Continual business transformation is crucial for companies to stay ahead of emerging players and maintain a competitive edge. From bringing new offerings to market to deploying IT systems to major capital expenditures, business transformation can take countless forms. Many large institutions, however, are struggling with their transformation efforts, according to a study from Oracle, a multinational computer technology corporation headquartered in Redwood City, Calif., and Forbes.
The study, Making the Change: Planning, Executing and Measuring a Successful Business Transformation, found while the vast majority of executives (86%) said that business transformation is necessary for continued success, many are struggling with it. The study reveals one in five respondents felt their attempts at transformation had failed, and three in five have not yet attempted a transformation.
The study found while continual transformation is crucial to staying ahead of the curve, many business leaders say their organization is not well prepared. Eighty-six percent of executives believe their organization should execute a business transformation initiative regularly to stay competitive—showing executives believe their organizations need to change ahead of their industry to stay relevant. But 48% of executives believe their organization is only somewhat or not at all prepared to successfully execute a business transformation today.
Execution of a business transformation initiative can make or break its success. The most often cited cause for failure in the rollout of a business transformation initiative is inefficient execution (41%), followed by resource and budget constraints (35%). Additionally, top reasons for successful initiatives include support from leadership (51%) and strong, competent execution (48%).
Global executives say changes in client expectations and technology advances are key internal drivers for business transformation today, followed by a shifting competitive landscape. In other words, they need to innovate to do things such as develop new business models, rationalize their portfolios or improve processes to stay ahead of the curve. Eighty-two percent cited the need for innovation—the increased ability to develop and deliver new products and services to the market and clients—as a very important external driver of the need for business transformation.
In the study, executives rated a balanced scorecard showing key metrics and achievement toward goals (46%), understanding the true impact of a proposed change to an initiative on all other initiatives across the organization (40%) and a clear summary of costs associated with the initiative (40%) as the capabilities most critical to a successful transformation execution. In percentage terms, roughly twice as many of those who feel extremely well prepared to execute a business transformation (versus total respondents) are very well equipped for these challenges.
Failure to anticipate and account for risk can quickly derail a business transformation. Top challenges to successful business transformation are related to the ability to accurately account for, predict and build contingencies around risk. Thirty-nine percent said failing to anticipate market changes was the biggest planning challenge threatening their business transformation activities, while 35% said misjudgment or failure to anticipate risk factors posed a substantial threat. In addition, 30% pointed to the inability to evaluate and model different options or plans, as well as ensuring a standardized/consistent approach presented challenges (29%).
Adoption of enterprise project portfolio management (EPPM) makes a difference. Respondents who consider their organizations to be leaders in business transformation are significantly more active in leveraging EPPM methodologies and processes. Twenty-seven percent of business transformation leaders leverage EPPM across their entire enterprise, compared with 13% of total executives surveyed; 55% of transformation leaders leverage EPPM across either their whole company or their business unit, compared with 38% of total respondents.
The study surveyed 534 senior executives (defined as director or above—with 61% of respondents C-level executives) at companies with $1 billion or more in revenues. Respondents spanned the Americas (37%), Europe-Middle East-Africa (EMEA) (29%) and Asia Pacific (34%), as well as a range of industries including professional services (10%), banking and finance (7%), manufacturing (13%), retail (6%) and engineering (6%).
“For businesses to remain ahead of an ever-changing market and meet rapidly evolving customer demands, they must effectively plan and execute transformational initiatives to create breakout growth and sustainable market leadership,” said Mike Sicilia, senior vice president and general manager, Oracle Primavera Global Business Unit. “EPPM solutions can help organizations address these challenges and needs simultaneously to support transformational investments on all fronts.”