Why Digital Investment Must Improve Efficiency in 2021

We probably all can agree with Microsoft CEO Satya Nadella’s sentiment that, as a result of COVID-19, “We’ve seen two years’ worth of digital transformation in two months.” While the concept of digital transformation has been floating around strategic planning meetings and yearly reviews for nearly two decades, the acute need for technology investment has […]

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We probably all can agree with Microsoft CEO Satya Nadella’s sentiment that, as a result of COVID-19, “We’ve seen two years’ worth of digital transformation in two months.” While the concept of digital transformation has been floating around strategic planning meetings and yearly reviews for nearly two decades, the acute need for technology investment has never come into focus quite as clearly as it has over the last 10 months.

For the enterprise, investing in new digital tools, workflows and processes is no longer a competitive advantage. It’s a matter of survival.

Moreover, we’ve seen how a world driven by technology–and huge uncertainties–can shift in an instant. In a way, what we’ve all experienced in 2020 and at the outset of 2021 is simply a reaffirmation about why these investments have been earmarked as critical for so long. We’ve now all experienced firsthand how quickly things can change and the true value of agility in all aspects of operations. Now more than ever before, IT and business leaders are in the hot seat to ensure fast execution, employee adoption and ROI when it comes to technology implementation.

These decisions will not only improve short-term business outcomes, but these investments will ensure that firms can survive in a world of seismic change and instant instability. As technological investment ramps up, it’s clear that there’s a need for more strategic focus. In fact, almost half of the legacy experience technology that firms have invested in on the path to digital transformation is no longer being used today.

A survey of 100 business, marketing, and technology leaders in UK enterprise companies in mid-2020 uncovered the current priorities of digital business transformation, the state of investment in digital experience technology, and a possible solution to the legacy software that’s stymying modern business. Here are some highlights.

Data Point No. 1: Digital ambition is high.

More than half of business leaders and one-third of IT and marketing decision makers said they expected to invest substantially in new technologies over the next 18 months to align their current digital experience with their ambitions. At the employee level, KPMG UK found that 70% of workers agreed that digital transformation is a leading priority in their businesses. So it’s no surprise that 98% of all respondents reported having some type of digital transformation project under way.

Data Point No. 2: COVID-19 drives remote working investments.

While COVID-19 has made most digital priorities more important to some degree, technology that enables remote work had the biggest upward growth when it came to transformation priorities. In fact, 62% of respondents said it had become “much more important” since the outbreak of COVID-19.

When evaluating new technology, 83% of respondents said features that support remote work had become more important since January 2020, and 71% said features that make employee adoption easy had become more important.

Data Point No. 3: Modern software is better for employees.

Almost three-quarters of respondents agreed that modern digital experience technology makes life better for employees. Forty-four percent of respondents said their teams were more productive, and 28% said their teams were both more productive and happier after their organizations made the switch from legacy to modern software.

Data Point No. 4: Despite digital acceleration, technology investments languish.

The hard truth is that, on average, enterprises are using less than half (49%) of the digital experience technology that they have invested in over the years. Moreover, a quarter of today’s technological investments are already unable to meet digital ambitions today. Over the next 18 months alone, that percentage is expected to grow to one-third of technology investment.

Data Point No. 5: Integration, maintenance, and support issues stand in the way.

The top three contributing factors to the gap between technology investments and digital transformation ambitions are:

• Lack of integration with other technologies: With an application integration rate of just 26%, it makes sense why 74% of IT decision makers cited “lack of integrations with other technologies” as a leading reason why a digital transformation investment fell short.
• Time spent maintaining the technology disproportionate to its business value: Close to 40% of respondents across the board agreed that a major hindrance to using legacy experience technology was that the time spent maintaining the investment was disproportionate to its overall business value.
• Inability to support new demands from inside the organization: Similarly, about 40% of respondents said a lack of support for demands coming from inside their organizations was another leading point of failure for legacy digital experience technology.

Speaking of support, receiving inadequate support from the technology vendor ranked just as high for business leaders but was one of the least impactful issues among IT decision makers—highlighting an interesting disparity between the way different departments think about technology investment and implementation.

In short, the encumberments that are common to “all-in-one” legacy technology suits are starting to become their greatest downfall in the modern era.

Data Point No. 6: Key features leaders seek in transformative tech.

When evaluating new digital experience tech in which to invest, companies prioritize the total cost of ownership (62%), ease of integration into the current technology stack (56%) and optimizing and streamlining current processes (50%). Unfortunately, these aren’t features that are common in the digital transformation technology that’s available today—not of the legacy variety, anyway.

The all-in-one legacy technology platforms in which many businesses invested—and continue to invest—are causing most of today’s barriers to true digital transformation.

As digital needs expand and more tools have to be “bolted on” to existing legacy technology platforms, companies find them increasingly inflexible, overly complex and expensive to run. This is why modern enterprises and software vendors are adopting MACH (microservices-based, API-first, cloud-native SaaS, and headless) technology that enables them to create evolvable solution ecosystems.

MACH technologies support a composable enterprise where each component is pluggable, scalable, and replaceable. This enables technologies to be continuously improved so evolving business requirements and goals can be met without wasting a large percentage of the investment.

Data Point No. 7: Businesses may finally close the gap on transformation ambitions in 2021.

While modern trends were already driving the need for digital transformation, COVID-19 has quickened the pace at which enterprises must adopt modern technology to remain competitive. By prioritizing MACH architecture, IT and business leaders will finally be able to achieve the streamlined, easy-to-integrate, and cost-efficient transformation they’re seeking in 2021.

eWEEK Guest Author Nishant Patel is co-founder and CTO of Contentstack.

Photo by Anna Nekrashevich from Pexels

If you have a suggestion for an eWEEK Data Points article, email cpreimesberger@eweek.com.

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