By Dennis Drogseth
The worlds of IT services and business or organizational services are coming together like never before. Digital services impact not only employee productivity and revenue but also brand awareness, customer loyalty, partner and supplier efficiencies, and internal and external business process effectiveness. Entire business models are being re-casted and increasingly created around the options that digital services provide.
At the same time, technology catalysts such as private and public cloud, agile development, and mobile computing force IT to become more dynamic, relevant, and business aware. IT organizations are moving from being reactive, back-office citadels of acronyms to proactive business partners seeking to optimize around human values.
The term most often applied to these transformations is digital transformation. When an organization is focused on IT becoming more effective in and of itself in support of the business, the term most typically used is IT transformation. But do these two groups see the world consistently? Or, do digital and IT transformation come together in a fractured handshake at best?
Addressing the Question
To provide a global view of the transformational challenge, IT analyst firm Enterprise Management Associates (EMA) undertook research targeting digital and IT transformation. The goal was to discover what the truth really is surrounding these critical—and sometimes overused—terms. To optimize the depth and value of this research, EMA partnered with the IT Transformation Institute.
A simple definition was embedded within the research questionnaire defining digital transformation as directed at optimizing business or organizational effectiveness via digital and IT services. IT transformation was defined as an initiative focused on optimizing IT performance for business or organizational needs and outcomes. While the two terms do seem like hand-and-glove fits—and they should be—the recent buzz around digital transformation has set it apart in many minds.
Survey data was collected globally across North America, Europe, and Asia Pacific, with more than 300 respondents. About 30 percent of respondents were business leaders and the rest were largely from the IT executive community. We wanted to investigate how digital and IT transformation complemented each other, and examine how business leaders and IT leaders viewed this critical arena. Were their views similar and where did they differ? Geographic differences were also examined.
Perhaps the single most dominant finding is that digital and IT are closely related and are, in fact, complementary—a necessary handshake rather than two separate worlds. In other words, an initiative targeting digital transformation without strong investments in IT transformation is far less likely to be effective than a 50/50 partnership.
Some other highlights from the research include the fact that nearly half—43 percent—of respondents were primarily focused on IT transformation. 15 percent were primarily focused on digital transformation. Another 35 percent were evenly divided in focus between digital and IT transformation, and an additional eight percent viewed the terms as interchangeable.
When IT was contrasted versus digital transformation, we found that IT transformational efforts tended to be more mature and further along with technology adoption and overall effectiveness. In terms of metrics for evaluation, digital transformation skewed to business metrics more heavily. But perhaps the biggest discovery was how parallel these two initiatives were across the entire questionnaire.
While IT and business stakeholders are similar in many ways, they do have some striking differences. Business stakeholders are less bullish about success and are more likely to cry out for a more compelling vision and more attention to process, while the IT executive community still struggles with internal issues of organization and politics.
Cloud and agile/DevOps are leading catalysts for both digital and IT transformation. 79 percent of transformational initiatives were linked to best practices or industry methodologies.
73 percent saw technology as a driver, and 27 percent viewed it as supportive. Only one percent said their initiative was not linked to any technologies.
We also examined the extremely successful and contrasted those who were less successful in finding strongly differentiated progressions from extremely to only somewhat successful. While respondents ranked themselves, the results—especially when contrasting extremes—were logically compelling overall.
A few things we found include statistics around stakeholder drivers, best practices, technology, the cloud, and DevOps.
The most successful group were those respondents who claimed a 50/50 partnership between IT and business stakeholders in driving their transformational initiatives. The least successful group of respondents was primarily driven by stakeholders outside of IT. This underscores the need for what might be called the digital dialog—a shared interest and involvement between IT and the business—as opposed to business stakeholders pushing for a still-reactive IT organization to change.
97 percent of the extremely successful experienced benefits from best practices in contrast to only 63 percent of those who were only somewhat successful.
Respondents who were extremely successful had significantly higher adoption rates of technologies overall. This was a consistent pattern based on success levels, with extremely successful averaging six technologies affiliated with their initiative, compared to 4.7 for the very successful, 4.3 for those successful in some areas but not in others, and 3.7 for those only somewhat successful.
95 percent of the extremely successful had cloud integration as a part of their transformational initiative, compared to 67 percent of the somewhat successful.
Those who were only somewhat successful were eight times less likely to be involved with agile or DevOps as the other groups. Even more importantly, those extremely successful were eight times more likely to have defined teams for IT-to-business dialog regarding application priorities compared to those who were only somewhat successful.
Two Worlds in Turmoil or One World Coming Together?
Ultimately, both are true. While we could derive a formula for success from our data, it’s clear that the IT leadership is struggling to sort through siloed politics and fractured processes, while business leadership is looking for IT to step up to the need for a compelling vision. On the other hand, when IT transformation is seriously underway with associated investments in technology, metrics, best practices, and transformational partners, the opportunity for true digital transformation to succeed is much greater.
The emergence of business teams willing to embark in this new digital dialog with strong service and consumer-aware IT organizations is reflective of a new vanguard in both digital and IT transformation. To truly succeed, these teams will not only require smart and proactive adoption of key technologies but also relevant processes and best practices, as well as meaningful partnerships with vendors and consultants. They also require courage. The courage for both business and IT leaders to go beyond traditional comfort zones and inbred habits of mind.
To learn more about this research, view the on demand webinar on this topic located at research.enterprisemanagement.com/digital-IT-transformation-on-demand-webinar-ws.html. SW
Dennis Drogseth, VP of research, IT megatrends, analyticsm and CMDB systems, EMA, joined the firm in 1998 and currently manages the NH office. He brings several years of experience in various aspects of marketing and business planning for service management solutions. He supports EMA through leadership in ITSM, CMDS, as well as megatrends like advanced operations analytics, cross-domain automation systems, IT-to-business alignment, and service-centric financial optimization.
Dec2015, Software Magazine