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Top organizations instead are deliberate in developing a governance program tied to the business, grounding each initiative in an explicit P&L result and building in specific metrics to track progress against business targets. Unfortunately, many of these “shiny objects” in which technology functions invest have limited value to the business due to limited partnering between technology and the business, the inability of technology to communicate the value of tech to the business, and an often unclear sense of the business value at stake. New technologies continually hit the market, many with tempting promises to solve many of tech’s ills.

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Successful CIOs, in contrast, are explicit in identifying system dependencies and deliberate in managing them so that the full scope of potential benefits can be captured. Modernizing the architecture, for example, changes how development teams deploy to it using old methods results in errors and delays. The other side of the coin is that activities in one area can have unintended consequences in another, often breaking or disabling tangential systems. Simply migrating systems to the cloud without also thoughtfully implementing cyber strategy, agile, and DevOps, for example, would leave a company unable to take advantage of the automation, scale, and flexibility that cloud-based systems offer.

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In fact, our latest analysis shows that companies are expanding the range of tech-related transformations (Exhibit 1).īut too often companies focus on a series of initiatives without accounting for crucial dependencies that need to be in place to enable the change. There is no shortage of technology-transformation initiatives, all of them with good intentions and promising payoffs. Following are three of the most common failure modes. These conversations illuminated a number of consistent factors that most consistently kill off even the most promising tech transformations and revealed antidotes to address them. To understand better what successful tech transformations look like-as well as what the most important pitfalls are-we spoke with nearly 700 CIOs at some of the largest companies across the world. 2 McKinsey Global Survey on IT and the Business, August 2020. Though many companies are transforming their tech organizations, about 50 percent of them report that they’re still in the pilot phase (small tech teams working with advanced technologies but isolated from the rest of the technology function). Tech transformations, nonetheless, remain notoriously difficult and complex. 1 McKinsey Global Survey on IT and the Business, August 2020. In a recent McKinsey study, some 50 percent of surveyed companies reported moderate to significant impact on realizing new revenue streams, almost 70 percent reported impact on increasing existing revenue streams, and 76 percent reported impact on reducing costs. Some companies are starting to see real impact from their tech transformations. We think of this comprehensive approach as “tech forward.” Counteracting the most devastating tech-transformation failure modes Instead, some technology leaders have pursued a new approach that is comprehensive enough to account for the myriad interlinkages of modern technology joined at the hip with the business so that change delivers value, and self-funded so that the scope of the change can continue to expand. Companies can no longer afford the long timelines and often-disappointing business returns that have hampered many of the large tech-transformation projects of the past.

That reality has injected a renewed importance and new urgency into modernizing the technology function. Whether it’s been the shift to online working, the spike in online demand, or the increase in cyber assaults, technology has emerged as a critical business capability. This article was a collaborative effort by Anusha Dhasarathy, Isha Gill, Naufal Khan, Sriram Sekar, and Steve Van Kuiken, representing views from McKinsey Technology.

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