A global survey of 510 senior executives from large enterprises finds that the bulk of transitions being made to the cloud are being driven by business executives rather than IT leaders.
Conducted by the market research firm HFS on behalf of IBM Consulting, the survey also finds less than a third (32%) of cloud initiatives are funded by IT stakeholders. That lack of IT involvement, however, appears to be a contributing factor in large number of cloud transformation initiatives that are either outright stalled or delivering suboptimal results. The survey finds only 30% of cloud transformations meet budget and timeline constraints, with only 28% having well-defined business-to-IT relationships defined.
Only 25% can identify a solid return on investment (ROI) from cloud transformation and 32% have well defined customer journeys and value streams. Only 17% have a well-defined future-state strategy, the survey finds.
Overall, the survey also finds most, just under 95% of respondents, have some regrets over the contract they signed with one of the major cloud services providers.
The survey makes it clear organizations are encountering widespread change management issues as they embrace cloud computing, says Saurabh Gupta, president of research and advisory services for HFS. Many of these projects are now being reviewed as persistent economic headwinds to create a recessionary environment that results in flat to declining spending on IT projects, he adds.
There is now, more than ever, a need to bridge a divide between business and IT that continues to persist even though organizations realize they are more dependent on IT than ever. “There are competing priorities,” says Gupta.
Many digital business transformation initiatives were launched with little regard to total cost. In fact, in many cases transformation initiatives were launched in a way that deliberately bypassed internal IT teams. Now that these initiatives are moving beyond the pilot stage, organizations are discovering that either IT costs are higher than anticipated or, just as often, the business value of the initiative is not worth the ROI required. As a result, Digital CxOs that are leading many of these initiatives are now being challenged to deliver results faster, notes Gupta.
It’s not clear how organizations will go about realigning digital transformation initiatives in the coming year, but most will be making adjustments, especially as it becomes more apparent how artificial intelligence (AI) will be applied to business processes. In many cases, AI models may be a saving grace for a digital transformation initiative that, in the absence of relevant data, might have been doomed to fail.
None of these means there is no appetite for digital business transformation. Most organizations will instead be placing their bets more carefully. In the meantime, there is no better time than the start of New Year to reevaluate priorities.
If the bulk of digital business transformation initiatives are to one degree or another flailing, the processes by which decisions to launch them are made are obviously flawed. The challenge is identifying the initiatives that should be abandoned based on cold hard facts versus any inherent bias someone might have based on their role in the organization.