The received wisdom has been that the pandemic has led to an aggressive acceleration of digital projects, collapsing years of progress into months.
However, there are signs that this runaway success could be about hit tricky ground. 98 per cent of UK companies have digital transformation initiatives underway, but only 27 per cent of companies think the technology they currently have will be able to support this transformation over the next 18 months. One in ten companies already believe that their current tools are an outright obstacle to these goals.
The immediate questions that these figures suggest are a) how do we stop the wheels from coming off of these projects without sacrificing the necessary speed and progress made so far and b)where did this risk begin, because digital transformation was always supposed to be about being better AND faster.
Who started it?
Unequivocally, digital transformation is being led by people in technology roles, with nearly half of all programmes being led by Chief Technology/Information Officers. A fifth of companies had an executive role dedicated specifically to digital or transformation.
These roles were most likely to be found in manufacturing and financial services – both sectors that are currently experiencing immense pressure for rapid change, which may be why they are more likely to have a specific C-level transformation role.
While technology roles may be in the driver’s seat, transformation is by no means a technology-only process. As companies digitally mature, the role of the leader grows from technology orchestration to aligning that technology to the goals of each department and the overall vision of the company.
But this leads us to consider the opinions of technology leaders when it comes to what causes technology to be inadequate, why technology goes unused, and what the priorities are in new technology investments. Communicating with business and marketing stakeholders about different needs and priorities is key to successful initiatives, but it will often be the technology leadership that defines digital transformation, for good or ill.
This difference can be seen in the fact that business and marketing leaders expect an average of 32 per cent of current investment to be inadequate over the next 18 months, with 30 per cent of each group expecting more than 40 per cent of investment to be obsolete in the same time period. In contrast, technology leaders expect the average to stay steady at 24 per cent.
The difference in opinion could be attributed to the idea that technology leaders have a better overview of the current toolkit. As they are usually the ones leading transformation they may have purchased tools to match future ambitions and have yet to implement them fully. In other words, they know what is in the armoury, they know the toolkit is already mature and they expect the ambitions to mature over the next 18 months.
On the other hand, the difference could indicate that business and marketing leaders are hearing more about the capability performance from the user’s perspective. The back-end of a solution might be smooth and theoretically it should be able to do what you want, but if users find it frustrating it won’t be seen as adequate technology.
A third explanation could simply be a difference of ambition over the next 18 months. For example, business and marketing leaders are more interested in opening new revenue streams with digital than technology leaders, while the technology cohort is more focused on optimising and streamlining current processes than their counterparts.
How bad are things?
Regardless of shifts in perspective, there is a sobering status quo: that 81 per cent of companies use 60 per cent or less of their current technology capability. On average, companies are only using half of their digital experience investment. This means not only do current technologies lack the capabilities to meet ambitions, but the capabilities these tools do offer are largely going to waste, right now.
Business, technology, and marketing leaders all experienced the pile-up of unused features, reporting an average use of 45 per cent, 49 per cent, and 52 per cent, respectively, of their current digital experience investment.
This has a direct financial impact. On average, companies spend 24 per cent of their digital experience budget on unexploited capabilities and nearly a quarter estimate that over 30 per cent of their budget is unused. With global spending in digital experience technology expected to reach $2.3 (£1.7) Trillion by 2023, that’s equivalent to £408 Billion left on the table.
So what happened?
There is a consistent culprit behind this immediate and future frustration. Half of all business and marketing leaders, and a third of technology leaders, said that implementation costs cause investment to not be fully exploited.
Businesses need not get hung upon semantics here. Technology executives may be more focused on implementation barriers on the back-end, while their marketing and business cohorts also include usability into their definition. A solution can be integrated well into the technology stack but not very well implemented in the business model – but as soon as there is an integration issue, it slams the brakes on digital transformation effectiveness.
This needs to be addressed as a matter of urgency. As investments in new technologies are expected in the near future, selecting tools with the best chance to be fully used – for which, you can read, best integrated – businesses must tackle the current barriers across departments.
Why this happened?
Identifying the root cause of digital transformation failure was always going to come down to one of two possibilities – either the new business model is wrong or the technology is not up to the job.
It is the latter.
Legacy technology that refuses to integrate without massive investment and delay, is the culprit behind many of the digital transformation barriers that enterprise companies are facing. Positioned as all-in-one software suites, vendors justified the complicated implementation process with the
idea that once you had the solution in place you were set. They would provide all the features and capabilities needed for digital experience.
In the early stages of digital experience this model worked fine but, as digital needs expand and more tools are added to the technology stack, companies are finding those legacy platforms are even more complicated to adapt than they were to implement. With custom workarounds needed for every change, the cost to innovate becomes too high. And the speed of change leaves these companies standing.
So what do we do about it?
The need for a more evolvable solution ecosystem is why more enterprises are turning to a modular architecture and why modern software vendors are designing solutions around MACH principles (microservices, API-first, Cloud-Native SaaS, headless).
Legacy digital experience tools are expected, rapidly, to become increasingly obsolete. Enterprises feeling the pain of inflexible legacy software can design a more modular architecture with MACH tools. Designed to evolve, modern MACH tools support a composable enterprise in which every component is pluggable, scalable, replaceable, and can be continuously improved to meet evolving business requirements - easing integration pains and ensuring businesses are never again locked into obsolete technology.
This change is already underway. New research, conducted by DJS Research and commissioned by the MACH Alliance, found that 81 per cent of businesses expressed the strong intention to increase MACH elements in their front-office architecture in the next 12-months. 63 per cent of respondents said customer experience is the main driver of their transition to a modern MACH infrastructure, while 57 per cent noted the ability to innovate faster – both hallmarks of the original reason to undertake digital transformationi.
Unless otherwise attributed, figures taken from The State of Digital Experience Investment in the United Kingdom – download the full report here. i See MACH Alliance Research Report