The Business Value of IT Transformation

IT Transformation offers substantial benefits that extend far beyond the network and data center. IT Transformation can drive business transformation by helping organizations to generate revenue.

An ESG global survey of 4,000 IT executives shows that IT Transformation initiatives are maturing.  But room for improvement exists — only 6% in the survey say they’ve fully transformed — and increasing urgency is warranted, given the clear benefits of ITT.

Organizations that have undergone genuine IT Transformation are able to leverage cloud computing, data analytics, automation, virtualization, and more to deliver highly personalized customer experiences, respond rapidly to customer requests, uncover or develop new revenue streams, and create new and better products faster than ever. In other words, a more agile, flexible IT infrastructure enables a more agile, flexible – and lucrative – business.

Further, IT Transformation is necessary for an organization to deploy mobile devices, the Internet of Things (IoT), artificial intelligence (AI), machine learning, real-time analytics, and other emerging digital technologies. The data-driven demands of digital transformation require a transformed IT infrastructure.

Advantages of Embracing Transformation

Fortunately, a growing number of enterprise IT leaders recognize the critical importance of IT Transformation to their organizations in the digital age.  The ESG study shows that 81% agree: “If my IT organization does not embrace IT Transformation, we will not be a competitive company.”

Many of these respondents confirm how IT Transformation can serve as an engine for both cost-cutting and growing revenue. For example, nearly one-third (32%) of respondents said they were able to free up annual IT budgets for innovation initiatives. In addition, research shows organizations realized:

• 20% total revenue growth over five years
• $206 million average higher revenue per year per organization
• 7% CAGR to revenue over five years
• 7 times more new features released per year
• 8% one-time revenue growth
• 23% lowered IT infrastructure costs
• 35% increased IT staff efficiency
• 73% reduced productivity loss from unplanned downtime
• 69% avoided revenue loss due to unplanned downtime

“There is a link between IT Transformation and how well a company performs at a business level,” ESG writes. “Transformed organizations were more than twice as likely to have exceeded their revenue targets in the past year compared with Legacy organizations (94% versus 44%).”

That’s in large part because business leaders at organizations which have undergone IT transformation “put more emphasis on measuring how the IT group supports new revenue streams,” ESG says. Nearly one-third (31%) of survey respondents from “transformed” IT organizations say enabling new revenue streams is a critical performance metric for IT, compared to only 13% of respondents from legacy organizations.

IT leaders are increasingly aware that their organizations rely on IT not just to keep digital operations running, but to advance the business.

“CIOs have said to me before that IT cost reduction efforts without additional business value will not succeed today,” writes Myles Suer, enterprise marketing manager at Dell Boomi and facilitator of #CIOChat. “They stress their CEOs want them and their teams to derive new revenue-generation ideas.”

According to a Forbes study, some CIOs — about 25% — who work closely with their CEOs are delivering. Those CIOs were 1.5x more likely “to see their organization achieving substantial year-to-year growth.”

However, Suer says, many also know they need to take the initiative. “CIOs insist that a culture of business value starts with the CIO,” he writes. “They ask if IT leaders aren’t delivering business value, why are they even there?”

Learn more about how to capitalize on the business value of IT Transformation by using this revenue gains calculator.