Report: Digital transformation now strategically vital

According to a recent report, digital transformation is seen as an overriding priority for businesses even if short-term gains are unclear.(Pixabay)

Organizations don't just accept the reality of digital transformation; they see it as a vital step in their company's survival, according to the 2019 Digital Transformation Market Trends Report.

The report, conducted by Webtorials' editorial and analyst division on behalf of Masergy, found that digital transformation is seen as an overriding priority even if short-term gains are unclear. "Since digital transformation is key to the survival of the business, the return on investment (ROI) for digital transformation is being measured from a strategic perspective that pays off in the long run even though the immediate ROI might be more difficult to quantify," the report says.

That doesn't mean that there are not short-term benefits, however. The report says that these are most keenly felt in customer service and customer interactions.

The report also found that 64% of respondents feel that they need "significant" help to achieve digital transformation, while 36% have the necessary expertise in house.

Those going outside the organization prefer that this help comes from smaller and agile service providers (57%), as opposed to large traditional carriers (43%). Investments in digital transformation are being made chiefly for cloud migration, improved security and data analytics, the report says.

Survey respondents were consistent in their opinion on the importance of digital transformation. For instance, 78% agreed with the statement that their "company's primary industry is rapidly evolving so digital transformation is needed for survival," while only 22% said their industry is stable and that digital transformation is not a matter of survival.

The respondents also were asked to rate the importance of digital transformation in relation to other issues faced by the organization. Improved customer experience was the top concern of 27% of the respondents and the second choice of 23%. Digital transformation was second (24%, 22%), followed by increased revenue generation (15%, 22%), cost savings/productivity (20%, 16%) and new product development (10%, 12%).

Another telling metric is how these projects are perceived by management. Sixty-one percent of respondents reported that the "ROI on digital transformation is more long-term and strategic than based on short term results," versus 39% that felt ROI "must be immediate and measurable in the short term."

The perceived benefits of digital transformation are broad. The top advantage is enhanced customer experience and CRM (tops for 22% and second for 15%). It was followed by the need to remain competitive (16%, 13%), to streamline business processes (8%, 18%), to enable new business models (15%, 10%), to enhance productivity (14%, 8%), to improve cost savings (11%, 10%), to increase revenue generation (5%, 15%) and to enhance product development (5%, 7%).

Such foundational changes are not easy, of course. The study found that budget commitment was the top overall challenge (the most challenging for 22%, the second most for 18%), followed by executive leadership, support and understanding (20%, 18%), finding in-house skill, resources and expertise (18%, 16%), organization-wide buy-in (15%, 18%), lack of robust IT infrastructure (11%, 14%) and lack of mature technology (11%, 11%).

Finally, the survey found that the technology investments in several areas will be necessary to achieve digital transformation. Cloud migration for IT (the top investment area for 22%, second for 15%), improved security (18%, 17%), data analytics, AI, big data and related technologies (17%, 16%), mobility and collaboration—unified communications (10%, 16%), emerging technologies such as the IoT and virtual reality (9%, 13%), SDN (11%, 10%) and network upgrades besides SDN (10%, 7%).