5 Barriers to Digital Transformation in 2018

With just 5% of CIOs stating that they have achieved full digital transformation, Bob Bailkoski, CFO  Logicalis Group, looks at five barriers to digital transformation in 2018 - and five ways CIOs plan to overcome them.

Six months ago a Harvard Business Review (HBR) report - High-Performance Sourcing and Procurement, June 23 2017 - highlighted a number of factors holding back digital transformation based on a survey of 682 HBR readers the previous year.

At the same time Logicalis was conducting its annual global CIO survey [Read more...], where digital transformation and CIOs’ plans for digital transformation in 2018 took centre stage. Overall the Logicalis survey told a story of slow progress, with CIOs aware of the barriers and plotting ways to overcome them.

Digital Transformation Barriers

The Logicalis CIO survey polled 890 CIOs across 23 countries and it’s interesting to note that the barriers have not moved much since the HBR study. Indeed the barriers, in some cases, have become more pronounced as the need to change becomes more pressing:

1. 56% cited organisational culture as a barrier to digital transformation. The HBR report cited 47% as having a ‘risk-averse’ culture.
2. 50% said that cost was a barrier, this stood at 37% in the HBR report.
3. 44% of CIOs stated that large and/or complex legacy infrastructure was holding them back compared to the 52% reporting the same barrier to HBR.
4. 34% of CIOs said they just didn’t have the skills, a slight improvement on 38% in the HBR study.
5. 32% of the respondents reported that security was an issue, while HBR quoted 34%.

Interestingly, while the HBR report found that the inability to experiment quickly was the biggest barrier (53%), this was not a question asked in the Global CIO Survey, and is likely a symptom of the five barriers highlighted here.

Digital Transformation and Experimentation

But experimentation is an important consideration. The master of the digital economy, Amazon, is also a master of experimentation. So much so their founder, Jeff Bezos, highlighted it as a central plank of the firm’s success in his 2015 letter to shareholders, [http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual]. He said:

“One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”

CIOs response to Digital Transformation in 2018

The benefits of digital transformation are clear to the majority of CIOs and they are responding accordingly:

1. 51% plan to replace and/or adapt existing infrastructure.
2. 51% plan to attempt culture change - which will help to unlock budget.
3. 38% want to address skills shortages through increased training and development.
4. A third (33%) will increase budget for digital transformation in 2018.
5. 31% will be increasing security capabilities.

Organisations have to realise that change is perpetual, as my colleague Mark Rogers said in the Logicalis Global CIO survey report:

“Change is now the norm. Just as we set a course based on our understanding of the technology landscape, that landscape changes. CIOs must accept that change is constant and work out how to get on the front foot – to shape change rather than being governed by it.”

One way CIOs can shape change, is by taking a leaf out of Amazon’s book and seeking to lead by trying new things - and occasionally failing. The alternative is to carry on following and reacting - and being left behind in a business and technological paradigm that is rooted in the past.

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