Digital transformation: What's changed and what hasn't

Security and innovation top the list in Red Hat's most recent Global Tech Outlook survey. Here are some other key takeaways on the state of digital transformation worldwide
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Every year, Red Hat sponsors a Global Tech Outlook survey asking IT leaders worldwide about their funding priorities, cloud strategies, and digital transformation efforts. The 2023 Global Tech Outlook, which surveyed over 1,700 IT leaders last May and June, is the most recent. With all the focus on digital transformation in a topsy-turvy global environment, we were especially interested to see what changed and what didn’t in this area.

While definitions vary, we view digital transformation as rethinking technology – but even more so processes and culture – to better serve customers and make the business more flexible and resilient. Given that, it’s perhaps worth probing why we haven’t seen more movement where companies say they are on their digital transformation journeys over the past few years.

For example, in the survey conducted in 2020, just 15 percent of the respondents said their organizations were in the top category – but 84 percent had seriously begun to transform digitally (categorized as emerging, transforming, accelerating, and leading). Indeed, with all that digital transformation going on, companies are in a better place than they were back then, right?

Not really.

The numbers have bounced around a little between then and now, but not by much. And this past year saw fewer in the top category (12 percent). One read is that even though a relatively small number (6 percent) say their digital transformation projects have stalled out, the reality is that many projects have.

Digital transformation strategy remains the top funding priority outside of IT in the current report, just as it was two years ago.

That’s hard to believe, given how many companies quickly adapted to remote and hybrid work and an increasingly threatening cybersecurity landscape. But initiatives such as these may point to a more profound truth that can perhaps be summed up as: “A CIO’s job is never done.”

Most companies are digitally transforming, but there’s always more transforming to be done. Perhaps it’s the companies that don’t think they’re all that far along that we should be paying the most attention to; they recognize how many possibilities still lie ahead.

[ Also read Digital transformation: 4 security tips for 2023. ]

Digital transformation strategy remains the top funding priority outside of IT in the current report, just as it was two years ago.

One thing that shifted significantly this year was the absolute top priorities within digital transformation.

Not all of them. Cost is still well down the list at 9 percent. Culture, speed, and experience are in the same general range. However, this year innovation and security traded the top spot, with security now one point higher while it had trailed by seven points last year. Innovation is still a priority, as shown by its close second-place ranking in this survey and other research. For example, Red Hat’s 2022 The State of Enterprise Open Source reported that ensuring their organizations had access to the latest innovations was one of the key advantages of enterprise open source software.

However, given the spotlight that’s been turned on security – and the genuine financial and reputational risks that data breaches, ransomware, and other security-related failures can have – it shouldn’t be a big surprise that security has emerged as a slightly more top-of-mind imperative.

The barriers to digital transformation haven’t shifted much over the past couple of years: Skillset or talent gaps take the top slot, followed by integration issues, technical debt, and security or regulatory gaps/risks. The talent shortages in IT and elsewhere get talked about a lot.

What is often less clear is what strategies companies follow to do something about it. The 2022 Digital Transformation Refocused: New Goals Require New Strategies Harvard Business Review Analytic Services report sponsored by Red Hat found that “upskilling/training is not a primary business goal for most organizations over the next year; it is one of the least-cited priorities among respondents at 14 percent. Moreover, nearly a third (31 percent) say they disagree that their organization is a leader in offering training to employees to improve or modernize their skill sets for the future.”

The 2023 Global Tech Outlook report paints a possibly more optimistic picture. While digital transformation was the top non-IT funding priority overall, it’s followed by technical/technology skills training and people/process skills training. Combine the training categories, and they outrank digital transformation.

While it’s always reasonable to question whether funding priorities will be followed up on when allocating money and time, there’s at least a recognition that developing employees should be a priority.

Companies are investing in digital transformation – whatever that term means to them precisely in the context of their own business. Most aren’t close to declaring victory yet, and the reality is that they probably won’t (and shouldn’t) ever do so. There are always new processes to streamline and new technologies to integrate. But it takes people most of all. And in several respects, that’s more of a challenge today than ever.

[ 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.