Digital Transformation Delivers Business Benefits – CIO

Virtually every organization worth its salt is involved in digital transformation, and those efforts are starting to pay dividends, according to F5’s 2023 State of Application Strategy Report.

When respondents to F5’s survey of more than 1,000 IT leaders were asked to list the benefits of digital transformation, IT operational efficiency topped the list (cited by 66% of respondents), followed by business operational efficiency (49%), better alignment of IT with business outcomes (47%), employee productivity improvements (42%) and customer satisfaction (41%.)

The survey results indicate that efforts to modernize and automate the underlying IT infrastructure are finally translating into what really matters for the organization: business efficiency, business outcomes, and improved customer satisfaction.

The path to digital transformation

Digital transformation can be broken down into three phases: In the first phase, companies automate manual tasks. The second phase entails digital expansion and IT modernization. And in the third phase, companies unleash the power of AI to gain business insight through advanced data analytics.

However, the road to digital transformation is not without its detours and U-turns. Companies often find themselves moving back and forth between phases for a variety of reasons. For example, a company might be building a new digital service (phase two) and discover that an interrelated back office function is still manual and needs to be automated (phase one).

More than half of organizations (54%) are working toward AI-assisted business (phase three), but that number is actually down 7% compared to last year. The slight cooling of interest in AI can be attributed to two reasons. One is the difficulty in implementing AI and machine learning at scale. Also, companies might be taking a step back to shore up their automation and IT modernization before taking the leap forward to AI.

Survey results indicate that more than 80% of organizations are currently engaged in modernization and digital expansion, which is up significantly from pre-pandemic levels, when only 37% were undertaking them.

“Most organizations are converging on that second phase of digital transformation, which is on expansion for the business. They’re trying to expand their digital footprint and that means delivering digital services,” says F5 Distinguished Engineer Lori MacVittie.

However, digital expansion can’t proceed unless the underlying IT infrastructure has been modernized. “IT operations had been stuck for a long time,” says MacVittie. “There wasn’t a whole lot of focus on automation to improve productivity and to enable scale.”

But that’s changing as companies realize they “need to modernize the entire hybrid IT stack to be able to more easily incorporate different clouds, different services, different apps and different models,” she says.

According to the survey, companies are focusing their automation efforts on three top priorities: systems infrastructure (61%), application infrastructure (55%) and network security (54%). More than half of respondents also said they are planning to adopt SRE (site reliability engineering), which enables organizations to operate more efficiently.

As MacVittie puts it, the goal is to “operate more like a cloud provider focusing on business outcomes and service level objectives.” This is critically important since 58% of companies surveyed reported they derive at least half their revenue from digital services.

Find out how you can unlock the benefits of digital transformation in the State of Application Strategy Report.