Firms ‘wasting $28m on flawed digital projects’

Aug 15, 2018 | Digital marketing skills

More than half of organisations say that a fixation on transformation is raising risk of wasteful projects, as 86 percent see next 12 months as a critical period for businesses, according to new research.

The research from Couchbase polled 450 heads of digital transformation in enterprises across the US, UK, France and Germany.

It found 52 percent said a fixation on digital transformation had raised the risk of rushing into ill-thought-out projects, meaning that much of their average planned spend of $28 million in the next 12 months could be wasted.

This risk of rushing in is being driven by mounting pressure to transform: 85 percent of respondents said disruption in their industry has accelerated over the past 12 months, and 86 percent believe businesses will have to adapt to providing digital services in the next 12 months, or accept they will become less relevant.

However, businesses that can adapt to this pressure can show significant success: 6 percent have completely revolutionized digital experience to the extent it’s now unique in their industry.

Other findings include:

  • 95 percent of respondents believe that digital transformation can seem an insurmountable task – meaning projects are more likely to be unsuccessful
  • Organizations spent an average of $24 million on digital transformation projects in the last 12 months
  • 35 percent say the primary driver for digital transformation is advances made by competitors, 23 percent changes in regulation, and 19 percent pressure from customers – meaning digital transformation is mostly being driven by reactive needs, instead of proactive ideas
  • Businesses have limited time to get this right: 64 percent believe those that can’t keep up with digital innovations will go out of business or be absorbed by a competitor in fewer than four years
  • There are personal consequences of failed digital projects: 83 percent of respondents said they would face being fired if a project fails
  • Despite these pressures, organizations are not standing still: 25 percent have either completely revolutionized (6 percent) or transformed (19 percent) digital experience in the last year, compared to 15 percent in 2017

“We are entering the era of the massively interactive enterprise where every part of an organization, from sales and marketing, to HR, finance and logistics, is built around engaging digital experiences,” said Matt Cain, CEO of Couchbase. “The revolutionary potential of digital transformation will have a hugely positive impact for those organizations that can do it well.

However, the pressure to transform at speed means organizations have a higher risk of taking a rushed, reactive approach, driven by the fear that the organization will lose relevance, that results in substandard experiences and wasted investments. Transformation is not a destination. It’s a continuous process that, at its best, is proactive, driven by the needs of the business as a whole, and underpinned by the right data infrastructure. By adopting this approach, and not letting the pressure faze them, organizations can join the ranks of the leading 25 percent.”

Digital transformation has been mostly driven by the IT function: 76 percent of organizations rank it in the top three business functions driving their digital transformation in the last five years. Business executives also have a substantial say, with 47 percent placing them in the top three. However, other functions are far less represented, suggesting that transformation is still seen as the domain of IT instead of something that should concern the entire organization.

Digital transformation is also still being held back by technology. Eighty-eight percent of organizations have had a digital project fail, reduce in scope, or suffer significant delays because their legacy database couldn’t support it. Indeed, this reliance on legacy databases and competing priorities has raised a number of issues, including:

  • 87 percent of organizations find they have to scale back ambitions for new applications and services so that they will work with IoT or mobile devices – since these devices cannot match the data processing power of larger servers, and cannot guarantee a consistent connection
  • Only 29 percent of organizations say they can use data in real-time, limiting the end-user experience and the types of services they can offer
  • 74 percent of organizations rely so heavily on their legacy databases that they cannot adopt newer database technology as quickly as they would like
  • 83 percent of respondents are under increased pressure to secure their organizations’ database – laying bare the threats organizations face and taking attention away from transforming new services

“Data is at the heart of the massively interactive enterprise,” continued Matt Cain. “Customer and employee-facing, and even machine-to-machine, applications need to access the right data, in real-time, even when there is limited access to a central server. This doesn’t necessarily mean organizations should simply throw out their legacy technology and start over.

However, they do need to ensure that they have the right data architecture for their needs. One that can handle sudden changes in direction, that can perform at scale, and that is secure.

ith the right technology at hand, organizations will be ready to weather the growing pressure and take part in a real digital revolution.”

The full 2018 Couchbase CIO survey report is available to download here.

The report is based on an online survey conducted in June and July 2018 by Vanson Bourne, an independent market research organization, of 450 heads of digital transformation, such as CIOs, CDOs, and CTOs, in organizations with 1,000 employees or more in the U.S., U.K., France, and Germany.

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