Companies waste $5.5m a year on digital transformation

Despite the pandemic spurring enterprises to increase innovative IT projects, on average enterprises are now wasting $5.5 million annually on failed, delayed or scaled-back digital transformation projects - the majority for reasons not related to the pandemic - according to research.

NoSQL database provider Couchbase commissioned research among 450 heads of digital transformation - such as CIOs, CDOs and CTOs - in organisations with 1,000 employees or more in the the US, the UK, France and Germany.The research found that 77 per cent of organisations had to either make “noticeable” or “major” changes to their digital transformation plans, or start again from scratch over the past year.

However, the rate of innovation - the number of projects driven by an original idea from within the business - almost doubled, rising from 8 per cent in 2019 to 14 per cent.

Similarly, organisations said they were still able to “meaningfully improve” the end-user experience while responding to COVID-19.

Yet worryingly, the number of failed, delayed or scaled-back projects is still high, at 79 per cent. “This potentially represents a significant waste of resources”, said Couchbase, as enterprises spent an average of $5.5 million on these projects over the year.

The report also found that while the pandemic caused a “rapid reappraisal” of digital transformation plans, it did not stop investment.

Average digital transformation spend grew from $27 million per organisation in 2019 to $27.5 million in 2020.

The reaction to COVID-19 helped this: enterprises’ spending in response to the pandemic ranged from +3.8 per cent in Germany to -0.7 per cent in the UK, for an average of +2 per cent.

Ravi Mayuram, senior vice president of engineering and CTO at Couchbase, said: “The underlying issues that were preventing modernisation of an ageing digital stack have been brought to the forefront by the pandemic, and there is now even greater impetus to accelerate digital transformation.

“The realisation that ageing infrastructure will not serve organisations' new needs in a post-pandemic world where we will live, work and play remotely has tipped the scales in favour of new investments in innovation and modernisation.”

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