Companies undertake digital transformation for customer needs but underestimate disruption, research shows

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The ability to meet customer expectations is the most important reason for companies to undertake a digital transformation, outweighing the need to reduce business and IT costs, although companies can often underestimate the disruption the process can cause.

This is according to the findings of newly released research commissioned by multi-domain Master Data Management (MDM) solution provider, Stibo Systems.

The research was carried out to explore the reasons behind the digital transformation activities of companies in the retail and distribution, manufacturing, financial services, automotive and hospitality industries across Europe, and the challenges and opportunities these companies faced.

More than three quarters of companies claimed to be actively undertaking a digital transformation project (77%), with over half expecting their level of investment in such activity to be higher this year than in 2014 (59%).

74% of businesses said that improving their ability to meet customer expectations was a more important consideration in digital transformation than reducing IT costs (54%) and reducing the costs of doing business (62%).

Respondents were most likely to measure the success of any transformational activity by using metrics relating to customer satisfaction (77%) and customer engagement (70%).  Customer management/service and customer experience featured in the top three areas in which two thirds of the companies surveyed said they’d started their digital transformation, the third being IT infrastructure.

However, while 87% understood that it was essential to plan for major disruption, and 81% believed that a failure to predict disruption was done at a company’s own peril, more than half admitted that – in retrospect – they hadn’t adequately predicted the disruption of their own transformational activity (53%).

Commenting on the report, Simon Walker, director of innovation at Stibo Systems, said “The digital economy represents a huge opportunity. However, while companies clearly recognise the business benefits that a digital transformation can bring, it’s also clear that planning is essential and under-rated, and that without it, execution can cause major unexpected disruption. The findings are enlightening and a wake-up call to major enterprises seeking to gain the most from their transformational activities.”

Other findings include:

  • More than half of business agreed that ‘digital transformation is hampered by poor quality data across the business’ (53%)
  • 54% of companies underestimated the level of data management issues around their transformation
  • ‘Finding the right data’ (70%) and ‘inconsistent data’ (62%) were cited as the top two challenges in terms of data management when undergoing digital transformational activities
  • Over half of companies found the level of disruption in their activity exceeded their original expectations (59%)