According to the latest research from SAP and Oxford Economics, only 57% of business transformations end up being worth the time, money, and effort they require — but this can change.
Today’s business transformations are diverse, ranging from creating new products or services and entering new markets to adopting cybersecurity frameworks and transitioning to net-neutral carbon emissions. However, these transformations are neither swift nor inexpensive, and sometimes the costs can be hidden.
That is why SAP has partnered with Oxford Economics on a new and comprehensive survey of large organizations, providing an exclusive look at the current global state of business transformation.
“The Estimation Game: What Do Business Transformations Really Cost?” reveals the true cost of business transformation, with the data aimed at helping organizations maximize transformation success and take the guesswork out of transformation budgeting.
Spanning a range of industries and focusing on companies with a minimum revenue of $500 million, the report provides insights from a balanced audience of 800 respondents, including IT professionals and leaders from corporate strategy, R&D, finance, manufacturing, HR, and operations.
The paper further reveals that:
- Barely half of transformations go according to plan (51 percent)
- Fifty-eight percent of transformations end up going over budget
- The average cost of transformation efforts is €9.5 million
- Sixty-three percent of respondents face resistance from leadership regarding the value of transformation efforts
- Nearly half of the initiatives highlighted by respondents remain incomplete, and budgetary constraints pose a significant challenge
From Strategy to Execution
In broad terms, this disconnect between the confidence level of respondents and what the report data reveals about the true cost and organizational impact of transformation can be understood in the equivalent disconnect between strategy and execution.
For example, while three in five say their major transformation plan was well communicated across their organization, only 53 percent say it was clearly defined in the first place.
While most companies are employing strategic practices such as crafting mission statements, appointing dedicated leaders, and forming cross-functional teams, they can lack the final piece of the puzzle when it comes to converting strategy into action. That is where SAP comes in.
“Transformation challenges will always exist, particularly in aligning execution with strategic road maps,” Dee Houchen, head of Marketing for SAP Signavio and SAP LeanIX, shared. “As companies navigate these complexities, the path to successful transformation remains a critical focus for global businesses, which is why this research is so relevant.”
“SAP Signavio and SAP LeanIX solutions offer clarity and transparency in business transformation, helping organizations leverage enterprise analytics and process data to really turn transformation plans into action through supporting decision-making, setting timelines, and tracking progress effectively,” Houchen said. “This report is an invaluable resource for anyone wondering why their transformation efforts have slowed, what they can do differently, and how others have identified and overcome similar hurdles to their own.”
Lucas de Boer is Global Marketing program lead for SAP Signavio at SAP.
