The State Of Digital Transformation

The Altimeter Report – The State Of Digital Transformation (2018-2019 Edition)

By Brian Solis, Principal Analyst

Report Highlights —

‘A successful digital transformation is an enterprise-wide effort that is best served by a leader with broad organizational purview. For the second year in a row, CIOs are reported as most often owning or sponsoring digital transformation initiatives (28%), with CEOs increasingly playing a leadership role (23%).

Market pressures are the leading drivers of digital transformation as most efforts are spurred by growth opportunities (51%) and increased competitive pressure (41%). With high-profile data breach scandals making daily headlines, new regulatory standards like GDPR are also providing impetus for organizations to transform (38%).

While there is a growing acknowledgment of the importance of human factors in digital transformation – like employee experience and organizational culture – most transformation efforts continue to focus on modernizing customer touchpoints (54%) and enabling infrastructure (45%). But many organizations are not doing their due diligence when it comes to understanding their customers, with 41% of companies making investments in digital transformation without the guidance of thorough customer research.

Organizational buy-in remains a top challenge for those leading digital transformation. The companies we studied report digital transformation is still often perceived as a cost center (28%), and data to prove ROI is hard to come by (29%). Cultural issues also pose notable difficulty, with entrenched viewpoints, resistance to change (26%), and legal and compliance concerns (26%) stymieing progress.

Innovation is staking its claim within the organization. Nearly half of respondents report that they are building a culture of innovation, with in-house innovation teams becoming the norm.’

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Comments & Key Learnings –

(i)              The opportunity for growth and differentiation, and the threat of security encroachment is driving a concerted digital response

(ii)            The customer-point-of-view is not being considered – most digital projects are ‘modernising’ customer touch points and upgrading infrastructure – these look more like cost-reduction initiatives, not necessarily improving customer experience

(iii)           Digital Transformation needs an enterprise-wide approach – with advocacy from the CEO, support from the board, and deployment capability of the line of business and technology resources

(iv)           Building the business case for Digital Transformation is tricky business – but as the space matures, the metrics and ROI will concretise

2 Questions Remain –

(i)              Companies have a poor track record introducing technological innovations – like CRM, BI, SCM, etc – so there is still a capability deficiency in implementing and managing any type of technological solution, including something as pervasive and complex as ‘Digital Transformation’. Building capability first remains a priority

(ii)            ROI based on cost-reduction does not focus on improving customer experience – in fact, it can lead to a degradation of services – consider the wholesale outsource of customer contact centres in Australia. Innovation teams need to consider the needs of all stakeholders, with an emphasis on customers if the objective is Growth and Differentiation