The 2017 State of Digital Transformation

Digital transformation is more than a buzz word even though it has definitely achieved that status. In reality, digital transformation is one of the most promising business movements modernizing constructs and models for a digital economy. The name however, can be misleading. “Digital” is more than technology. It’s adapting businesses to operate with digital mindsets and perspectives supported by modern technologies across the organization and markets. But, every company thinks about and approaches digital transformation differently. It’s one of the reasons I spent over a year documenting how companies evolve in “The 6 Stages of Digital Transformation.”

To track how organizations progress along the 6 stages (or don’t), I, along with my Altimeter colleagues, study the state of digital transformation and publish an annual report to share our findings. I’m proud to announce that the “2017 State of Digital Transformation” is now available for download (free with email gate).

Now in its third year, we surveyed more than 500 executives and digital strategists to understand the current challenges and opportunities they are facing as they undergo a digital transformation. In 2017, we reveal how, why, and to what extent businesses are investing in digital strategies, initiatives, and operational models. The good news, we’re happy to report, is that a growing number of businesses are investing in innovation strategies to uncover new growth opportunities. The bad news is that most companies we surveyed are ignoring the pervasive changes happening to connected consumers’ buying behaviors and as such, they’re making investments that are not truly customer-centric.

Defining Digital Transformation

To reflect the current state and direction for our 2017 report, we continue to evolve our definition of digital transformation. This year, we have slightly amended the definition to mean:

The investment in and development of new technologies, mindsets, and business and operational models to improve work and competitiveness and deliver new and relevant value for customers and employees in an ever-evolving digital economy.

Report Highlights

Even though “digital transformation” is a popular topic, data reveals that many companies are still not operating with a sense of urgency to invest in new technologies, models and teams.

Companies largely don’t see disruption as a threat. Only 37% of businesses view digital transformation as an investment in the fight against market disruption.

While businesses cite “evolving customer behaviors and preferences” as the top driver of digital transformation, fewer than half invest in understanding digital customers (42%). 

The majority of businesses are planning roadmaps with incomplete information about the customer. This year's findings show that only 34.8% of businesses have fully mapped the customer journey within the last year—down from 54% last year.

Organizations face big challenges, including a lack of digital talent and expertise (31.4%), the perception that digital transformation is a cost center and not an investment (31%), and general culture issues (31%).

While some companies are attempting to modernize employees’ skillsets with new training programs (62%), only about half are investing in new digital talent.

In 2014 and 2015, our research about digital transformation was among the earliest to point out the growing rivalry between Chief Marketing Officers (CMOs) and Chief Information Officers (CIOs) as primary owners or sponsors of digital transformation. This year, 28.2% of our survey participants indicated that the CIO/CTO is responsible for digital transformation, compared to CMOs at 22.9% of respondents.

**There’s good news too!** 

“Digital mavericks” are investing in digital transformation as a competitive advantage.

Among digital mavericks, innovation is becoming an executive-level mandate, with organizations sparking innovation through “innovation tours” (38%), in-house labs (56%), and encouraging a culture of innovation (53%).

Digital Transformation Needs Change Management

Many of the challenges in digital transformation are no stranger to business evolution. They’re often human and require management and shepherding to guide change from the perspective of the organization and individuals. The red flags in this year’s report signal the need for more businesses to develop and realign priorities and operate with a sense of purpose and urgency. As we document in The Six Stages of Digital Transformation, when companies focus and invest in technologies that positively affect customers’ and employees’ new expectations, preferences, and behaviors, these businesses become more competitive and grow.

Please download this year’s “State of Digital Transformation” to more effectively guide your journey.

Brian Solis is principal analyst and futurist at Altimeter, the digital analyst group at Prophet. He's also a world-renowned keynote speaker and 7x best-selling author. His latest book, X: Where Business Meets Design, explores the future of brand and customer engagement through experience design. Follow him on Twitter, Facebook and LinkedIn. Invite him to speak at your next event.