Digital Economy Dispatch #235 -- AI and the Human Reality of Digital Transformation

A lot of questions go through your head while you're sitting waiting in hospital. Faced with a life crisis, the mind runs riot, and you look around for answers from any source. Most of these thoughts are not easily addressed. Especially in the moments where nothing seems to be happening.

It's a situation I faced several times in recent weeks. Many hours in crowded waiting rooms, and lots of time to consider the processes and practices in use. Given my background and interests, you won't be surprised to hear that I couldn’t stop myself wondering how accelerating digital technology adoption could improve current ways of working. Surely, faster-paced introduction of AI would make a difference here? Isn’t that what we’ve been all hearing?

But as I watched healthcare professionals moving through their day – staff dealing with people in pain waiting for many hours to get treatment, nurses juggling multiple patients, doctors consulting briefly before rushing to the next case, administrators trying to manage the endless flow of people and information – the diverse characteristics of the situation became all too clear. Healthcare cannot be viewed as series of technical processes waiting to be optimized. It's a much too complex and deeply human system with many interdependencies that technology alone cannot address.

The tech industry has painted a compelling vision of AI revolutionizing healthcare: automated diagnostics, predictive analytics for disease management, and chatbots handling routine inquiries to free up valuable human time. And certainly, there's tremendous potential in these applications. I welcome every one of them.

However, what became increasingly clear to me over many hours in A&E is the stark contrast between where transformation can easily add value and where implementation becomes much more challenging. It’s easy to see the low-hanging fruit – appointment scheduling, capturing case notes, inventory management, and logistics optimization – as near-term relatively straightforward opportunities. These are discrete processes with clear inputs and outputs, well-defined success metrics, and minimal human complexity.

But sitting in those waiting rooms, watching a nurse comfort a scared patient in pain while simultaneously updating records and preparing medication, I saw the gap between neat PowerPoint slides and the messy reality of frontline implementation. This isn't just about data points and decision trees – it's about human judgment, empathy, and adaptability in environments where multiple systems and processes collide, and where no two situations are identical.

The Digital Transformation Landscape: Insights from Deloitte

This contrast between transformation vision and implementation reality isn't unique to healthcare. In practice, bridging this gap is where all the hard work takes place to deliver technology-driven change. And the latest studies only serve to highlight what’s needed to make this happen.

Just released, Deloitte's "2025 Chief Transformation Officer Study" reveals that as disruption becomes the norm, transformation programs are increasingly central to executive agendas across industries. The study identifies six key insights from successful enterprise-wide transformation programs:

1. Increased Financial Investment: Transformation budgets have increased up to 2.5x in the past two years, signalling executives' commitment to transformational change.

2. Dedicated Human Capital: Companies now prioritize internal resources over external contractors, with over half of team members working full-time on transformation initiatives.

3. Experienced Leadership: 90% of transformation leaders have led three or more previous transformation programs, with a trend toward appointing dedicated Chief Transformation Officers rather than executives with dual roles.

4. Ongoing Change Management: While recognized as important, talent and change management remain underprioritized in budget allocations despite being critical throughout the transformation journey.

5. Execution Challenges: The most significant obstacles occur during execution rather than planning, with three of the top five challenges relating to implementation and managing people through change.

6. Measurement Focus: Contrary to the perception that transformations often fail, over 80% of programs are on track to meet or exceed performance targets, reflecting improved capabilities and accountability.

According to Anne Kwan, principal at Deloitte Consulting LLP, "Companies are taking a more deliberate approach to transformation, dedicating more resources and appointing experienced leaders to ensure these programs meet or exceed their goals".

The Integration Challenge

Transforming the NHS with digital technology is clearly “a big job”. Just how big? A report just released from AP Consulting estimates it will cost more than £21 Billion to achieve the NHS’s existing ambitions for digitisation. These include putting in place infrastructure such as electronic patient records, cloud storage, cyber security and Wi-Fi, along with the skills and capabilities to use it effectively. How can such a figure be justified?

Digital transformation of healthcare in the UK requires the wholesale redesign of complex processes and presents formidable challenges that extend far beyond technical implementation. Just in my few hours observing the challenges for healthcare, it was possible to identify several critical concerns to be addressed.

Sharing disparate data remains a persistent obstacle. We needed to visit 2 hospitals less than 20 miles apart within the same healthcare authority. Yet, the data held by one was not available to the other. Information often exists in siloed systems with incompatible formats and varying levels of accessibility. Integrating these diverse data sources while maintaining privacy, security, and regulatory compliance requires sophisticated technical solutions and organizational cooperation that many institutions struggle to achieve.

Managing people in stressful situations adds another layer of complexity. Its frustrating watching the number of manual tasks being carried out. Yet, automated systems that perform flawlessly in controlled environments may falter when confronted with real working situations. People in distress, stakeholders seeking answers, and professionals under pressure create a volatile environment where rigid technological solutions can quickly break down.

Redesigning complex practices requires navigating intricate webs of professional roles, established protocols, and institutional norms. What I observed wasn't a lack of technology but a lack of thoughtful integration. In one department, I watched staff toggle between several different systems, none of which communicated effectively with the others. Elsewhere, finding and accessing equipment when needed was a challenge when staff are over-burdened and tired, situations change rapidly, and processes hadn't been designed with the actual workflow constraints in mind.

Reinterpreting regulations presents yet another hurdle. Many sectors are heavily regulated for good reason, but these frameworks were developed before modern technologies existed. In my case, this meant lots of time was spent waiting for the right person able to sign-off a procedure, the busiest people inaccessible to make approvals, and lots of physical paperwork circulating by hand. Safety is paramount. However, digital-first practices help organizations navigate ambiguous regulatory terrain, balancing innovation with understanding who has decision making authority, information being verified automatically, and assisted compliance at all stages.

So, a further concern in such an environment with everyone working so hard and systems at capacity, is determining when people get time to learn new ways of working. When new digitally driven approaches are available, finding time to introduce new training is difficult. Even the most brilliantly designed system will fail if users lack the skills and confidence to utilize it effectively. Developing comprehensive training programs amid already demanding schedules represents a significant operational challenge.

Lessons for Transformation Strategy Development

For leaders tasked with transformation strategy, these observations reinforce several important principles that dominate all human-centric digital transformation programmes:

1. Start with the humans, not the technology. Understand the complex social and professional dynamics of the environment before introducing new tools. Map workflows, identify pain points, and recognize unstated needs.

2. Distinguish between simple and complex processes. Be strategic about where you deploy new initiatives first. Target discrete, well-defined processes where success can build confidence before tackling more complex systems transformations.

3. Co-create rather than impose. Involve end users in design and implementation from the beginning. Their domain expertise is invaluable, and their buy-in is essential for successful adoption.

4. Think in systems, not solutions. Transformation tools don't exist in isolation but within complex organizational ecosystems. Consider how your technology will interact with existing processes, culture, and infrastructure.

5. Prioritize augmentation over automation. Focus first on technologies that enhance human capabilities rather than replacing them. This builds trust and creates space for more transformative change later.

6. Plan for integration challenges. Develop comprehensive strategies for data sharing, regulatory compliance, and cross-departmental collaboration before implementation begins.

7. Invest in change management. Allocate resources for training, support, and organizational adaptation that match or exceed your technology investment.

So far, so good. Each of these lessons offers sound advice we should all take on board. But is that enough?

My own recent experiences have been rather humbling. Of course, we all know that introducing new digital technologies will take time. We’ve all read the books and chuckled at the anecdotes about the challenges of moving individuals and organizations to new ways of working (anyone remember “Who moved my cheese?”). Yet, experiencing human-technology interactions in such a complex environment brings home the reality of what this means in practice, and depth of the challenges to be addressed.

In the end, the promise of digital transformation isn't about replacing human judgment with algorithms. It's about creating systems where technology and human expertise work in concert, each compensating for the limitations of the other. For leaders, this means thinking beyond technical capabilities to the human realities of implementation. Only then can we move from platitudes and impressive demos to meaningful transformation of stakeholder experiences.