjointed ownership, a lack of leadership sponsorship, and misalignment contribute to the failure of digital transformation projects. Unrealistic business expectations extend the existing literature.
7.4. Theme 4: Poor Organizational Collaboration
Poor organizational collaboration is a breakdown in coordination and alignment across departments and leadership levels. Six factors—information, experience gap, incompatible evaluation criteria, conflict of interest, perception gap of the future, and lack of mutual trust—are identified as failure reasons (Uchihira & Eimura, 2021). Participants identified two of these factors during their interviews, which partially confirms the existing literature.
7.5. Theme 5: Lack of Transparency Early on
Lack of transparency early on highlights the lack of open communication and delayed stakeholder involvement. This theme confirmed the existing literature. Barbara & Dorota (2020), Rodriguez-Segura et al. (2016), and Sebestyen (2017) identified stakeholder involvement as a success factor. Abreu and Nunes (2020) identified that building a project team early on increases the project success rate.
7.6. Theme 6: Underestimating the Time Frame and Requirements
The theme highlights that unrealistic timeframe estimates and an incomplete understanding of project requirements increase the chance of digital transformation project failure. Keil et al. (2002) identified inaccurate requirements, and Nguyen (2020) found that poor project financial planning can impact project success. This theme confirmed the findings of these authors.
7.7. Theme 7: Poor Communication between Stakeholders
The participants highlighted stakeholders who shared inconsistent messages, lost early momentum, and failed to define clear project requirements. This theme aligns with the findings of Amoah et al. (2020), who concluded that miscommunication among the stakeholders can cause project failure.
7.8. Theme 8: Lack of User Experience
The lack of user experience occurs when the end users are not involved throughout the project. When the end users are not involved, it can lead to poor adoption or complete rework. The end user is considered a stakeholder in the project. As stated in Theme 5, Barbara & Dorota (2020), Rodriguez-Segura et al. (2016), and Sebestyen (2017) emphasized stakeholder involvement as a success factor. However, the participants discussed the stakeholder environment at the end of the project, which is different than the authors’. Because of this difference, the theme extends the existing literature.
8. Implications
The study findings may impact social change by reducing the digital transformation failure rates. Digital transformation projects have a high focus on technical innovation; however, this study identifies human, organization, and process-driven factors that can impact failure rates. The findings in this study are grounded in the lived experiences of U.S. project managers. The study encourages organizations to expand their focus beyond technology when considering digital transformation.
At the individual level, project managers could incorporate the findings into their practice. These changes may improve their project success rate, leading to additional improvements such as gaining more confidence. Ultimately, this could lead to greater job satisfaction.
As project managers’ success rates improve, the organization also benefits. If project managers have improved satisfaction, it may lead to lower employee attrition. Improved success rates mean less financial waste. These efficiencies may lead to the organization improving product quality, increasing profitability, benefiting employees, and becoming more competitive. Alignment between business goals and technology initiatives may also improve.
The study reveals the need for C-suite leaders to be involved early in the project. The C-suite should monitor the cost of failure for digital transformation projects. Failure reasons such as insufficient funding, lack of accountability, or conflicting priorities can be addressed early on by setting formal expectations.
An organization could build and offer training specific to its project management methodology across the system. This training should include the C-suite to set the standard for the rest of the organization. Building a training program focused on required competencies will decrease failure rates (Dadzie & Sebitla, 2023). This training would lay the foundation for building a project team. When implementing digital transformation projects, the project team needs to be aligned with the project’s tasks and objectives (Abreu & Nunes, 2020).
The eight themes identified in this study can be treated as a list of risks for organizations implementing a digital transformation project. According to Kuczyńska and Nepelski (2021), projects have better outcomes when they have incorporated risk management into their operations. Project managers could address the eight themes before starting the project and increase their success rate.
Finally, established organizations such as PMI could benefit from this study’s contributions by incorporating its eight themes into their professional training and certification programs. As experts and certifying authorities of project management, they should ensure practitioners have the most current knowledge. Supporting project managers through the complexities of digital transformation projects may reduce failure rates.
9. Recommendations
Based on the study’s findings, a recommendation for future research is to explore Theme 1: lack of preparation. Specifically, the team buy-in component should be studied. Kelly (2014) identified the importance of C-suite buy-in; however, this study needs to extend to the project team. Researchers could explore whether gaining full team buy-in would reduce the digital transformation failure rate.
Change management is a widely researched topic; however, in this study, the importance of when change management takes place was identified by seven of the 13 participants. Gkrimpizi et al. (2023) identified that resistance is a failure factor when change is introduced without sufficient time to adjust. Future studies could focus on change management in digital transformation projects and on the appropriate timing to reduce adoption issues.
Researchers could also explore unrealistic business expectations. Competing priorities, executives setting unrealistic delivery expectations, executives setting unclear or disjointed ownership responsibilities, lack of leader sponsorship, and alignment are just a few areas the researchers could explore. All of the participants in this study referred to the importance of the executive sponsor in digital transformation projects. Regardless of whether the participant associated the executive sponsor with a positive or negative lived experience, the value and impact of the role were consistent. Exploring this topic would also benefit the C-suite training program recommended in the implications section.
Stakeholder management is another topic researched; however, in this study, the participants identified stakeholder involvement, including missing key stakeholders, during the selection process. Future research could focus on developing a methodology or process for identifying stakeholders for digital transformation projects. When stakeholders have the opportunity to be involved from the beginning, success rates improve (Barbara & Dorota, 2020; Rodriguez-Segura et al., 2016; Sebestyen, 2017).
Lastly, additional research on the lack of user experience would benefit organizations. When end users are involved too late, it impacts adoption and could create resistance to the new technology (Barbara & Dorota, 2020; Rodriguez-Segura et al., 2016; Sebestyen, 2017). Involving end users too late may also lead to delays in go-live, rework of the technology, or, worse, redevelopment resulting in additional financial waste. These types of delays also impact the culture within the organization.
10. Conclusion
Digital transformation projects have a failure rate of 66% to 84%, costing U.S. companies billions of dollars each year (Koczerga, 2024; Oludapo et al., 2024; Zhang et al., 2022). It is crucial for organizational leaders to understand the reasons for digital transformation project failure. This study focused on the lived experiences of 13 U.S. project managers when implementing digital transformation projects. Eight themes emerged from the thematic analysis: 1) lack of preparation, 2) ineffective change management, 3) unrealistic business expectations, 4) poor organizational collaboration, 5) lack of transparency early on, 6) underestimating the timeframe and requirements, 7) poor communication between stakeholders, and 8) lack of user experience.
These findings offer project managers and organizations a risk management roadmap. Addressing these eight themes before beginning a project may decrease the risk of failure. As investments in digital transformation grow, the cost of failure increases. It is vital to the success of organizations to build standardized processes and methodologies that reduce their financial risk. While digital transformation is grounded in technology, the implementation’s success or failure relies on the people who make up the project team.
Author Contributions
All authors have collaborated in the development of the manuscript. All authors have read and agreed to the published version of the manuscript.