Integration challenges as the price of digital transformation failure rises - new data from MuleSoft

It’s getting more expensive to get digital transformation wrong! According to new research from MuleSoft, the average cost of a botched or unfinished program now sits at around $9.5 million, up from $6.8 million last year. At a time when budgets are increasingly tight, that’s bad news all round.

Some context to the data - MuleSoft’s annual Connectivity Benchmark Report - access here, details required - surveyed 1,050 CIOs and IT decision makers across the US, UK, France, Germany, the Netherlands, Australia, Singapore, Hong Kong, and Japan. All respondents work at an enterprise organization in the public or private sector with at least 1,000 employees and hold a managerial position or above in an IT department.

Despite the current macro-economic climate and a slowing down of the buying cycle, as reported by MuleSoft parent Salesforce and most other enterprise tech firms, over three-quarters of respondents to the study (78%) actually expect to see IT budgets increase over the coming year. MuleSoft’s data suggests that global enterprises spent $11.7 million on IT teams alone over the past 12 months, up from $9.4 million the year before. 

Meanwhile organizations are expecting more for their money, with the number of projects that IT teams are expected to deliver rising 41.32% over the past year. But the IT-centric respondents are giving themselves a pat on the back, with nearly half of them (48%) claiming to have delivered all the projects asked of them, while stating that the percentage of programs not delivered on time has fallen from over half (52%) to under a third last year (30%). 

The respondents are also pretty upbeat about their success rate on digital transformation overall, with 69% claiming to be ahead of where they need to be and only ten percent suggesting that they’re falling behind, while 21% reckon they’re about on par with expected progress. 

So the problem is...?

All of that sounds pretty positive overall, although it’s important to note that 52% of respondents have not delivered everything asked of them. So what are the blockers to success? As might be expected from a MuleSoft study, integration issues figure highly, with 80% of those polled citing this as a general inhibiting factor, rising to 90% among organizations that admit to being behind on their digital transformation programs. Organizations used an average of 1,061 different applications over the past year, up from 976 the year before. Only  29% of these applications are currently integrated, according to the MuleSoft study. On average, some $4.7 million was spent by enterprises on custom integration over the past 12 months, up from $3.6 million the year before. 

Breaking the inhibiting factors down, integrating siloed apps and data is pointed to by 36% of respondents, sharing top billing with lack of skill sets within the IT team and risk management/compliance issues. Hiring/retaining the IT comes in at 34%, reflecting the ongoing Great Resignation - how much this changes with cross-tech sector round of headcount reductions currently underway remains to be seen - and legacy infrastructure/systems. 

In terms of data siloes, the biggest challenge remains incorporating data-derived insights into user-facing applications, cited by 77% of respondents, following by moving data from source systems into a data warehouse (75%) and reusing data sources across different user-facing applications. 

And at a time when customer expect a connected user experience, the number of enterprises that can confidently claim to offer that remains low at 36%, albeit up from the 30% that boasted of this capability the previous year. Over half (54%) of respondents argue that it’s difficult to integrate end-user experiences, a percentage that rises to nearly three-quarters (74%) among organizations that are behind schedule on their digital transformation programs. 

An increasing number of enterprises are looking to automation tech to address some of their challenges, with a third of respondents expecting to invest in RPA (Robotic Process Automation) over the coming year. This puts some additional responsibility on IT teams with 67% of respondents saying automation tech will be managed centrally by them and 59% saying that it will be tracked centrally. 

But it’s not just IT people who are looking to use automation tools. Other job functions need automation capabilities, including those in data science (64%), product (62%) and business analysis (61%). 

My take

Some interesting stats to be found here. I was particularly interested in the regional variations around digital transformation progress.  Over three quarters of US respondents (78%) reckon they are ahead of their anticipated results, compared to less than half (42%) in the UK. In terms of delivering on projects last year, only 29% of UK respondents said they hit all their goals, while in the US that rises to 56%. Is that American exceptionalism vs British inhibition in action?