We’ve moved from a point of the media talking about the digital transformation’s promises and opportunities to a point of media pointing out many digital transformation projects are underperforming in expectations. Adding fuel to that fire is Gartner’s recent claim that digital transformation is going through the trough of disillusionment. But the facts belie that. We at Everest Group struggle with the Gartner claim, given that we are seeing an uptick in the size of digital transformation projects. What’s the explanation for the difference between Gartner’s claim and what we’re seeing?
Here's what we see: the size of digital transformation projects is exploding. Last year we saw relatively small, focused projects of $500,000 to $3 million. Now digital transformation projects consistently hit $20-$100 million in size.
We find Gartner’s comment interesting, but I think it’s dangerous to take that comment in isolation.
We see a real step up in the size and number of large projects. As we try to square that circle without being privy to Gartner data, it’s possible that what we’re seeing is companies moving from rampant speculation or trying many, many pilot initiatives to now focus on a few key initiatives aimed at driving substantial business impact. We are seeing steady growth in the size of digital transformation projects. I believe this indicates the market is not going through a trough of disillusionment but, rather, is now being discerning on which projects to back.
Here’s another truth: large transformation projects are inherently risky and incredibly hard to deliver. Historically, that has always proved true. So, much like previous waves of transformation, many of today’s big bets on important transformation issues will fail to meet expectations. Thus, disillusionment can arise as companies recognize how inherently risky these big bets are and how difficult it is to deliver on the promise of digital transformation.
It’s possible that Gartner is picking up on the shift to larger projects and interpreting that as a disillusionment and/or picking up on the natural angst and risk of large technology-driven transformation projects.
Gartner has a record of predicting the early death of very important trends. For example, the keynote address at the 2016 Gartner BI Conference claimed data warehousing, the BI Competency Center and business intelligence, as we know it, are done, and would be replaced by business-led analytics platforms. But for those of now looking at the BI market, it’s clear that business intelligence is still very much alive and kicking and is being supplemented by Artificial Intelligence.
It feels like Gartner made the wrong call about digital transformation projects as they did with the projection of the business intelligence market. It’s possible they misinterpreted data by missing the switch from pilots to programs, which is clearly happening. Or their monitoring vehicles, which often gauge sentiment, could be picking up on the angst associated with large digital transformation projects.
Having said all that, there is absolutely no doubt that we’re seeing a significant uptake in the number of large transformation projects and the growth and size of these projects.
