Lack of digital skills, poor strategic control over IT projects and fear of failure are among the challenges hindering organizations’ progress with digital transformation. But it’s not all bad news, as a global survey of business decision-makers reveals.
Digital transformation is becoming a reality as organizations make significant progress in terms of understanding its strategic importance to their business’s future. A recent report, The Digital Transformation PACT, based on interviews with 1,625 business decision-makers across 14 countries, found that almost half (46%) have already completed and seen outcomes from digital transformation projects. Moreover, the majority (87%) believe their organization has now established a culture of innovation.
However, the research by global ICT vendor Fujitsu shows areas where a disconnect remains between businesses’ intentions and an ability to execute those plans. For example, although 90% say they have a clearly defined digital strategy, three-quarters admit their organization is pursuing digital projects outside that strategic framework (typically ‘shadow IT’ projects where business units bypass the IT department), with 69% believing this presents a significant problem for their organization. Of greatest concern, a third of organizations report that they have cancelled digital transformation projects over the past two years, with the average cost of a failed project more than €500,000.
With such significant sums at stake, it is perhaps not surprising that almost 7 out of 10 respondents cited “fear of failure” as a major hindrance to pursuing digital projects. In many cases, that stems from a perception that “hazardously high costs” need to be committed to projects. An alternative approach that is likely to inspire greater confidence, says the report, involves the pursuit of “numerous agile and low-cost projects, used to gain insight without breaking the bank when they fail.”
So how can businesses attain this ability to ‘fail fast’? A big part of it is about creating agile digital strategies and business plans that can be easily and quickly adapted if a project does not progress as expected. And to do this effectively, organizations need to establish equilibrium across four key variables — people
or PACT. As part of the study, the authors defined criteria of excellence in each, noting that fewer than a fifth of the organizations surveyed hit the mark in any one category.
People – All sights set on skills
Having the right skills was seen as critical by respondents to the PACT survey, yet with technology advancing so quickly many saw it as difficult to keep skills current or source suitable levels of digital skills. Seventy per cent of those surveyed admit there is a clear lack of digital skills in their organizations today. But most are making the right moves: 90% of those surveyed are currently taking measures to increase their access to digital skills, both from within and outside their organization. While 46% are looking at recruiting to fill some of the gaps, there is an even bigger emphasis on developing existing talent. Over half (56%) of the respondents are investing in training programs, while 39% are using collaboration tools to share expertise across the organization.
Actions – Bringing digital in from the shadows
The survey showed organizations’ ‘official’ digital projects created new processes that sit alongside or augment existing ones (in around 60% of cases). Fewer than one in four of these (37%) represents a true transformation in the way things are done. While this might help to minimize disruption to the business, an overly conservative strategy is likely to result in organizations missing out on the most transformative change. Some of the most radical shifts in processes are actually happening under the radar. Although 91% of respondents believe their organization has clear evaluation processes in place for digital projects, shadow IT initiatives evade such scrutiny. That often means there are no controls in place should these renegade projects go awry. Continual benchmarking of projects and ensuring departmental spend on IT is brought under the auspices of the overarching business transformation program, is the only way to attain the strategic and cost control needed to maintain digital agility.
Collaboration – Need to co-create
Despite the focus on growing internal talent, there is increasing realization that close external partnerships will play a vital route in fulfilling digital transformation ambitions. The majority of business decision-makers questioned (63%) are already running digital co-creation projects. Most of those are in collaboration with their technology suppliers, but 30% say they would also work with industry competitors — a trend likely to grow in the future. However, there are also signs that organizations need to be a little more patient with the progress of digital transformation projects: 73% say they would terminate a partnership that didn’t deliver rapid results. In fact, co-creation projects can take a while to mature, so organizations might benefit by taking a slightly longer-term view.
Technology – Change to compete
It is now widely appreciated at all levels of business that advanced digital technology enables new business models that can quickly and fundamentally disrupt established industries. Indeed, 84% of respondents said they would willingly change their organization’s business model and processes in order to capitalize on digital. But in terms of more immediate priorities, over the next 12 months more than half plan to invest in cybersecurity technologies (52%) and the Internet of Things (51%). But despite their willingness to embrace technological change, almost three-quarters (71%) worry about their ability to adapt to it effectively. Even more (76%) believe it is impossible to know where their competition will come from in a decade’s time. This serves to highlight the need for organizations to keep a step ahead by understanding their customers’ future needs, and how emerging technologies might allow them to fulfill those before competitors do so.The digital imperative
Getting all four aspects – people, actions, collaboration and technology – aligned is the key to successful digital transformation and, as the report’s foreword by Fujitsu corporate executive officer Duncan Tait notes, there’s “no quick fix, no shortcuts.” It takes a strategic approach, hard work and perseverance. “Digital opens up a world of possibility but its impact often won’t be felt immediately. It’s the ability of organizations to adapt, re-assess and re-plan that will ensure long-term success,” says Tait, who heads the company in the Americas and EMEIA regions.