Now in its fifth year, our annual “State of Digital Transformation” research continues to
document the constantly evolving enterprise. As disruptive technologies and their impact on
organizations and markets continue to progress, our research aims to capture the shifts and
trends that are shaping modern digital transformation.
In 2018, strategic digital transformation is only becoming more pervasive moving beyond
IT to impact competitiveness throughout the organization. Budgets are soaring. The list of
disruptive technologies on the radar of stakeholders is expanding. Ownership is moving to
the C-Suite and managed by cross-functional, collaborative groups. Customer experience
(CX) continues to lead digital transformation investments, but as we observed in 2017,
employee experience and organizational culture are also rising in importance to empower
and accelerate change, growth, and innovation.
This year, it’s clear that digital transformation is maturing into an enterprise-wide movement.
Digital transformation is modernizing how companies work and compete and helping them
efectively adapt and grow in an evolving digital economy. What’s also evident is that there is
still much work to do as companies are, by and large, prioritizing technology over grasping
the disruptive trends that are influencing markets and, more specifically, customer and
employee behaviors and expectations.EXECUTIVE
SUMMARYA successful digital transformation is an enterprise-wide efort that is best served by a
leader with broad organizational purview. For the second year in a row, CIOs are reported
as most often owning or sponsoring digital transformation initiatives (28%), with CEOs
increasingly playing a leadership role (23%).
Market pressures are the leading drivers of digital transformation as most eforts are
spurred by growth opportunities (51%) and increased competitive pressure (41%). With
high-profile data breach scandals making daily headlines, new regulatory standards like
GDPR are also providing impetus for organizations to transform (38%).
While there is a growing acknowledgment of the importance of human factors in
digital transformation – like employee experience and organizational culture – most
transformation eforts continue to focus on modernizing customer touchpoints (54%)
and enabling infrastructure (45%). But many organizations are not doing their due
diligence when it comes to understanding their customers, with 41% of companies
making investments in digital transformation without the guidance of thorough
customer research.
Organizational buy-in remains a top challenge for those leading digital transformation.
The companies we studied report digital transformation is still often perceived as a cost
center (28%), and data to prove ROI is hard to come by (29%). Cultural issues also pose
notable dificulty, with entrenched viewpoints, resistance to change (26%), and legal and
compliance concerns (26%) stymieing progress.
Innovation is staking its claim within the organization. Nearly half of respondents report
that they are building a culture of innovation, with in-house innovation teams becoming
the norm.
REPORT
HIGHLIGHTSAs our parent company Prophet observed in its report The Evolved Enterprise, “the
purpose of digital transformation is not to become more digital. It’s to generate growth.”1
That’s why we believe digital change and innovation goes beyond IT. Digital, in fact, is
becoming a Trojan Horse for total business transformation—from changing how the
C-Suite operates to transforming each strategic business function, the back-ofice units,
and everything in between.
As digital transformation evolves into total business transformation, so does how we define
it. Based on extensive interviews and our annual market survey, this year we’ve updated the
definition of digital transformation to acknowledge its holistic goals:
Digital transformation is the evolving pursuit of innovative and agile business
and operational models — fueled by evolving technologies, processes, analytics,
and talent capabilities — to create new value and experiences for customers,
employees, and stakeholders.
To help companies understand where they are — and where they need to be — on the
road to digital transformation as we define it, in 2016, Altimeter identified “The Six Stages
of Digital Transformation”.2 After years of talking to executives who were driving digital
eforts and of studying companies in their journey to transformation, we identified
a series of patterns, components, and processes that form a strong foundation for
change. We organized them into these six distinct stages:
DEFINING DIGITAL TRANSFORMATION
AND THE SIX STAGES OF DIGITAL
TRANSFORMATION
1 Suh, Chan, Tony Fross, Mat Zucker, Nicholas Carrier, Michael Welch, and Kevin Grubb. “The Evolved Enterprise: Unlocking Growth |
Digital Transformation.” Prophet. prophet/report/evolved-enterprise/.2
Solis, Brian. “The Six Stages of Digital Transformation.” Altimeter, a Prophet Company. prophet/2016/04/
the-six-stages-of-digital-transformation/.
4。