January 23, 2020
How IT is contributing to disappointing digital deployments
In The Hackett Group’s annual Key Issues study, we asked IT leaders how well a variety of digital tool and technology deployments met business objectives. Their response was disconcerting. Deployments fell short of business objectives in from a best case 27% for cloud-based applications to a worst-case 73% for virtual assistants/chatbots. Across all eight technology categories, the result remains grim – on average, these deployments fell short of expectations for 46% of respondents. Worse, 54% of IT respondents reported negative outcomes for three or more of the technology categories.
Digital tool deployment objectives realization
Source: 2020 Key Issues Study, The Hackett Group
These results are certainly influenced by tech adoption history and scope, as well as the technologies’ relative maturity and complexity. Cloud platforms and BPM tools, which performed relatively well, have been utilized longer and are more mature than cognitive technologies, which performed poorly. And of course, as the owners and users of the digital solutions, business stakeholders bear ultimate responsibility for achieving value. But as a solution development partner, IT also shares responsibility. So, where is IT falling down?
We filtered respondent data to isolate factors that most differentiate respondents whose digital initiatives fell short from those whose deployments met or exceeded expectations. Four capabilities and conditions proved to have the greatest degree of differentiation between the two groups:
- Progress or current stage in IT’s digital transformation.
- Degree of resource overcommitment and ability to manage project demand.
- Severity of IT skills gaps.
- Ability to innovate.
- Degree of technology (infrastructure) and process complexity
Let’s look closer at two of these.
Overcommitment and poor capacity management
Respondents with disappointing results twice as likely to suffer from overcommitment and lack of capacity than respondents with successful implementations. They toil in a perpetual state of having more initiatives on the agenda than can realistically be executed. This ties up resources and prevents IT from investing the time required for successful digital outcomes – namely, stakeholder education and expectation setting, collaborating on realistic business cases, performing due diligence, and thorough piloting. If IT is not scene as a capable tech partner, business stakeholders will circumvent IT and procure and deploy new tools on their own, which may not measure up.
Perpetuating IT’s overcommitted state is the failure to rationalize and manage project demand. Of the respondents whose deployments fall short, only 28% say they effectively rationalize IT project demand, versus 58% of the successful respondents. Other Hackett research shows that top-performing IT organizations approve 44% fewer project requests for their pipelines due to more rigorous vetting.
The remedy here is to move as rapidly as possible to a business-owned project governance process that ensures that all proposed initiatives are vetted against strategic business goals and value priorities. It should be the business leadership that says “no” to specious project requests, not IT. If compromises are required, then business leadership must make those hard choices.
Critical skill gaps
Respondents whose deployments fell short face a more debilitating lack of critical IT talent and larger skill gaps compared to respondents with successful digital deployments. We’re talking digital-era skills such as experience with advanced analytics and other emerging technologies, but also core capabilities such as process redesign, strategic road-mapping and rapid applications development technique (see diagram below). The latter two skills are ones in which the fallen-short group have the biggest gaps compared to other respondents. However, the fallen-short suffer larger gaps across most to the critical skills, indicating that talent level is broadly associated with digital deployment success.
The struggling respondents exacerbate their skill gaps by their ineffective effort align IT skills with changing business need. Only 17% say they are doing well at this skill portfolio update, versus 35% of the successful respondent group.
Skill gaps (demand vs. supply)
Source: 2020 Key Issues Study, The Hackett Group
The solution to this problem must include better collaboration with human resources. In our research, world-class IT organizations nearly twice as often collaborate or leverage HR to help solve their talent needs, compared to IT organizations that go it alone. This applies to assessing business need and skill gaps for workforce planning, developing skill and competency models, identifying sources of candidates, and establishing training and development priorities and programs. IT leaders should also increasingly leverage vendors and consulting firms to provide digital skills transfer and training, building it into their contracts.
Clearly, digital’s significant failure rates cannot continue without consequences for the business and IT organization. Although there are numerous aspects that affect outcomes, IT should focus energy in 2020 on those it can control. Our findings recommend targeting digital transformation acceleration, project demand rationalization, closing skill gaps, and technology and process complexity reduction.