Digital Transformation: Have We Finally Reached an Inflection Point?
November 21, 2019

Peter Finter
Couchbase

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For the past two years, Couchbase has been digging into enterprises' digital strategies. Can they deliver the experiences and services their end-users need? What pressure are they under to innovate and succeed? And what is driving investments in new technologies?

This year, we surveyed 450 digital leaders at large enterprises in the UK, US, France and Germany. We've looked at the results from two angles: firstly, from the perspective of the senior IT leader responsible for digital transformation strategy.

And secondly, from the perspective of the IT architects responsible for making the actual technology selections.

In this first blog, we'll take the seat of the senior IT leader — and we begin with some startling news.

An Inflection Point

Digital transformations may have finally reached a point of inflection. Organizations are spending more on transformation itself — $27 million on average over the last 12 months, and $30 million over the next 12.

More importantly, that investment is delivering results. 73 percent of organizations say they have made "significant" or better improvements to the end-user experience in their organization, the highest figure in three years of surveys.

Similarly, 73 percent of IT decision makers say that while the huge potential of digital projects is often talked about, most of the time they fall short of being truly transformational or revolutionary. This might seem high, but in context it's a meaningful improvement — in 2017 the figure was 90 percent.

If digital transformation is on the journey to meeting its potential, what will this look like when it happens? Most so-called "inflection points" in our history have come about because of a combination of easily available resources and outside influences that have created the incentive for transformation. With the technology behind digital transformation, such as databases and connectivity, coming of age, and challenges from more empowered, demanding consumers to increasingly volatile economies, all providing an incentive to transform — the ingredients are there. The biggest challenge for enterprises will be turning their digital transformation strategy into a reality.

Driving Force

For digital transformation to truly succeed, it needs to be driven in the right direction. This demands two things. First, the right driving force behind any project. And second, the right destination or goal. Increasingly we are seeing the ideal of digital transformation as something that supports overall business goals — ideally focused on a goal that will lift the organization past its competitors, instead of simply reacting to what has gone before.

Currently IT teams set digital transformation strategy in 52 percent of organizations — with the C-Suite setting strategy in 36 percent. While IT teams will understand the technical needs of digital transformation, they will not necessarily understand how any project will support the business; or even what the business's strategic goals are. As a result, there is a risk that many organizations are still supporting projects that, while useful, are not quite aimed in the right direction.

This becomes clear when looking at the drivers behind digital transformation. Joint first are reactive drivers: responding to competitors' advances, pressure from customers for new services, and responding to changes in regulation — all chosen by 23 percent of respondents. In contrast, original, proactive ideas from within the business only drive eight percent of projects.

It seems that to make the most of digital transformation, organizations need to truly understand their digital goals, and ensure they have a strategy that backs them up. This means involving the entire organization, from the top down, instead of giving IT full responsibility.

Plain Sailing?

If organizations have the right goals and their digital drivers are aligned, does this mean that digital transformation is a simple task from here on? Sadly not. There are still challenges to overcome — and the potential risk of failure.

87 percent of organizations say they are at risk of failing to digitally innovate, with consequences including losing their relevance, or losing skilled staff to more innovative competitors. There are a number of challenges in their way — from lack of skills, time and resources, to not having the right technological support. Thanks to these, 86 percent of organizations have been prevented from pursuing new digital services or projects they wanted, and 81 percent have had a digital project fail, suffer a significant delay, and/or be scaled back in the last 12 months.

Success Is Within Grasp

As we can see, historically it's not been guaranteed that every digital transformation project will be a success. However, we appear to be at a point where success is now within every organizations' grasp. The path ahead will not necessarily be smooth — it will mean ensuring transformation is driven in the right direction, and addressing challenges head-on. However, the potential rewards will be great. Not only for organizations themselves, but for the digital economy they are helping to create.

In our next blog in this series, we will examine enterprise architects, the challenges they face turning digital strategy into reality, and the technology that is helping them do so.

Peter Finter is CMO of Couchbase
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