Companies that rush major digital transformation efforts run the risk of facing challenges such as budget overruns and employee burnout, according to executives at staffing and consulting firm Aston Carter.
“One of the biggest mistakes that I’m seeing is when organizations go through this process, and they underestimate the lift required as well as the impact on their people,” Joe DiBernardo, director of market operations for accounting and finance at Aston Carter, said in an interview.
“It’s these projects that can drive people into retirement or into another organization because of how burdensome they are to those supporting the effort,” he said.
A myriad of factors are driving business leaders to undertake digital transformations, including the need to abandon legacy systems and migrate to the cloud, according to Tom Jones, Aston Carter’s director of strategic sales and solutions for financial services.
“In some cases, the technology companies are forcing organizations to go that route because they’re saying that they’re no longer going to maintain these [legacy] systems,” he said in the same interview.
In other cases, companies are looking to avoid falling behind competitors in the race to adopt cutting-edge technologies such as artificial intelligence, he said.
Chief information officers historically “owned” the organization’s tech initiatives, but CFOs are increasingly playing a more prominent role, according to Jones.
Worldwide spending on digital transformation is forecast to reach almost $4 trillion in 2027, up from $1.9 trillion in 2022, according to a May report by research firm IDC.
“Digital transformation is no longer a discretionary investment: companies that want to be competitive and win in the digital economy are leading the way,” Angela Vacca, senior research manager in IDC’s Data & Analytics Group, said in a press release when the research was announced.
Such investments are accelerating with the advent of generative AI, she added.
The demand for Aston Carter’s digital transformation services — which include the supply of both talent and consultations — has spiked in recent years, Jones said.
In a survey released by Big Four accounting firm KPMG in August, 78% of business leaders said they were “confident” that planned investments in generative AI would produce returns such as revenue growth or cost savings over the next one to three years.
But other AI studies paint a less rosy picture. Organizations are predicted to abandon nearly one-third of generative AI projects after the proof of concept stage by the end of next year, according to Gartner research, which blamed rising costs and unclear business value as contributing culprits, as reported by CFO Dive sister publication CIO Dive. Tuning, customizing or simply deploying generative AI models costs businesses an average of at least $5 million, the report said.
Besides financial risks such as cost overruns, poorly executed transformations can run into challenges related to data, systems security and controls, and skills gaps, PricewaterhouseCoopers said in a February article.
“The stakes are high, and major transformations should be carefully planned,” according to the report. “Still, business leaders often underestimate the complexity involved and may overlook the importance of addressing risks and controls.”
Jones said many organizations are building their digital transformation projects based on “assumptions about what they may need from a technology perspective.”
“It’s critically important that those assumptions are validated on the front end,” he said. “The best way to do that is to document the current business processes, and then evaluate where there are opportunities to optimize them.”