Digital transformation drivers and KPIs don’t stack up

Ensono, the provider of managed hybrid IT, and the Cloud Industry Forum (CIF) have revealed that while cost saving was the most common driver for digital transformation, success metrics do not match.

The results from a recent survey of business and IT decision makers in enterprise organisations across multiple vertical sectors discussed their digital transformation experiences. When asked about how they are measuring success only 51% said they were measuring cost savings, despite 70% saying this was a key driver. The most cited KPI was customer satisfaction with 52% saying they were measuring this versus just 40% saying it was a driver.

>See also: Software development issues hold back digital transformation

The top three drivers for digital transformation were cost savings (70%), increasing productivity (59%) and increasing profitability (58%). Drivers lower down the list included competing with industry disruptors (35%), differentiation (35%), speeding up time to market (33%) and customer experience (40%).

When looking at sectors, interestingly manufacturing and IT see cost savings as much less important (55% and 50% respectively), with more of a focus on productivity and customer experience. Utilities saw cost savings as the biggest driver with 89% responding this way.

Simon Ratcliffe, principal consultant at Ensono said: “Digital transformation is fundamentally about business transformation. It is about seeing change – facilitated by technology and hybrid IT – as a revenue generator rather than a cost reduction function. Primarily, it needs to be seen as an opportunity for growth. Growth through innovation and the delivery of the best service, product and experience to customers and through finding new and quicker routes to market. The focus on cost savings is outdated and will negate transformation efforts, limiting its scope and impact. This could ultimately have longer-term implications for the business in the digital era.”

Almost all (99%) are intending to measure success in some way and the majority said that the current value achieved was either in-line with expectations or, in almost half of cases (48%), higher than expected. Business decision-makers are even more positive, with 65% stating that digital transformation is delivering better results than they had anticipated, though just 32% of ITDMs think the same.

>See also: Laying the foundations for digital transformation

“It is promising to see that nearly all organisations are measuring the success of their projects. However, the objectives and KPIs do not align, indicating a bigger problem. Either the strategy is not tied down and organisations are ‘doing’ digital transformation for the sake of it, or the strategy is not being communicated adequately. Whatever the root cause, for digital transformation strategies to succeed, the IT department, the business and the board need to have a clear and shared vision, and that vision needs to focus on people first, with the right technology facilitating,” Ratcliffe added.

Alex Hilton, CEO, CIF said: “When the Cloud Industry Forum first started researching digital transformation two years ago, it was a relatively minor concern, with only 51% having started the process. In this latest study, 100% of the organisations we spoke to reported that they were pursuing digital transformation and some 16% stated that they had already completed it. Great strides are being made, but organisations need to ensure they have the right vision, objectives and the appropriate measurements in place to ensure it delivers to the business.”

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Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...