Nov 15, 2022
A study conducted by Natuvion documents that almost half of the medium to large-sized companies surveyed do not fully achieve the goals they set themselves for their transformation efforts. Their ambition concerns increasing quality, securing reliable processes, and ensuring future readiness.
Natuvion, the consulting firm with special expertise in digital transformation, conducted a study to learn more about the goals and key success factors pertaining to the digital transformation of core business systems at medium sized to large companies. The results reveal a significant gap between expected goals and true achievements. Almost half of the participating companies, with 50 percent of those representing the key industries, Automotive, Life Science, and Energy, confirm that they did not fully achieve their transformation goals, even though these projects were executed with ambitious objectives. Almost 65 percent of respondents were striving for higher quality and secure and reliable processes, more than 57 percent intended to improve their future readiness.
Patric Dahse, Founder and Managing Director Natuvion, explains that “the discrepancy between expectation and reality is remarkable. By no means did every transformation lead to the result that the companies had in mind. Project delays and budget overrun were common complaints. Some transformation projects had to be stopped or, in the worst case, reversed completely. Those companies not only wasted time but also important funds. Furthermore, it is a gamble in a disruptive environment with a potentially devastating ending.”
Over 30 percent of the companies surveyed stated that an analysis during the transformation process had not been done, and that a validation of the data quality was purposely omitted. This could be a reason why some of the transformation goals were not fully achieved. In addition, the lack of sufficient expertise in the organization could be a contributing factor that results were less than satisfactory. In that context, over 35 percent of those companies indicated that it was during the transformation project when knowledge gaps eventually had been identified.
More than 52 percent responded that upskilling and building competency in their own organization is a focus topic of their organizational change management activities. As a lesson learned, 32 percent of the companies would involve external consultancy at an earlier stage at a future occasion.
The study shows that companies would consider setting the priorities differently in future transformation projects. With their next transformation, almost 44 percent would use their experience and prioritize those important processes that must run immediately after a successful migration. This indicates that in the past, companies have not well-differentiated the various aspects, or simply set the priorities incorrectly. Another view suggests that companies underestimate the nature of a transformation and the cost involved. Almost 40 percent of respondents would generally start earlier to familiarize themselves with what lies ahead, and 33 percent would seek support from key decision makers and influencers.
Preparation projects are best practice to set the stage with a detailed as-is analysis for determining the specific goals and the transformation scenario. These projects offer an excellent opportunity for a deeper dive into potential transformation options for goal setting, data optimization strategies, and process definition. In addition, the sequence of necessary steps before, during, and after the actual transformation can be explored further.
The benefits of those preparation activities also reach into risk management. The duration of downtime is most visible and carries an immense business risk. 16 percent of the companies surveyed operate critical systems in areas such as online trading or international business transactions which do not allow any downtime at all. 62 percent state that potential business disruption may last no more than a few hours, one working day, or a weekend.
Today, systems supporting the core business are required to be available 24/7. The stakes are high in terms of selecting the right approach for the transformation. The main scenarios to be evaluated are greenfield, brownfield, and Selective Data Transition. The study backs the assumption that the right choice is crucial. The question of what would have happened if the transformation had taken a different path was responded to by 45 percent with incurring higher cost with heavy process changes, and by 41 percent with incompatibility issues with new systems.
Taking a closer look at the study, it becomes apparent that the pure plays of greenfield (all data and processes are being completely redesigned) and brownfield (all data and processes are being completely retained) transformation concepts are no longer the dominating scenarios.
Patric Dahse confirms that “these days, one-dimensional migration processes are rarely implemented strictly according to the definition.” Dahse continues that when planning the transformation, it becomes clear that a blend of different approaches offers a better suited, more promising alternative.” After all, already around 50 percent of medium-sized to large companies opt for Selective Data Transition, and only in some cases we see a greenfield or brownfield approach being pursued. In only 21 percent of the cases, pure greenfield is being selected, 29 percent decide for pure brownfield.
This large-scale study addressed a total of 201 decision makers of mid to large-sized companies who had either already completed a transformation project or were right in the process of one. The results of this effort are intended to provide valuable insight to support a more targeted approach to digital transformation.
Download Study: Transformation Study 2022 (natuvion.com)