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Digital transformation: Are companies kidding themselves on KPIs?

IT leaders have got their KPIs sorted. Or have they?

By Sabrina Dougall

Poor digital strategy is a major turn off for customers and an even sharper thorn in the foot for budget managers. Cost savings are the top reason for digital transformation for 7 in 10 IT leaders — yet just half of businesses are actually measuring how much money is saved by such strategy changes. The embarrassing discrepancy reveals just how siloed IT decision makers can be in their spending models.

When asked about how they are measuring success, only 51% of IT budget masters said they were measuring cost savings despite 70% saying this was a major motivating factor in their digital transformation plan.

By contrast, 52% of companies are measuring customer satisfaction even though only 40% cited it as a driver behind their business digitisation.

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The data sheds light on the disconnect between large-scale strategy and where money is spent. Somewhere along the way, IT decision makers are losing the ‘why’ of budget choices and wandering in the forest of conflicting marketing messages.

“Either the strategy is not tied down and organisations are ‘doing’ digital transformation for the sake of it, or the strategy is not being communicated adequately,” said Simon Ratcliffe, Principal Consultant at Ensono, facilitated the research.

Less mature companies take a piecemeal approach to digital transformation, tackling individual business problems with discrete technologies, according to a major 2015 study from MIT and Deloitte.

A holistic approach to digital transformation must surely be the way forward, lest company spend managers fail to follow up on budget projections and cast good money after bad.

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CIF’s research found that the second and third drivers for digital transformation were increasing productivity (59%) and increasing profitability (58%). Around a third of respondents highlighted each of the following goals as crucial to their firm’s digital modernisation: competing with industry disruptors (35%), differentiation (35%) and speeding up time to market (33%).

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Deloitte and MIT found digitally maturing organisations are more than twice as likely to have a single person or group leading their firm’s digital transformation. Experts found that the most successful companies’ employees were confident in their leaders’ ability to articulate the value of digital technology for their organisation’s future.

Encouragingly, business leaders are responding quickly to market changes – in particular, the rise in Fourth Industrial Revolution (4IR) technologies. Similar research from CIF found that two years previously just 51% of businesses had been looking into a digital transformation plan – today this figure has risen to 100%.

Yet Rome was not built in a day and neither will the metropolis of digital transformation — just 16% of respondents told CIF they had already carried out their plan to completion.

Ensono and the Cloud Industry Forum (CIF) surveyed 250 business and IT decision makers in enterprise organisations across multiple vertical sectors.

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