Where Digital Transformations Stumble: An Analysis
Enterprises seem to have the right broad vision for digital transformation but often struggle with alignment and execution.
According to research firm IDC, enterprises spent more than $1 trillion last year on digital transformation efforts — and they’re nowhere near done. The firm anticipates digital transformation spending will increase 42% by 2019.
Yet IDC, among others, also notes that many digital efforts are moving slowly — or worse yet, stalling. What’s causing this disconnect between spending and execution?
One issue is that digital transformation usually isn’t about buying and deploying a certain technology — it’s about leveraging technology to change how business is conducted. The overarching goal typically isn’t cloud or mobile or machine learning — it’s about creating the agility to perpetually adapt to continual, accelerating change. In this sense, digital transformation is a somewhat misleading term. Businesses shouldn’t aim to transform from one thing into another so much as learn to shape ongoing evolutions.
To form goals around perpetual business evolution instead of finite digital transformation, businesses may need to think more holistically. McKinsey, for example, finds that today’s most successful businesses have made aggressive technology investments across a range of business dimensions.
McKinsey’s research reflects our observations here at Google’s Apigee team from working with hundreds of companies on their digital transformations. Recently, the Apigee team introduced a new way to examine these transformations and to assess where they’re most likely succeeding and faltering: Apigee Compass.
Using the results of a short survey, the Apigee Compass tool generates a digital score to help a business measure its efforts and provides recommendations tailored to that organization’s current needs. The score is based on sub-scores across 10 dimensions, allowing organizations to understand where their plans may get derailed.
Our analysis of anonymized responses to the Apigee Compass survey from 2,060 unique users collected between July 1 and December 1, 2017 suggests several clear patterns.
Key Findings
Broadly, enterprises appear likely to have the right vision for digital transformation:
- 62% are using platform strategies, such as leveraging external platforms like Android or iOS or building an internal API platform.
- Fewer than 10% are not planning to transform or modernize IT.
- 56% are pursuing digital ecosystem participation.
- 57% are deploying agile methodologies and other software development lifecycle (SDLC) best practices in most or all of the organization.
But organizations appear weaker on alignment and execution:
- 57% view APIs as integration tech, rather than as strategic assets or products for developers.
- 39% indicate they don’t measure API usage at all, and another 21% only measure exposure, not consumption or value. This limits an organization’s ability to drive internal alignment, mine data for insights or develop an outside-in culture.
- Two-thirds of respondents indicate they severely lack developers experienced in modern, API-oriented application development.
- Only 1 in 4 respondents indicates their organization has a digital transformation imperative driven from the C-suite.
- 32% have no API self-service, which severely impedes developers’ ability to leverage business assets. Another 26% have self-services processes that take days or weeks.
Thinking Holistically
Analyst research, our experience at Apigee working with Fortune 500 companies, and Apigee Compass user data all circle the same message: if you think of digital transformation as a finite activity, rather than a holistic and ongoing reworking of the business, you may already be behind.
To begin making strides faster, businesses should recognize that, yes, staying competitive is about technology — but it’s also about governance, funding, development cadence, internal alignment, metrics, operations, and everything else that must be in place for the technology to make a difference, and for IT to shift from a curator of infrastructure to an enabler of business opportunities.
Because these dimensions are interdependent, the path forward for each business will be different. Companies may learn things from observing the big “digital native” companies — but in the end, a successful business evolution isn’t about becoming Google or Facebook or Amazon. Rather, it’s about expressing core business assets and competencies as software and then operating the business in new ways that only software can enable. As businesses begin to focus less myopically on “digital” and begin to more fully consider how to evolve larger business operations, they’ll be primed to make the leap.
[Looking for more insights about digital transformation? Check out Apigee’s resource hub here.]
