There are a number of reasons that a business may undergo digital transformation, but by far, the most likely reason is that they have to. It’s a survival issue for many.
Howard King, in a contributed article for The Guardian, puts it this way: “Businesses don’t transform by choice because it is expensive and risky. Businesses go through transformation when they have failed to evolve.”
John Marcante, CIO of Vanguard, points this out, as well: “Just look at the S&P 500. In 1958, U.S. corporations remained on that index for an average of 61 years, according to the American Enterprise Foundation. By 2011, it was 18 years. Today, companies are being replaced on the S&P approximately every two weeks. Technology has driven this shift, and companies that want to succeed must understand how to merge technology with strategy.”
Enterprise leaders have largely gotten the message. The IDC research “FutureScape: Worldwide Digital Transformation 2018 Predictions” reported, “By the end of 2019, digital transformation (DX) spending will reach $1.7 trillion worldwide, a 42 percent increase from 2017.”
However, it won’t be easy. IDC’s predictions for CIOs in 2018 echo that, stating: “Through 2019, dragged down by conflicting digital transformation imperatives, ineffective technology innovation, cloud infrastructure transition, and underfunded end-of-life core systems, 75 percent of CIOs and their enterprises will fail to meet all their digital objectives.”
CIOs worried about their company’s – and their own – survival should focus on securing company-wide support and collaboration to get digital transformation right from the start. They may only get one shot.
But even if business leaders don’t believe they have to transform, there are many reasons why they should consider it anyway.
- Their competitors are doing it. According to a Forrester Research report, executives predict that nearly half of their revenue will be driven by digital by the year 2020.
- It will make them more profitable. In a recent Gartner survey, “56 percent said that their digital improvements have already improved profits.”
- It will make them more efficient. Research shows, “Nine out of 10 IT decision-makers claim legacy systems are preventing them from harnessing the digital technologies they need to grow and become more efficient.”
- Their customers will thank them. Whether external customers, or internal employees, people have already largely adopted digital practices in all facets of their lives, from shopping online via their mobile devices to adjusting their home thermostat remotely. They are waiting for businesses to catch up.