IT decision-makers are prioritizing digital transformation

Recent survey shows a trend toward innovation and the customer experience as primary driving factors in digital transformation
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What are your top-priority initiatives?

That was one of the topics we probed in interviews conducted by Frost and Sullivan with IT business executives from organizations with more than 1,000 employees globally. They represented companies in manufacturing, energy, and utilities split between North America, Germany, China, and India.

The executives used a variety of words to describe their top priorities: automation, Internet of Things (IoT), edge computing, and cloud infrastructure. They called out digital transformation by name as well. But all of these top initiatives are associated with technologies that companies often adopt when they say they’re digitally transforming (although it’s important to note that digital transformation isn’t just about implementing new technologies; process and even culture change matter too).

[ Also read Digital transformation: 3 ways a culture of innovation can drive your strategy]

Decision-makers are thinking about their top priorities in terms of digital transformation, confirmed in another quantitative survey conducted by Frost and Sullivan of over 1,000 decision-makers. The impact on a company’s digital transformation goals was the top metric by which technology implementation success was measured.

The pervasiveness of digital transformation thinking came through clearly in our interviews. For example, an automotive executive told us, “You hear the term ‘smart manufacturing’ or ‘Manufacturing 4.0’; that is all built around edge computing and AI and the digitization of processes. The industry as a whole is moving towards this because it is a very important tool in being more efficient in your process of delivering quality products. The other thing that it’s doing as well as cost reductions are new revenue streams, like the predictive maintenance, which is a new service that we are being able to offer to our customers.”

Integrating digital technology

We heard a lot about innovation and experimentation on the edge using new sensor types and the data collected from them. One interviewee had looked into using computer vision to detect whether someone entering a location was wearing the appropriate safety equipment, although different lighting and different angles made the project infeasible. Others were exploring augmented reality.

IoT is continuing to expand into proactive roles such as early on-site detection of impending failures. In addition to vision – sometimes using drones – this can include monitoring of vibrations, heat, audio, and other indicators of a motor or other device drifting out of spec.

[ Discover how priorities are changing. Get the Harvard Business Review Analytic Services report: Maintaining momentum on digital transformation. ] 

Integrating digital technology to fundamentally change how businesses operate and how they deliver value to customers – that is, to digitally transform – mostly trumped cost-cutting in our interviews.

While the interviewees did mention cost reductions now and then, it was less cited than just about anything else. This isn’t to say that costs don’t matter. In fact, budget limitations came up as a key challenge for their priority initiatives. But integrating digital technology to fundamentally change how businesses operate and how they deliver value to customers – that is, to digitally transform – mostly trumped cost-cutting in our interviews.

This is a common theme in our research. We’ve seen a similar dynamic play out in our annual The State of Enterprise Open Source report, which surveys almost 1,300 IT decision-makers worldwide. Four years ago, when asked about the top benefit of enterprise open source, the answer was clear: lower total cost of ownership (TCO). Not really a surprise; that was the biggest driver behind the shift from proprietary UNIX to Linux. But today? This year’s survey saw higher-quality software and better security in the top two slots. Lower TCO? It’s now down in ninth place. Better, not just cheaper.

Customer satisfaction is a driver of digital transformation

Our interviewees mostly framed digital transformation as an internal initiative to improve internal information technology and operational technology goals. That said, our quantitative survey showed that end-user/customer satisfaction and experience had about the same importance as a metric for measuring technology implementation success as did digital transformation.

Monitoring customer experience, along with optimizing services to increase customer satisfaction, were also at the top of the list of external initiatives that our interview subjects mentioned. The conclusion I drew is that decision-makers do, in fact, have customer experience and satisfaction as a priority, even if they often don’t explicitly talk of them as a driver of internal digital transformation projects.

[ Read also: 5 ways digital transformation drives customer success ]

Decision-makers may not always come out and use the term “digital transformation” unless they’re prompted. However, interviews, quantitative research, and customer conversations make it clear that most organizations are doing digital transformation to at least some degree.

Our 2022 Global Tech Outlook survey found that only 10 percent of respondents had no plans or had not yet started. In contrast, 22 percent of respondents were accelerating their journey to digital transformation. Why? Those getting started often think it’s about cost. But our survey data shows that once they get going, the key driver is innovation.

[Where is your team's digital transformation work stalling? Get the eBook: What's slowing down your Digital Transformation? 8 questions to ask.]

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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