Poor Change Management is Costing Business Millions: 2023 Research


Tech Insights for ProfessionalsThe latest thought leadership for IT pros

Thursday, April 20, 2023

Digital transformation has become a business imperative for organizations across the world, but research suggests that the costs of poor change management in these initiatives are piling up.

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Poor Change Management is Costing Business Millions: 2023 Research
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By now we’re all familiar with the upheaval caused by COVID-19 on the business landscape. From the rise of remote and hybrid working to The Great Resignation and large-scale cloud migration, the last few years have been among the most disruptive in the history of business.

This was particularly the case for IT teams, who had to fast-track their digital transformation (DX) plans to accommodate remote workers, onboard new software and migrate more assets to the cloud – all while communicating change to the rest of the organization to make transitions as smooth as possible.

To better understand the state of DX and how organizations have approached change management, we asked 219 IT professionals to assess the success of their DX journeys and the challenges they’ve encountered.

IFP DX 2023 Report Org Size Chart

How did organizations respond to COVID-19?

80% of IT leaders report having invested in remote working and collaboration tools as a direct response to COVID-19, while 60% cite having migrated to the cloud and 57% point to increasing their use of more advanced technologies.

IFP DX 23 Report COVID-19 Response

Implementing and fast-tracking these initiatives presented significant challenges for IT departments. Change management emerged as a key obstacle, with 42% of respondents encountering this in their digital transformation journeys.

IFP DX 23 Report Challenges Encountered in Transformation

When asked to estimate the impact of poor change management, a staggering 32% of IT leaders and CIOs claim it had lost their business $1m to over $5m. Just under a quarter (24%) put this figure at between $500,000 and $1m.

IFP DX 23 Report Cost of Poor Change Management

While change management was a common issue for organizations, regardless of their stage in the DX journey, they were particularly present for businesses at Stages 1 and 2 – putting together a case and developing a plan and piloting small transformation efforts.

IFP DX 23 Challenges Encountered by Transformation Stages

The reasons for high change management costs become clearer when IT leaders were asked to rate the success of their DX programs. Companies that rated their DX programs as ‘good’ were likely to point to smaller figures when asked to estimate the cost of poor change management. In fact, over four times as many respondents that rated their DX success as just ‘fair’ claim poor change management cost them over $5m.

Across our survey, change management proved to be a key factor that differentiated how companies rated the success of their transformation. Almost twice as many ‘fair’ respondents cited this as a challenge they encountered (63% vs 36%).

It’s also worth noting that, in terms of company size, 40% of organizations with 25,000+ employees claim the cost of change management was over $5m, and 80% of this segment estimated it to be at least $1m.

Access The State of Digital Transformation Research Report

For more detailed insights into the current state of digital transformation, including how businesses adapted during COVID-19, the biggest challenges they faced in their DX initiatives and their investment and initiative priorities for the coming year, download the report today.

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