The digital transformation agenda 2016: research and analysis

Ever more service providers, ICT integrators, software firms and IT vendors are coming up with solutions for digital transformation.

Digital transformation priorities are mainly driven by an intent to gain a competitive advantage (Pegasystems).

They sponsor research and come up with advice on and data regarding digital transformation. The latest in a long list to do so is Pegasystems, which worked together with the Economist Intelligence Unit (EIU) to conduct a survey into the digital transformation plans and priorities of 282 executives. The result: The Digital Transformation Agenda 2016. Data, overview and analysis.

Bullish about reaching digital transformation objectives

The responding 282 executives (from three target industries in which Pegasystems is active, healthcare, financial services and telecommunications) are quite bullish regarding the digital transformaton plans they have in place: 69 percent expect to achieve their digital goals (sic) this year.

Digital transformation is also a key 2016 priority for the majority of respondents. For 77 percent it is even their company’s top strategic priority in 2016, the press release states and if the strategic digital transformation goals are not met, poor financial performance is said to be the top consequence.

The Digital Transformation Agenda 2016 report by Pegasystems and the EIU
The Digital Transformation Agenda 2016 report by Pegasystems and the EIU

Pegasystems partially explains the – unusual – optimism by the way executives are looking at digital transformation as, quote, ‘an opportunity to thrive as opposed to a market threat to be feared‘.

As the infographic, created at the occasion of the research (see below), indicates, the digital transformation priorities of the respondents, are mainly driven by an intent to gain a competitive advantage (48 percent of respondents), whereas only 25 percent indicate that competitive pressure is a key driver for digital transformation.

Knowing that the three ‘target industries’ include financial services, which is being pressured and challenged (we won’t say interrupted) from various angles, that’s indeed a remarkably positive stance.

Main 2016 digital transformation goals and the lack of senior leadership support

Focus on customer service, process optimization and organizational agility

When looking at the key 2016 digital transformation initiatives of the respondents we see that the number one digital transformation objective is improving customer service (57 percent).

The list of priorities (we have no info on other objectives).

  • Enhancing customer service (57 percent).
  • Process optimization (38 percent).
  • Improved organizational agility (37 percent).
  • Enhanced employee engagement (14 percent).

The focus on enhancing customer service seems like a much needed and ongoing priority for most organizations as far as we’re concerned and the relatively low attention for employee engagement concerns us as in far too many digital transformation initiatives workers are not involved, ‘empowered’ or even heard enough as we mentioned before.

Lack of oversight/sponsorship by leadership and other indicators of ad hoc digital transformation approach risks

When it boils down to the most commonly required change, there is a strong call for an improved oversight of senior leadership regarding digital transformation initiatives.

This might come across as strange since traditional belief is that digital transformation is driven by the top. If oversight is missing, this could be a sign that most respondents approach digital transformation in an ad hoc and maybe siloed way, rather than an integrated and holistic one.

The top 3 changes respondents see as being crucial to achieve digital transformation objectives are:

  1. Increasing sponsorship and oversight of senior leadership (40 percent of respondents). Sponsorship is a further indication that digital transformation projects might be focused on one particular activity in a non-holistic way.
  2. Establishing the right organizational model (39 percent). This seems to also be a clear call for more alignment, vision, leadership and enhanced organizational processes and collaboration.
  3. Increase the available funding (37 percent of respondents). As funding means buy-in and usually leadership gives the OK to sign off budgets, the conclusion is clear: despite being a priority for responding executives, leadership is not involved where it should.

Maybe there is less reason to be bullish, given both the leadership ‘absence’ challenges and the rather low attention for employee engagement.

Quoting from the press release: “Sixty-one percent of business leaders say their company needs to make substantial organizational changes to achieve success. Respondents identified a lack of executive sponsorship as a critical impediment to reaching their goals”.

On the technological level, the major areas of investment according to the research are:

Big data and analytics, the press release says, are consistent across the verticals in which respondents are active.

The Digital Transformation Agenda 2016: more information and further comments and analysis

Pegasystems and the Economist Intelligence Unity offer two documents regarding The Digital Transformation Agenda 2016 research and findings:

More than 60 percent believe they must first make significant organizational changes to reach their digital transformation goals.
  • The report itself, The Digital Transformation Agenda 2016, can be downloaded here (registration required). It is a follow-up report of the 2015 ‘Digital Evolution’ report, sponsored by Accenture and Pegasystems and is conducted among 282 executives across the globe from the mentioned three ‘target industries’: healthcare, financial services and telecommunications. It elaborates on what is covered in the infographic, the press release and this post.
  • The beforementioned 2015 report, entitled “Digital Evolution – Learning from the leaders in digital transformation” can be downloaded here (also registration required). It was conducted among 444 executives and sponsored by Accenture.

The definition of digital transformation: stuck in SMAC

Interesting to know: in both reports digital transformation is defined as “the reinvention of business practices to derive the maximum value from digital technologies such as social media, cloud computing, mobile technology and big data analytics”.

In other words: the traditional pillars of the 3rd platformn which now contains more than these four pillars as you can read in our post on IDC’s views on the nascent DX economy – or good old SMAC (social, mobile, analytics and cloud).

In our view, the definition of digital transformation from the (SMAC) technology perspective is a too restricted way of looking at digital transformation.

SMAC takes center stage in Digital Transformation Agenda 2016 definition of digital transformation - social mobile analytics cloud
SMAC takes center stage in Digital Transformation Agenda 2016 definition of digital transformation – social, mobile, analytics and cloud

Interpreting digital transformation data and research: IT vendors and integrators stepping up the technology perspective pace

To illustrate the beforementioned increasing attention of IT vendors for digital transformation, the research was announced on July 12th, the same day that Cisco came out with a press release at its annual user conference, announcing a new approach to networking and become the ‘foundation for digital transformation’ as Steve Evans puts it on ComputerWeekly.com. Cisco is a partner of Pegasystems.

The reason we mention this is to put announcements regarding digital transformation, as well as research, into perspective. IT vendors and solution providers want to sell so it’s important to interpret data and research with that context and that of their products and services in mind. It’s equally important to keep in mind what digital transformation is because various vendors look at it differently (we’ve even seen hardware that strictly has nothing to do with digital transformation being announced as helping organizations with digital transformation).

As you know, digital transformation isn’t just about solutions, let alone digital technologies themselves.

The digital transformation agenda 2016 infographic
The digital transformation agenda 2016 infographic – click here for PDF version

SMAC illustration based on graphical template of SlideModel.com