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Proving the Business Value of Digital Transformation Post-Pandemic

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Along with many other things, 2020 will surely be seen as the year when digital transformation and technology innovation truly accelerated. After years of steady and sometimes laborious progress, organizations hastily sped through digital transformation and application modernization initiatives that would previously have taken years to plan and execute.

Our latest report, Agents of Transformation 2021: The Rise of Full-Stack Observability, found that the timeline for the implementation of major strategic transformation projects accelerated threefold during 2020. For many organizations, rapid digital transformation was the difference between survival and oblivion, as businesses in all sectors had to suddenly pivot their go-to-market strategies to meet changing customer needs and enable entire workforces to operate remotely during the pandemic.

In such an environment, the impact of digital transformation has been easy to see. Technologists have been able to deliver new digital services and applications, without which their organizations simply wouldn’t have been able to serve customers during the pandemic. Only through accelerated digital and application transformation have businesses been able to deliver the faultless, seamless digital experiences that we have all come to rely on during lockdown; and to ensure that their employees were productive, engaged and supported during this most challenging period.

To a large degree, therefore, IT organizations and technologists haven’t really needed to measure or report on the value or return on investment of digital transformation during the pandemic – the very fact that their organizations are still operating, generating revenue and serving customers, is evidence of the impact their heroic work has delivered over the past year.

Putting metrics back into digital transformation

Technologists know that the speed of digital transformation won’t slow down over the next 12 months, even after we would have put the pandemic behind us. The world has changed forever as a result of COVID-19 and the expectations and behaviors of customers and employees will continue to evolve rapidly in a digital-first economy. Accelerated digital transformation will be the norm for organizations, with success hinging on their ability to deliver innovative digital services to customers and employees at all times.

But as we (hopefully) move towards the end of the pandemic and business leaders turn their attention from continual fire-fighting to take a more strategic approach to digital transformation, there is an increasing need to track ROI and evaluate the impact of technology on business outcomes. In a more ‘normal, less extreme environment, businesses will need a more tangible way to demonstrate the value of innovation and technology performance. Indeed, our research reveals a strong desire within IT departments to adopt better ways to show the impact of their work over the next 12 months. 92% of global technologists feel that the ability to link technology performance to business outcomes impacted to demonstrate ROI will be important in 2021.

Bridging the digital transformation measurement gap

Currently, many organizations don’t have the right tools, processes and cultures to align digital projects and technology performance to business outcomes in a meaningful way. Most technologists are unable to correlate technology performance insights across their critical
application estate with real-time business data, and that means they’re unable to prioritize innovation and investment based on customer and business impact. They’re still having to rely on instinct or gut-feeling to detect technology issues and prioritize on what to fix first.

The danger is that if technologists can’t demonstrate business value with cold, hard data, then they risk losing all of the credibility and influence that they have deservedly built up during the pandemic – they cannot fulfill their potential and operate at the highest level to drive their businesses forward. And at an organizational level, business leaders risk wasting the huge investments they are making in innovation and digital transformation, if they don’t ensure their technologists have the tools and data they need to connect technology performance to business outcomes. In fact, 72% of technologists are already concerned that they don’t have the tools they need to maximize the full potential of the rapid innovation they have delivered during the pandemic.

Full-stack observability with business context

In order to address this measurement gap, technologists need to develop full-stack observability systems across their IT setup and most importantly link it with business performance and outcomes. This correlation of technology and business data enables them to move beyond constant firefighting and make smarter, strategic decisions based on actual business metrics.

This shift is absolutely critical in order for businesses to successfully embed a sustainable digital transformation-as usual culture across their operations to thrive in the post-pandemic economy. The reactive, silo-based approach has to end now; technologists have to be able to monitor, evaluate and report on the value that digital transformation is delivering to the business.

(The author Abhilash Purushothaman is Managing Director (India & SAARC) at AppDynamics, part of Cisco, and the views expressed in this article are his own)

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