What do enterprises expect is going to happen when they embark on a digital transformation project? What’s the outcome they’re hoping for? After all, digitization is a long process (it can take years), and it can be expensive and disruptive. There must be some benefit coming out the other side that makes it worth doing.
At 451 Research, we conducted a global study to explore how digital transformation is playing out in the real world. It turns out that there are four main reasons to go forth and digitize, and of those four reasons, one stands out. Among the 1,400+ respondents, the most important factor in a digital transformation program – the key to the hoped-for outcome – was improving the organization’s overall operational efficiency. In other words, digital transformation is seen as a way to remove the cruft from processes that are holding the business back from competing effectively, from being truly resourceful. (The three other factors were improving the customer experience, boosting agility and managing risk.)
In fact, of those who are still in the early stages of planning their digital transformation program, nearly half (49%) called out operational efficiency as the top driver behind their initiative. Some 44% of all respondents said specifically that “reducing costs through operational efficiency” was their goal.
Operational efficiency means different things to different people, of course, but these results give us some insight into the minds of the transformers. What it seems to imply is that people are looking to digital initiatives as a way of cleaning house and preparing for a more complex future. And they know that in order to justify a long, complex technology project, it has to be rooted in real-world savings. There has to be measurable benefits that accrue to the project, so the project does not become a “white elephant” that grows into something unmanageable. People feel comfortable championing a project that has efficiency benefits; they can point to ROI for the technologies involved, and they can make the case to executives based on solid numbers and use cases. Even if there are other benefits down the road, finding efficiencies early on is a great way to overcome skepticism.
In the long run, this is a smart way to approach digital transformation. Over time, as digital transformation projects move through their lifecycles, priorities will shift somewhat away from efficiencies to the other three benefits. But this is perhaps due to two factors along the way: first, that the efficiencies are reaped early on as low-hanging fruit, allowing the project to continue and blossom into more sophisticated functions of the business; and second, that the later steps of a digital transformation project build on the early ones, so that savings on the front end can be directed to more complex technology components that make the business more agile in the face of changing market conditions, or that surface insights into risks and security issues that just weren’t visible before.
Efficiency seems like a fairly straightforward goal: do more with less. Depending on your business, you might define efficiency based on speed, cost, headcount or some other metric. Our survey-takers had a pretty diverse menu of options for “efficiency.” The two highest-cited objectives for improving operational efficiency were to better serve customers and to use data for better decision-making, both selected by 41% of the sample. Close behind those goals, both selected by 39%, were the desires to use IT as a strategic differentiator for innovation, and to optimize the use of human resources, infrastructure and other materials.
These tell us a lot about the mindset of the digital transformer. People who are embarking on these projects see digital transformation projects as a mechanism not just for “digital” change, but for a broad, organizational rethink that can be a way to reset the standards for how the organization approaches customers, employees, costs and revenue. What do they expect to get out of digital transformation? A fresh shot and a clean slate at doing the things their business does best, free of the baggage of outdated/legacy tools and processes. It’s a tall order, but there’s reason for optimism.
Editor’s Note: You can review the full findings from the CenturyLink-commissioned survey with 451 Research in the Enterprise Digital Transformation Strategies report. To learn more about CenturyLink’s capabilities as a trusted transformation partner, visit this page or contact your CenturyLink account representative.