What Makes Digital Transformation a Success?

Despite more than $5 trillion having been spent on digital transformation efforts, survey after survey shows that successful digital transformations are far and few in-between. By many estimates, more than 50% of digital transformation efforts failed in recent years.

While a recent survey conducted by Hanover Research and commissioned by AHEAD, the State of Enterprise Digital Transformation, found that 93% of enterprises are undergoing some digital transformation as they seek to cut costs (77%) and improve customer experience (71%). The survey found 42% of enterprises struggling to reach success as their efforts fall behind or stall.

This survey found many challenges, both demanding and typical among enterprise digital transformation efforts, including hurdles created by legacy systems (36%) and technical debt (24%). With that in mind, it’s no shock that 67% cited infrastructure as a critical part of their digital transformation efforts.

Additionally, the survey found that improving operational efficiency and cost-cutting are motivators in 77% of digital efforts. Those needs beat improving the customer experience, at 71% of enterprises.

When it comes to results, this survey found more optimistic results. According to the survey, 58% of those surveyed said their digital transformation projects are on target or even ahead of schedule, with only 42% citing faltering progress.

The State of Enterprise Digital Transformation survey found six core factors of success:

1. Dedicated Leadership: The survey found that 83% of digital transformations that are on track or ahead of schedule are led by a CIO, CEO, CDO or CTO. As digital transformation touches every part of an enterprise, the company-wide buy-in is critical. While 27% of organizations have a CIO leading their transformations, only 8% of organizations have a chief digital officer leading the transformation efforts. Chief technology officers are leading the efforts at 16% of organizations.
2. All-In Approach: Transformations that are on track are 30% more likely to be structured as full-scale change initiatives. Because digital operations are often so interconnected, piecemeal and partial transformations can often be siloed and result in limited impact on the factors driving the transformation.
3. Defined Digital Roadmap: Ninety-two percent of transformations that are on target or ahead of schedule have a defined strategy and roadmap that includes IT infrastructure and operations.
4. Alignment Between Infrastructure and Apps: Enterprises powered by an integrated DevOps approach are 43% more likely to see success in digital transformation efforts. To avoid bottlenecks, enterprises should audit DevOps functions before undergoing digital transformation.
5. Platform Mindset: Businesses that include IT infrastructure as a big part of their digital transformation are 36% more likely to have a successful transformation. As the backbone of a digital change initiative, an enterprise’s infrastructure determines how far the transformation will go and its limits.
6. Commitment to Intelligent Operations: Companies that monitor IT performance in real-time and remediate issues quickly are 24% more likely to undergo a successful digital transformation. Further, the survey found that enterprises are more likely to see success in digital transformation if they have confidence in their abilities to perform highly in areas of automation, monitoring, hybrid cloud models and integrated security.

Last year, in Digital Transformation: Coming from Behind, we cited research from the consultancy McKinsey & Company found that less than one-third of transformations are successful. While this survey from AHEAD finds more optimistic outcomes, most previous surveys and our interviews with transformers echoed AHEAD’s survey findings, with the need for leadership, dedication to platforms, defined strategy and proper alignment all being essential to success.

The State of Enterprise Digital Transformation survey was conducted by Hanover Research through September and October 2019. The survey is based on the responses of 293 IT decision-makers with a direct influence on IT spend at companies based in the U.S., and with more than 1,000 employees.

— George V. Hulme