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Companies lose out as digital transformation costs skyrocket

Many projects fail to deliver because of other pressures on IT and the complexities of multicloud technology

Organisations are incurring overhead expenses averaging just over £2m a year for the time that IT teams spend laying the groundwork for digital transformation projects.

A report from Global Data Centers, a division of NTT, has found that half of digital transformation projects are always or regularly delayed. The report, Mind the hesitancy gap, was based on a Vanson Bourne survey of 200 IT decision-makers in large UK enterprises with over 1,000 employees.

It found that the main reason for these delays, according to the decision-makers who took part in the study, is that there are too many barriers or too much existing pressure on IT.

More than a quarter (26%) of the IT decision-makers surveyed admitted that their IT teams waste time laying the groundwork for these incomplete projects.

The survey reported that enterprises are investing in artificial intelligence (AI) (63%), the internet of things (58%), and software-defined networks (51%), but more than a third of the IT decision-makers said a major barrier was the complexity of connecting the multicloud services that underpin their projects.

More than a third of the IT decision-makers admitted that their organisations needed to provide significant investment upfront before even trialling new transformational technologies, and 35% said they had limited access to the skills needed to run successful projects with emerging technology, such as AI and blockchain.

The report also suggested that IT heads are concerned that a transformation project could lead to business disruption, and 34% raised concerns about the time needed to design and build a production-ready environment to run a transformation project or proof of concept (PoC).

It is very difficult to run a PoC without access to a production-ready environment where they can access all the technologies, infrastructure, connectivity, partners and skillsets they need to trial an idea and demonstrate its expected return on investment (ROI) – something very few organisations have at their disposal.

The survey also showed that UK enterprises estimate they could shave an average of nine months off digital transformation projects if they did not have to spend time building a partner ecosystem and cloud infrastructure and implementing connectivity. No less than 94% of the enterprises said their digital transformation projects could be “supercharged” if they could test new concepts in a full-scale, production-ready environment, using a multitude of cloud services, partners and connections – without the hassle of pulling everything together by themselves. 

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The report’s authors urge IT chiefs to focus on encouraging collaboration in order to run a successful digital transformation project. NTT recommends that they look to create a rich open ecosystem that offers a sandbox environment where service providers, established enterprises and startups can work together and exchange ideas to test new concepts using the latest technologies to see what works best for the business.

This, according to NTT, minimises the risk and hassle that comes with DIY approaches, enabling organisations to trial digital transformation initiatives more easily and fail faster.

John Eland, chief strategy officer at Global Data Centers, said: “The complexity of connecting a mix of cloud services and other technologies together adds a significant challenge to overcome before transformation projects can turn into a reality. Adding further strain, there is the risk that even just a proof of concept could have a negative impact on live production systems, leading to service failures that result in reputational or revenue damage.

“This is understandably causing enterprises concern, resulting in many projects falling behind and innovation to stagnate.”

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