Harvard Business Review Analytics Services Report - Digital Transformation Refocused: New Goals Require New Strategies

The Covid-19 pandemic has been a catalyst for many organizations in their digital transformations, leading companies to expedite technology initiatives, design dramatic changes to processes and reexamine culture and the role it plays in today’s new business world. As some organizations find success in their digital transformation strategies, they are able to provide additional bandwidth to their teams to focus on improving customer experience through the collection and analysis of data.

Successful digital transformation allows for mistakes, encourages transparency and supports open communication. If new initiatives fail, retrospectives need to be encouraged at both the team and organization level. A lack of institutionalized open communication strategies will prevent the organization from learning, evolving and gaining strength through these failures. It’s important to celebrate success and learning and invest in the employees and partners of the organization.

For the past several years, Red Hat has sponsored a Harvard Business Review Analytics Services report that explores how digital transformation has evolved, the main challenges companies are experiencing today, what leading organizations are doing differently, and what steps that businesses can take to identify and address key focus areas in the year ahead. By sponsoring this survey annually, we are able to explore and evaluate candid insights from IT leaders who are addressing these challenges head-on.

Some of the key highlights from this year’s survey results include: 

• 63% of survey respondents defined as leaders — 24% executive management/board members, 43% senior management, 25% middle management, 5% other grades — were significantly more successful in modernizing their workplace cultures in 2021, compared to 23% of the remaining sample

• 34% of all survey respondents say their top business goal is enhancing customer satisfaction, followed by better analyzing enterprise data to uncover new business and operations insights (33%) — two goals that represent shifting business priorities for 2022 transformation efforts 

• 27% of leaders are more likely to indicate that their organization has a much higher organizational commitment to cultural change compared to 14% of the remaining sample

New priorities and challenges arise amid success

As organizations rethink their business models, strategies and processes, they are setting new digital transformation goals and brainstorming how to meet them.

In 2021, respondents reported that their organizations prioritized internal processes — such as increasing productivity/efficiency (37%), improving business continuity and resiliency (32%) and increasing agility (30%), all of which mirrored the period during which organizations implemented major technology, culture and process changes — to adjust to the new normal the pandemic created.

In 2022 and beyond, however, respondents’ organizations are shifting the business goals for their transformation efforts to focus on enhancing customer satisfaction (34%), better analyzing enterprise data to uncover new business and operation insights (33%) and continuing to increase on pure business survival. Organizations now have more room to optimize their data strategies, find ways to be more innovative and improve the customer experience beyond updates and accommodations made to adapt to the pandemic.

To achieve these business goals, however, companies will need to contend with challenges that threaten to hamper their success. Among the top digital transformation challenges respondents reported is embracing these efforts across the entire organization (46%) and aligning digital transformation with business objectives (45%). Without collective buy-in from the organization on the vision of and path to transformation, these efforts will undoubtedly fail.

Aligning digital transformation efforts with business objectives and key performance indicators (KPIs) is another key challenge that organizations must overcome. Without clear alignment, decision making will take longer and the value in digital transformation efforts will decline.

Organizations are also being hindered by personnel challenges, both in finding and securing talent to support new digital initiatives and in creating a culture of continuous learning. Without concerted efforts to reinvent hiring practices for a global workforce — and by ignoring opportunities to cultivate internal talent — organizations risk not only their ability to support new technologies and quickly evolving business priorities, but ultimately their competitive edge, as well.

Upskilling and training internal talent could help organizations alleviate the current hiring and retention obstacle, though respondents indicated that upskilling/training is not a primary business goal, one of the least-cited priorities (14%) for most organizations over the next year. By prioritizing upskilling and training over the next year, organizations could close skills gaps without needing to contend with a highly competitive talent market.

Technology priorities endure

In the next year, organizations will continue to invest in technologies that streamline processes and deliver more business value.

Mirroring 2021, half of the executives surveyed (50%) say that their organization plans to invest in business process automation in 2022, followed by artificial intelligence (AI) and machine learning (ML) technology (44%), which is also the same percentage as last year. However, respondents indicated a bigger emphasis on using data analytics for business insights — likely due to the increase in AI/ML usage for data improvements. 

In 2021, 27% of organizations said that better analyzing enterprise data to uncover new business and operation insights was a primary digital transformation goal, ranking fifth, but in 2022 that percentage increased to 33%, ranking as the number two digital transformation business goal.

The survey found that AI and ML are technology investments that leaders are prioritizing today. For example, leaders are more likely to say they will be investing in a wide range of technologies over the next 12 to 18 months to support their digital transformation, with a notable difference on AI/ML technologies (52% versus 42%).

Overall, they are also more likely than the remaining sample to indicate much higher organizational commitment to technology advancements — 38% versus 18%. This increase proves that smart technology investments matter and leaders are getting them right. 

Moving forward

In 2022 and beyond, organizations will need to confront and actively address cultural challenges that are hindering digital transformation efforts from being embraced across the entire organization. In the words of Charlene Li, chief research officer at PA Consulting, “Not enough businesses focus on the transformation part of digital transformation, and the transformation part has always been about people. This has been the blind spot for so many digital transformation efforts—it’s what a lot of companies are missing.”

For some, this means reevaluating hiring strategies and increasing reskilling and upskilling opportunities to alleviate current hiring challenges. For others, there may be a need to reassess whether or not they are adopting the right technologies and applying them correctly. Regardless, knowing how their transformation efforts align with business objectives and KPIs plays a huge role in their digital transformation success. 

Learn more

Read the full report here: Digital transformation refocused: New goals require new strategies.