Trillions spent on digital transformation and customers don't notice

Only 28 percent of digital investments focus on customer experience. Is that a bad thing?
Written by Joe McKendrick, Contributing Writer

Too many digital transformation projects focus on technology optimization, rather than the ultimate customer experience, a recent study suggests. Can enterprises make the shift to customer orientation, and will it make a difference? 

The study of 800 executives and 800 consumers, released by Kony, looked across four industries -- banking, retail, utilities, and healthcare -- and concludes that $4.7 trillion in investment dollars have yielded little improvement, with only 19 percent of consumers reporting any significant improvement in the experiences offered to them. 

Most digital transformation efforts do not have visibility. If anything, consumers underestimate the number of businesses that are investing heavily in every customer experience outcome by at least 50 percent. Consumers also are not giving businesses credit for the level of investments they are making. Conversely, businesses are not listening to – or understanding – the needs of customers. 

Most digital transformation is internally focused -- 68 percent of initiatives are business process centered, while only 28 percent were customer experience centered. A meager handful, four percent, consider their initiatives to be employee experience centered.

It appears that a greater outward focus pays off for the business. A majority of customers, 62 percent, would spend more money if their digital experiences "feel effortless." The leading companies in the study "consistently recognize the need for change and they are prepared to take risks," the researchers report. "They have agile, customer-focused organizations that recognize digital transformation is a cultural change, not just a technological change." The "laggards," however, tend to exhibit an internal focus -- improving workflow productivity, cost reduction, better internal collaboration.  

There are sound, logical reasons why many enterprises keep their digital efforts focused on internal processes and efficiencies, of course. Better targeting IT investments to achieve business outcomes can be a complicated thing, George Hulme, writing in DevOps.com, suggests. There is plenty of activity that seeks to better align technology with the business. Digital transformation is "a never-ending continuum, and those enterprises that are investing in the removal of technical debt, modernizing their software delivery methods, machine learning and streamlining their businesses to be more cost-effective and agile are building platforms that will sustain their businesses and provide exceptional digital experiences over the long haul."

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Here are some of the recommendations the survey report's authors make to move forward on the road to digital:

Say no to silos and yes to integrated digital strategy. "The majority of digital transformation initiatives follow a coordinated, siloed approach, where individual departments lead specific projects with central funding support. Digital leaders are more likely to have a centrally funded, strategically managed digital transformation initiative, a consistent and enterprise-wide strategy, executive buy-in and commitment to change drive success." 

Prioritize investment in digital outcomes, not digital initiatives. "In every industry and region covered in this survey, consumers believe that businesses are under-investing in delivering excellence in digital experiences. This is not just about how much is being spent; rather, it is about how and where spending is being prioritized. 

Embrace innovative thinking, ambition and a commitment to improvement. "Digital transformation leaders look to the market and their potential customers to guide their next investment priorities. They focus on building a culture and technology infrastructure to support the future as much as enhancing current business process. Digital transformation leaders are always looking for what is around the next corner, not just at the challenges of today." 

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