Digital transformation: New data shows speed gains – and culture worries

Twenty-one percent of IT leaders accelerated their digital transformation work during COVID-19, Red Hat's Global Tech Outlook 2021 research says. But have enough IT leaders prioritized dealing with the related culture change?
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In some circles, "digital transformation" as a term was starting to wear out its welcome in 2019. At an MIT Sloan CIO Symposium panel earlier this year, Rodney Zemmel, global leader, McKinsey Digital of McKinsey & Company, identified December, 2019 as a time of “peak cynicism about digitization.” But then he went on to say, in 2020, “COVID accelerated the migration to digital.”

That’s consistent with what  Red Hat found in its Global Tech Outlook 2021 research, a July-Sept. 2020 survey of 1,470 IT professionals, mostly from companies with more than $100 million in annual revenue, representing a mix of Red Hat customers and a broader industry panel. While there’s evidence to suggest the pandemic put the brakes on some organizations’ plans, many IT leaders accelerated their digital transformations during COVID-19.

[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]

Digital transformation speed: What's happening?

Let’s start with those who slowed down. Six percent of the respondents said that their digital transformation has stalled this year. (Five percent were still just getting started). For the purposes of this survey, we defined “stalled” as “pausing adoption of new processes and technologies.”

Digital transformation strategy was the top non-technical IT funding priority for respondents, at 36 percent.

This finding isn’t really surprising. While moving people and processes online has been a priority for many companies this year, there is also a swath of industries – such as travel and hospitality – that has been effectively forced into survival mode. So the fact that some forward-looking projects have been put on hold, whether for pandemic-related reasons or not, isn’t surprising.

Balanced against that group, the majority (65 percent) of respondents indicated they were well into their digital transformations – with 15 percent characterizing themselves as being in the highest “leading” stage. Furthermore, 21 percent had accelerated their digital transformation plans, putting them into effect sooner than expected or otherwise speeding them up.

Overall, digital transformation strategy was the top non-technical IT funding priority for respondents at 36 percent, outranking training and hiring/retention efforts.

This speed-up is consistent with what we’ve heard from many IT leaders. A common refrain during the pandemic: Forced experiments, while not always panning out, have often turned out surprisingly well.

[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]

What are the most important parts of digital transformation efforts?

Improving collaboration between IT and business functions  proves crucial to digital transformation success.

Similar to results from a survey Red Hat ran last year, improving collaboration between IT and business functions has emerged as a leading part of doing digital transformation projects. However, when asked “What do you think is most important to be successful for digital transformation?” respondents cited quite a few other pieces as almost as important. These included: implementing cloud technologies, delivering better user digital experiences, and delivering IT services faster.

On the culture front, 27 percent of all respondents cited the importance of “evolving/transforming IT culture;” and among Red Hat customers, 35 percent agreed. This is consistent with last year’s Global Customer Tech Survey, when 37 percent reported using new processes to move to a more open organizational culture.

A disconnect on prioritizing culture change?

But only 6 percent of the overall respondents said that evolving their culture was their top priority for digital transformation, the lowest out of any other response.

It’s hard not to see a disconnect between the fairly broad recognition of culture’s importance to digital transformation and the limited concern about seriously prioritizing it.

Digital transformation funding priorities

Aphorisms like “technology is easy, people are hard” notwithstanding, the lesson would seem to be that people and culture still get overlooked a lot of the time. They’re hard – and hard to measure – so maybe it’s easier to focus on the IT side of the equation. There the IT leaders we surveyed ranked security as their top digital transformation funding priority (45 percent), followed by cloud management (39 percent), and cloud infrastructure (34 percent).

But even an IT priority like security, while it can be aided by automation and other tools, still requires the right mindset and attitudes. Which is to say, in part, culture.

And a company’s leadership has a great deal to do with establishing that culture. As Dr. George Westerman, senior lecturer, MIT Sloan School of Management put it at another recent Sloan event: ”If you think about digital transformation as two words, we pay too much attention to the digital and not enough to transformation. It’s not a technology challenge, it’s a leadership one.”

[ Want more data? Download the full Red Hat 2021 Global Tech Outlook report. ]

Gordon Haff is Technology Evangelist at Red Hat where he works on product strategy, writes about trends and technologies, and is a frequent speaker at customer and industry events on topics including DevOps, IoT, cloud computing, containers, and next-generation application architectures.

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