The figures come from a new Forbes report compiled for Dell. It reveals the progress organisations are making as they pivot towards a digital-first model. The overall finding is that almost all large companies are aggressively pursuing digital transformation aims but only a few are achieving significant success.
Of the 500 senior executives surveyed, 85 percent said they will spend up to a quarter of their total budget on digital transformation next year. Simultaneously, 89 percent acknowledged there are “significant barriers” to reaching their long-term goals.
The challenges companies face
One of the most common barriers is a lack of collaboration between the CIO and CFO, causing transformation strategies to languish despite the large budgets they’re assigned. Other issues include the problem of maintaining legacy equipment and difficulties in hiring experts to lead new digital initiatives.
The challenges are having a clear impact on transformation success rates. The report found a “large gap” between companies leading at digital transformation and those that are less far advanced. 59 percent of executives said their firm is “at parity” with its competitors after achieving digital transformation. Only 12 percent felt they were “market leading.”
The finding suggests that translating a digital strategy into an effective implementation is still a big ask of inexperienced firms. Despite the enthusiasm around IoT, cloud platforms and AI, most companies that pursue digital transformation do not gain a competitive advantage afterwards.
The turnaround on digital transformation
Of those that do, the return on investment typically takes between 13 and 24 months to become apparent. The report found digital transformation typically delivers a profit boost of 7 percent or more, but warned not everyone sees the same results. The indicator of success is the maturity of the transformation strategy.
“[The research] segmented respondents into companies whose sales grew by 7 percent or more, whose profits grew by 7 percent or more, and that have seen a significant improvement in competitive position,” the Forbes/Dell report explains. “This group demonstrates a direct correlation between business success and transformation maturity, with 68 percent of leaders rating IT Transformation as an established strategic priority and in many cases a component in overall business strategies. Only about 40 percent of the others say the same.”
Despite the difficulties experienced during digital transformation, there’s still no sign that companies are being significantly put off. Most firms seem to recognise that the digital era is now unavoidable. The report found transformation is being “embraced” in all major industries, including insurance, entertainment, manufacturing and education.
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A digital strategy is no longer an optional profit booster. In the current business environment, it could be the only way to ensure long-term success. Firms might face a bumpy journey but it’s now apparent that digital transformation is a case of “when,” not “if.” Effective use of digital tech can significantly boost an enterprise’s value, making the initial technical struggles worth persevering with.
