Focus on cost cutting a danger in digital transformation pitches

The main motivation behind digital transformation initiatives appears to be trying to save money but most customers have not yet aligned performance indicators with the outcomes of projects.

Research from the Cloud Industry Forum (CIF) and Ensono into digital transformation has revealed a mixed bag with the motivation for customer projects being laid bare but also an element of confusion about how to measure success.

Cost savings, profitability and increased productivity were the top three reasons to opt for digital transformation and 99% of customers are measuring the projects they choose to roll out.

But the measurement of projects did not align to those ambitions, with only 51% keeping track of cost savings. The most popular way of charting success was looking for customer satisfaction improvements.

Difficult as it might seem the advice for the channel is to try to steer clear of focusing on costs and to make the argument more around the longer term benefits for the customer.

“Digital transformation is fundamentally about business transformation. It is about seeing change – facilitated by technology and hybrid IT – as a revenue generator rather than a cost reduction function. Primarily, it needs to be seen as an opportunity for growth," said Simon Ratcliffe, principal consultant at Ensono.

"Growth through innovation and the delivery of the best service, product and experience to customers and through finding new and quicker routes to market. The focus on cost savings is outdated and will negate transformation efforts, limiting its scope and impact. This could ultimately have longer-term implications for the business in the digital era," he added.

Where there are no doubts is the speed with which digital transformation has become a mainstream business, with an increasing number of customers looking to implement projects.

“When the Cloud Industry Forum first started researching digital transformation two years ago, it was a relatively minor concern, with only 51% having started the process. In this latest study, 100% of the organisations we spoke to reported that they were pursuing digital transformation and some 16% stated that they had already completed it," said Alex Hilton, CEO of CIF.

"Great strides are being made, but organisations need to ensure they have the right vision, objectives and the appropriate measurements in place to ensure it delivers to the business," he added.