Digital Transformation is Still Largely Technology-First, People-Second

Digital transformation has officially become a ubiquitous term that describes any company's investment in digital infrastructure regardless of ultimate vision and intention. But, unless digital transformation takes a technology-second and a customer/employee first approach, investments will be unaligned with market evolution and more importantly, human behaviors, preferences and expectations. Technology is just a means to power business transformation. But technology can only get part of the job done. You need people. And, like technology, people are changing.

Each time I study the “state of” digital transformation, I learn time and time again, that companies are modernizing the back and front office with the best of intentions but not with new perspectives. As a result, IT continues to operate like a technology partner, marketing sells through creativity and touchpoints, support scales automated or dated customer engagement services at a technological arm's length, but little is done to upgrade business integration, continuity and value propositions through human-centered design.

When I published my first research report on the subject, I specifically reached out to companies lauded for their progressive advancements against digital Darwinism, the rate companies evolve compared to technology and society. What I learned from the onset was that digital transformation is (or should be) a story of business transformation and people. In the most interesting cases, digital transformation evolved from technology-first approaches to the quest to better understand the new generation of digital customers and employees and then invest in technology, leadership and operational strategies that steered the company in a more relevant and empathetic direction.

In my latest report, I surveyed over 500 executives around the world to understand where companies are in digital transformation, the challenges they face, the catalysts that spur change, the initiatives that take priority, how companies measure ROI and success, and more. The result is, “The 2016 State of Digital Transformation” and it is immediately available for download.

Following are some of the TL;DR highlights:

The Changing Customer and the Lack of Customer Appreciation

55% of those responsible for digital transformation cite “evolving customer behaviors and preferences” as the primary catalyst for change. At the same time, the number one challenge facing executives (71%) is understanding behavior or impact of the new customer. Despite more data being available about customers, this statistic (71%) increased from 2014, when only 53% cited understanding the new customer was a significant challenge. Knowing this, it's all the more surprising, nor not, that only half (54%) have completely mapped out the customer journey.

You would think by now that companies would understand the extent we're living in a mobile-first world Yet, a mere 20% of leaders surveyed are studying the mobile customer journey/behavior. That's right…20%.

This means that many companies are changing without true customer-centricity. More so, you can't know customer behaviors if you don't study them and appreciate it how they inform your next steps.

The Top 3 Digital Transformation Initiatives

1) Accelerating innovation (81%)

2) A modernized IT infrastructure with increased agility, flexibility, management, and security (80%)

3) Improving operational agility to more rapidly adapt to change (79%).

Define “Accelerating Innovation”

81% said innovation was at the top of their agenda, 46% stated their company has launched a formal “innovation center.” Right behind innovation was modernizing IT infrastructure (80%) and improving operational agility (79%).

Who Owns Digital Transformation?

Digital transformation is largely led by the CMO (34%) and not the CIO/CTO (19%).

What's the Long-Term Vision of Digital Transformation?

The easy answer is that most companies are focusing on the immediate horizon. Digital transformation appears to be driven by short-term plans: Just 29% of companies have a multi-year roadmap to guide to digital transformation evolution.

The 2016 State of Digital Transformation

As in every report I've published in this space, customer experience (CX) remains the top driver of digital transformation. I also learned that IT and marketing and other functions not only influence technology investments (even without fully understanding customer behaviors and expectations), they must work together to advance along the “Six Stages of Digital Transformation.”

One of the top questions I'm asked right now is where most companies reside in the “six stages” based on the new data in the latest “state of” report. The answer is that in the broader scope of business transformation, many companies are still early in their development. But please do use this data and the maturity model to guide your next steps and bring about the change you wish to see…and you wish others to see…in your work.

The future of all of this starts with you.

Please download the report here.

Note: I want to send a very special thank you to Jaimy Szymanski who has been my long-time partner in research and who once again helped bring this report to life.

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Digital Transformation is Still Largely Technology-First, People-Second

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