Enterprises waste $5.5 million on failed DX projects

Despite significant upheaval to organizations’ digital transformation plans, the pandemic has contributed to a surge in innovative projects, according to a research from Couchbase.

Failed DX projects

77 percent of organizations had to either make “noticeable” or “major” changes to their digital transformation plans, or start again from scratch. However, the rate of innovation (i.e. the number of projects driven by an original idea from within the business) almost doubled, rising from 8 percent in 2019 to 14 percent.

Similarly, organizations were still able to meaningfully improve the end-user experience while responding to COVID-19. Yet worryingly, the number of failed, delayed, or scaled-back projects is still high, at 79 percent. This potentially represents a significant waste of resources: enterprises spent an average of $5.5 million on failed DX projects over the year.

In general, while the pandemic caused a rapid reappraisal of digital transformation plans, it did not stop investment.

Key findings

• Pandemic reaction supports spending increase: Average digital transformation spend grew from $27 million per organization in 2019 to $27.5 million in 2020. The reaction to COVID-19 helped this: enterprises’ spending in response to the pandemic ranged from +3.8 percent in Germany to -0.7 percent in the UK, for an average of +2 percent.
• End-user experience focuses on pandemic reaction: 55 percent of organizations made significant or better improvements to the end-user experience this year, compared to 73 percent in 2019. However, 17 percent created an excellent end-user experience in their response to COVID-19.

“Enterprises understand that the real test will be in how they adapt to life and business in 2021 and beyond,” said Ravi Mayuram, SVP of Engineering and CTO at Couchbase.

“The underlying issues that were preventing modernization of an aging digital stack have been brought to the forefront by the pandemic, and there is now even greater impetus to accelerate ‘digital transformation.’ This realization that aging infrastructure will not serve organizations’ new needs in a post-pandemic world where we will live, work and play remotely has tipped the scales in favor of new investments in innovation and modernization.”

Orgs still struggling to meet their digital transformation goals

The research suggests that, outside the pandemic, organizations are still struggling to meet their digital transformation goals. The need to divert resources in response to COVID-19 was the most common factor either preventing organizations from pursuing new digital transformation projects (affecting 31 percent of organizations), or causing those projects to fail, suffer delays, or be scaled back (affecting 29 percent).

Yet more organizations were prevented from pursuing projects, or suffered project disruption, for reasons that had nothing to do with the pandemic. For instance:

• Technology challenges preventing projects: 55 percent of organizations could not pursue a digital transformation project for reasons besides COVID-19, including the complexity of implementing technologies (experienced by 31 percent), reliance on legacy technology that couldn’t meet new digital requirements (28 percent) and a lack of resources or funds (25 percent)
• COVID-19 not responsible for majority of project disruption: 50 percent of organizations suffered project disruption such as failure, delays, or scaling back for non-COVID-19 reasons, including the complexity of implementing new technologies (24 percent), lack of resources or funds (22 percent) and reliance on legacy technology (20 percent) that were nothing to do with the pandemic.

Disrupted projects don’t only have a financial cost

Disrupted projects don’t only have a financial cost, but can have a significant effect on business strategy. 72 percent of organizations have had to push their strategic goals back by more than a month or even reset them completely because of delayed, scaled-back or cancelled digital transformation projects.

“COVID-19 was a unique event: many of the challenges organizations face are far more deep-seated,” continued Mayuram.

“Organizations that have worked so hard to adapt and succeed in 2020 should not see their gains lost because of issues that have been known for years. Instead, they should make sure they have the resources they need to build upon their experiences and truly succeed in digital transformation. This means having the technology, the skills, and the investment that will help drive innovation to new heights.”