Any project can go sideways on you, but digital transformation projects, which impact multiple departments and stakeholders and often have multiple contingencies, are mission-critical. An IFS research report this summer established that among respondents with failed digital transformation projects, 45 percent were feeling the effects for one to two years, 33 percent were feeling the pain for two to three years, and 11 percent were still hurting three to four years later. Another three percent were still recovering beyond those time scales.
In all, 28 percent of respondents said digital transformation projects have gone over budget and a third (33 percent) said they have overrun the planned timeline.
The global study of 3,000 IT decision makers, C-suite executives, and individuals working in operations in six markets solicited insights about the digital transformation projects they have planned and those they have completed. A slight majority revealed a plan to increase spending on digital transformation despite the fact the sample was gathered during the initial peak of the COVID-19 pandemic (April and May 2020).
Despite a guarded optimism among businesses when it comes to tech investment, the study also showed that past successes or failures with digital transformation can profoundly affect a business.
Survey respondents indicated that failure in past projects makes management more reluctant to engage in future digital transformation efforts. In fact, budget overruns tops the list of reasons management may put the brakes on critical projects at 28 percent while 26 percent say blown timelines on past projects have made them more risk averse.
But, among companies who experienced timeline overruns, 40 percent said budgets were cut back in other areas, 35 percent said other projects were stopped, 32 percent said headcount was frozen and 31 percent said it deterred investment in similar projects.
This makes a great deal of sense when considering a digital transformation project that goes past schedule, and its impact on the business. A $1-million project may run over budget even by 100 percent. But it still might not cost as much as a missed opportunity for a project launch postponed because underlying systems are not ready, or damage to the brand caused by failure of departments or processes that impact customer satisfaction or reputation.
The Unexpected Value of ERP
These statistics shine a light on some important issues related to the value of digital transformation. Firstly, that value should be customer-defined not technology vendor-led. Secondly, that most people have a misperception about the value that ERP delivers. You may understandably think it’s just about operational efficiencies such as time saving, resource optimization, error reduction and so on. While all of these things are true, it’s not the whole story, as a 2019 whitepaper from IDC revealed. According to the paper, businesses of $2.54 billion annual revenue generate more bottom-line value by focusing on growing net revenue, rather than trying to improve operational efficiencies.
Organizations around the world are demonstrating this kind of revenue creation with IFS technologies. Respondents in the IDC whitepaper, for example, cite better sales team performance, the ability to bid for more business, improved net promoter scores (NPS), winning more deals and keeping customers for longer.
So, it doesn’t surprise me that blown timelines are more problematic than blown budgets. Both of these research papers prove the old adage that time is indeed money. In fact, the IDC paper identified that the gross revenue of the average IFS customer surveyed added 1.02 percent of net new revenue to their bottom line.
Ensuring the flow of data across their operations is necessary for organizations to implement business plans, react to opportunities, ensure timely and tailored delivery of products and services, and operate cost-effectively. Also, to realize their potential growth. They must be sufficiently agile to address opportunities and have a strong business infrastructure to ensure that they can serve their customers.
So, business transformation software has to pay back. Fast. It’s one of the many reasons we talk about ‘time to value’ with our customers. Meeting timeline requirements is important. But so is realizing value sooner rather than later. I’m particularly proud that the average return on investment (ROI) for IFS customers is just 15 months.
Read the full 2020 survey “Digital Transformation Investment in 2020 and Beyond: Factors in the Success or Failure of Technology Investments in the Post Pandemic Era” and download the IDC whitepaper, “The Business Value of IFS Enterprise Solutions with Industry-Specific Use Cases”.
— Michael Ouissi (@MichaelOuissi) July 2, 2020
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