Data Quality and Skills Shortage Major Roadblocks in IT Transformation

Every year, Natuvion and NTT DATA Business Solutions survey top managers and department heads who successfully have completed an IT transformation in the past 24 months. These experiences aim to support those who are about to undergo such a transformation or are currently in the process (e.g., transitioning to SAP S/4HANA). In 2024, the scope of the successful study was doubled. Consequently, 1,259 transformation leaders from 15 countries were surveyed in 2024. 

The results clearly demonstrate that many companies underestimate the effort and preparation required to modernize their IT systems. Below, we provide initial insights into the study's findings, which will be officially released at the end of May.

What is a measure of success for a transformation? Is it goal achievement? What goals have companies set for their transformations, and have they achieved them? Across all regions, 57% of surveyed companies confirm they have met their set objectives. However, 43% were unable to fully realize these goals. In the DACH region, the ratio is slightly below the international results, with 55% achieving all their goals and 45% falling short of expectations. Leading in goal achievement are the NORDICS with 62.5%.

Have you achieved your goals through the transformation?

Major Transformation Hurdle: Data Quality

One of the most commonly cited stumbling blocks on the path to modern and up-to-date IT systems is data quality. When asked which technical measure was crucial in the transformation process, nearly 45% mentioned the enhancement of data quality.

What technical measures were crucial in the transformation process?

In Germany, this figure was 55%. In industries such as finance or IT, the figure also exceeded 50%. Consequently, it is unsurprising that when asked about the challenges and difficulties that surprised them the most during their transformation, poor data quality ranks prominently, at approximately 30%, placing third!

Scarce Resource: Transformation Know-how

A significant impediment on the road to a new, innovative, and high-performing IT system appears to be the lack of transformation know-how. Across all 15 countries, transformation know-how was consistently chosen as the most important success factor in transformation as well as a major challenge during planning. The lack of experience among teams in managing such projects surprised stakeholders the most (34%). Thus, it is hardly surprising that, when asked about the organizational measure crucial in the transformation process, building new competencies was overwhelmingly selected as the top priority, with over 46%. Manufacturing industries (56%) and the financial sector (52%) placed particularly heavy emphasis on this aspect.

What were the key success factors in the transformation process?

Communication: The Most Underestimated Discipline

Renovating data processing is not solely an IT project. This assumption is incorrect. This is evident from the responses to the question "Which part of your transformation project did you underestimate the most?" Approximately 39% of the 1,259 respondents underestimated the "organization of communication between departments and business units," placing this option firmly in the first place by a wide margin. In industries such as life science (42.4%), automotive (42.4%), or IT (44%), the figures even exceeded 40%. This highlights that close collaboration between IT and business units is not universally practiced and is likely to become even more challenging with less location-dependent work models such as remote work.

Which part of your transformation project did you underestimate the most?

Transformation Costs: Universally Underestimated

Whether in terms of time or budget planning, a thesis from last year's study was impressively confirmed despite significant internationalization and enlargement of the sample: companies underestimate the project of IT transformation in all areas. When asked "What would you do differently in your transformation today?" the top three responses were "allocate more time" (≈37%), "allocate more resources" (36.5%), and "address the issue earlier" (≈34%). In the manufacturing industry, 49% would allocate more time if they were in the same situation again. 44% of all executives vow that they would address the issue much earlier in a repetition.

What would you do differently today as part of the transformation process?

Cloud Transformation: Executives Do Not Expect Positive Cost Effects

The vast majority of companies use more cloud services after their transformation (56%). The goal for increased cloud usage is higher flexibility (39%), accelerated business processes (38%), and quicker and easier access to technical innovations (37%). Few expect cost benefits from the cloud. This point ranks second to last among the 13 options with only 11%! Clearly, executives understand that increased speed and flexibility through the cloud do not lead to cost reductions!

Why are you using more cloud services?

Artificial Intelligence (AI): Not Yet a Major Transformation Driver

The results of the question "What role did the introduction and use of AI play in your transformation project?" were eagerly awaited. For about a quarter of all companies, AI was a crucial driver for transformation. The same question was asked about data protection ("What role did data protection play in your transformation project?"). Data protection was significantly rated higher as a relevant driver for transformation by the respondents at 34% compared to AI. For 21% (data protection 9.6%) of the surveyed companies, AI played no role in their transformation project. Looking at the data of CEOs and executives, 14% even believe that AI played no role in their project!

Download the full study now!

https://www.natuvion.com/transformation-study-2024/