In today’s challenging technology landscape, digital transformation has, in many ways, become a beacon that companies of all sizes look to when trying to remain competitive and survive.
IDC forecasts that worldwide spending on technologies and services that enable digital transformation will reach nearly $2 trillion in 2022 and by 2020, 30% of G2000 companies will have allocated at least 10% of revenue to fuel their digital strategies, according to the organization’s semi-annual report. Recent research from Smart Insights also found that 31% of companies are planning to introduce a digital program within the next 12 months, with 24% noting they’ve started a digital transformation program within the last two years.
There’s no denying that a shift in operations and the technology to get there plays a pivotal role in achieving success. According to findings from Harvard Business School, digital leaders, or those in the top quarter of the report, generate better gross margins, earnings and net income than organizations in the bottom digital quarter. Leaders were also shown to have a three-year average gross margin of 55% versus 37% for the laggards.
The problem, however, is thinking of digital transformation as a silver bullet. Taking a lax approach can and has ended in failure for those that don’t take its core challenges into consideration. In fact, KPMG’s Global Transformation Study found that over 90% of polled companies had completed a transformation in the last two years, yet less than half of the executives said they could realize sustainable value from business transformation. The study went a step further, reporting that one-third of CEOs said their organizations had failed to achieve the value they anticipated from previous transformation initiatives.
With such high expectations from companies looking for immediate and desired results, but limited success to date, the stakes are greater than ever before. It’s therefore important for organizations to truly understand what digital transformation actually requires and how it can be executed most effectively — especially at a time when the phrase itself has morphed into more of a buzzword than a concrete strategy.
Originally published in Forbes.