Recent research with data from 650 IT leaders delivers valuable insights into the importance of people and culture to digital transformation outcomes.
The study was conducted by Couchbase, and it delves into key areas in driving success (and failure) in digital transformation.
Key Findings on Digital Transformation
A couple of top-line findings before honing in on people issues:
- 81% of enterprises had digital transformation efforts fail, suffer delays, or be scaled back in the past year — at an average cost of over $4 million. This is quite a surprising finding and one that I think should give companies pause before they rush headlong into digital transformation: It’s not for the faint of heart.
- Despite the “failure” rate, companies remain committed to, and clearly see the value in, digital transformation initiatives: Enterprises plan to increase their investment in digital transformation by 46% over the next 12 months. “There’s still a commitment to investing in transformation projects. In some cases, the projects they’re deciding to tackle are deeper and more core to the business,” says Jeff Morris, Vice President, Product and Solutions Marketing at Couchbase.
People and corporate culture are major factors in companies’ abilities to successfully execute digital transformation projects. Several findings in the study indicate that a significant amount of work remains before enterprises are optimally positioned for success.
The study found that 82% of companies were prevented from pursuing digital transformation. The key factors include a lack of skills to deliver on their objectives (cited by 24%) and the complexity of implementing technologies (23%). The latter item could certainly be viewed as a skills gap issue as well. A lack of resources or funds was cited by 26%.
The People Factor
In one noteworthy example that speaks to the importance of technical skills in digital transformation projects, the manufacturing firm Generac made the strategic decision to offer training to its employees as it embraced automation software as part of a corporate transformation. The company found that employees embraced the upskilling opportunity and were eager to move into new roles that enabled them to contribute at higher levels. The company’s CIO pointed to the upskilling initiative as an important factor in the project’s success.
Another skills-oriented finding in the Couchbase study addresses the impact that can be felt when a project fails: specifically, the loss of people to more nimble and innovative competitors. 41% of respondents said they’ve lost valuable IT staff to more innovative competitors, while 40% said they’ve lost staff in other areas.
The study looks at top tech investment priorities and also delivers important insight into culture and employee retention. Adopting new technologies has jumped as a priority vs. 2019, from 33% vs. 29%, while modernizing existing tech has gone down as a priority: from 32% in 2019 to 27% in this most recent study. Those findings point to a key question that leaders should be asking: Do top tech workers want to spend their days modernizing what’s old and creaky, or do they want to work with the latest, sexiest technology?
“The urgency to move systems ahead and go through a transformation exercise because of today’s labor shortage and state of the economy has increased pretty dramatically,” Morris says. “Organizations that don’t do anything are certainly going to be much more affected by their reticence.”
This additional finding from the study doesn’t bode well: In 2019, almost 30% of survey respondents listed “enhancing customer experience” as a top investment priority. In 2021, the percentage has gone down to the low 20s.
Morris says he expects the reduced customer experience focus to reverse in future versions of the study. In the airline industry, for example, he noted that Couchbase customers took the opportunity of the pandemic-driven slowdown to make new strategic technology investments to improve customer experiences, such as improving baggage handling and pre-flight checklists.
Newsflash: If improving customer experience is not one of your top goals, expect your company to give a boost to that failure rate referenced above. On the other hand, if you’re the type of company that Morris cited — namely, those that pursued strategic initiatives as the pandemic slowed business — you should be positioned well for success at digital transformation.