IT service management vendor TEKsystems released its 2023 State of Digital Transformation report on Feb. 28, revealing how economic uncertainty is having an impact on decision-making.
Among the key findings in the report is that there are four key strategies that help separate digital transformation leaders from laggards.
The first is that leaders focus on building strategic alignment, with digital transformation identified as a core foundation for business strategy. Valuing the right mix of both IT and business stakeholders is the second key differentiator. Digital transformation leaders also map out their journeys, defining desired business outcomes from the start. Rounding out the differentiators is the fact that leaders tend to optimize spending.
The report also identified three overriding trends in the current digital transformation landscape:
1. Digital transformation journeys are changing. As economic uncertainty grows, organizations are shifting what goals they need to achieve.
2. Connecting a workforce to the value of digital transformation efforts remains vital to success. The report found that 41% of digital transformation efforts fail when there isn't alignment between employees and business goals.
3. Spending on big digital transformation initiatives is decreasing. Twenty-one percent of surveyed organizations will spend $10 million or more on digital transformation this year, down from 34% in 2022.
"Perhaps not a surprising but very sobering finding from the report is the rate of deceleration on digital transformation spend from leaders," Rick Madan, vice president of global technology services at TEKsystems, told ITPro Today.
TEKsystems Digital Transformation Report Identifies Spending Decreases
While there is a decrease in big digital transformation spending, it's not necessarily a cause for concern, given the current state of the economy.
However, the decrease in spending is definitely a potential indicator that leaders will increase scrutiny on budgets going forward and lean more toward optimizing digital transformation spend as opposed to using it for transformative IT initiatives, Madan noted.
"We see this being applied to cloud consumption with a variety of FinOps exercises designed to ensure that the organization's cloud spending aligns with its business objectives," he said.
Why Securing Buy-in for Digital Transformation Remains a Challenge
According to the report, 53% of digital laggards struggle to get the whole organization onboard for digital transformation.
There are a number of reasons why it continues to be hard for some organizations to secure buy-in for digital transformation. Madan said that to get buy-in, an organization's leadership must provide clarity on goals, including their intent and purpose. There must also be a willingness to do the hard work needed to ensure buy-in ripples across an organization.
"The less clear and the less quantified the leadership's goals are for any digital transformation initiative, the harder it will be for them to cascade ownership of the associated vision and plan," he said.
Looking forward, Madan is hopeful that there will not be a deterioration of the digital transformation appetite among organizations. Rather, what he'd like to see is a more prominent, mature, and recession-proof approach to digital transformation where organizations are accountable and quantified about exactly what sort of business outcomes and value they are extracting from their digital transformation priorities.
"These priorities can include goals ranging from increased revenue or greater cost optimization to improved customer experience, but will require leadership to set measurable goals," Madan said.
About the authorSean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He consults to industry and media organizations on technology issues.