Thursday, September 29, 2022

Digital transformation projects stall as talent crisis intensifies

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With the increasing level of digital transformation in every sphere of life, a huge demand for talent is rising. At the same time, a severe talent crisis is making the digital transformation prospect vulnerable.

In a not-so-surprising discovery, a Red Hat survey finds that People, not technology, are the important part of digital transformation, finds a Red Hat survey for 2022’s technology outlook. In fact, skillset or talent gaps were this year’s top barrier (26%) to digital transformation, which likely explains why that area leads to non-IT funding priorities. This represents something of a shift from both prior survey results and more anecdotal evidence that technology has had a more historical emphasis than people in this area.

Red Hat, owned by IBM is a leading provider of open-source solutions, surveyed 1,341 information technology (IT) leaders and decision-makers to better understand where they are on their digital transformation journeys, their IT and non-IT funding priorities, and the types of infrastructure on which they are running their applications. The respondents mostly work at companies with more than $100 million in revenue.

Training takes urgency

Talent shortage had in fact, stalled digital transformation projects as skill set or talent gaps took the lead in this year’s survey as the top barrier to transformation projects. The stage at which companies placed themselves on their digital transformation journeys hasn’t changed much since last year. For example, the percentage in the accelerating stage increased from 21% to just 22% this year. Technical or technology skills training and people and process skills training each increased by four percentage points to 37% and 32% respectively. This was expected given the talent crisis companies were facing.

Transformation projects make slow progress

However, more significant differences were seen among those placing themselves in earlier stages: this year, respondents were less likely to either have stalled digital transformation plans (down from 6% to 3%) or have no plans (4% to 2%) and more likely to report having plans that were not yet started or just beginning (5% to 8%). These shifts suggest that about half of companies without plans or with stalled projects in 2020 progressed their digital transformation initiatives. And while most companies have plans for digital transformation, newly created plans have likely made little progress over the past year.

From cost-saving to innovation

It’s also interesting to see how organizational priorities shift between the different stages of digital transformation initiatives. Organizations in earlier stages were more likely to focus on cost reduction and simplification. But those in the emerging and other later stages most often chose innovation as their top priority. This pattern suggests that many digital transformation projects start as IT efficiency efforts but, later, come to be crucial for improving competitiveness, revenue growth, and customer experience.

The hybrid cloud is a favourite

Companies are shifting to the cloud and the hybrid cloud remains the most common cloud strategy overall. If we add organizations who chose multi-cloud — a term that many use interchangeably with hybrid cloud— the total selecting a cloud strategy relying on more than one cloud rises to 43% — up to five percentage points from last year. With the cloud comes security concerns.

Security gets the most budget

Security-related questions appeared throughout this survey. Among organizations’ top IT technology funding priorities for 2022, IT security was by far the most common, selected by 46% of respondents, consistent with last year’s results. Network security remains the highest security funding priority at 38%, although that represents a four percentage point drop from last year. Cloud security was close behind at 37%. Vulnerability management saw the biggest increase in prioritization since last year; it shot up from 21% to 27%.

Security was a priority among those in technology, transportation and logistics, and utilities and energy for these industries. Applications development also saw an increased focus on security this year. This year 25% chose secure coding practices and tools as one of their top three funding priorities compared to 20% last year.

Artificial Intelligence dominate tech spending

Artificial intelligence and machine learning (AI/ML) and the Internet of Things (IoT) continue to dominate emerging technology planning. The percentage of organizations considering or planning to use emerging technology increased across many workloads this year, with AI/ML at 53% and IoT at 49%. If you consider IoT and edge computing in combination, 61% are planning to use one or the other or both in the next 12 months. Selecting, deploying, and life cycle managing AI/ML tools and frameworks emerged as the clear top challenge to get an ML project up and running at 35%, seven percentage points above last year’s result.

People are priority

Closing talent gaps, accelerating application development, and establishing a hybrid cloud platform are all part and parcel of an effective digital transformation strategy. This survey suggests that IT decision-makers are generally focused on the right things. They’re prioritizing security. They’re prioritizing hybrid cloud infrastructures. They’re prioritizing their people.

Also Read: Elon Musk’s war and future of connectivity

(Abhijit Roy is a technology explainer and business journalist. He has worked with Strait Times of Singapore, Business Today, Economic Times and The Telegraph. Also worked with PwC, IBM, Wipro, Ericsson.)

(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)

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