IFS has released the second phase of its Digital Transformation Study, which has found that Australian businesses seek out technology vendors with specialist industry expertise (40 per cent) who are proven innovators (30 per cent). These considerations trump ethics (10 per cent) and cultural alignment (22 per cent) which were much more important to businesses globally (23 per cent and 28 per cent respectively).
The vast difference in Australian attitudes can be attributed to business leaders being more sceptical and pragmatic when dealing with vendors – while culture and ethics is important, it comes secondary to the delivery of proven innovative solutions.
This is unsurprising, considering poor advice from vendors was the top reason cited by Australian businesses for why digital transformation projects to fail (46 per cent).
Despite the uncertainties caused by the COVID-19 pandemic, a majority of companies are planning to increase their digital transformation spend. With more businesses investing, with the aim of driving revenue post-pandemic, the cost of failure is high and it’s becoming even more important to get investment right.
Despite this, a resounding 53 per cent of respondents at companies in Australia with revenues between US$850 to US$950 million stated that they had been forced by senior management or the board of directors to use a well-known vendor that was a poor technological fit.
“It is not surprising to see Australian business leaders take on a more pragmatic approach to choosing who to do business with compared to rest of the world, with poor advice from vendors often seen as the biggest driver of failed digital transformation projects that have large financial and workforce investments attached to them,” said Warren Zietsman, Managing Director for IFS Australia and New Zealand.
“We are seeing a shift in the local market, with business leaders seeking out vendors that can provide not just deployment guidance but strategic counsel on customer experience, system integration, and future workforce capabilities.”
“Technology vendors with specialist industry expertise and ‘For the Challenger’ mindsets to innovation, are also seeing an uptake of interest,” said Zietsman.
Moreover, respondents indicate that failure in past projects makes management more reluctant to engage in future digital transformation efforts, with budget overruns a major reason management may put the brakes on critical projects. Blown timelines on past projects have made management more risk-adverse.
Further analysis of the findings shows that the success of these digital transformation projects primarily hinges on finding the right technological fit (46 per cent) and establishing clear objectives (60 per cent).
In fact, the top-three vendor trust factors highlighted by respondents are on-time delivery (59 per cent), support before, during and after project completion (49 per cent), and proof of concept and validation (37 per cent).
About the survey
The study is based on responses from 3,032 executives in the United Kingdom, the United States, Australia, France, Germany, and the Nordics. There was a weighty sample size of more than 500 in each region.
A vast majority of respondents are from companies in the midmarket ($250M – $500M) and enterprise market ($500M+), taking into consideration in annual turnover and spending power.
Respondents represent a broad industry scope, including manufacturing, construction, healthcare, IT and telecommunications, energy and utilities, and travel and transport.
Data was collected between 8 April and 5 May 2020, by independent research organisation, Censuswide.
The report, ‘Digital Transformation Investment in 2020 and Beyond: Post-Pandemic Business Success and Failure Factors’, can be found online here.