Fewer than half software projects deliver expected ROI, say UK CIOs

SME Publications/ SME XPO 2024

Just 45% of software projects deliver or exceed their expected return on investment (ROI), according to a new survey of CIOs from digital adoption platform Userlane, and leading consultancy, PwC. Large businesses carry out an average of five major software projects each year with each costing, on average, more than £2,200,000. This indicates that, with more than half of these projects failing to deliver the right outcomes, the average firm is losing upwards of £6,000,000 annually.

Although almost two thirds of CIOs (65%) are concerned that the state of the economy will affect their digital transformation plans, 62% plan to deepen their investment in technology over the next 12 months. Cost increases are anticipated across cloud-based software (61%), on-premises software (54%) and software training for employees (54%).

The survey of 250 Chief Information Officers (CIOs) and IT leaders at large UK-based companies reveals that software ROI is most frequently measured in terms of:

  1. Productivity improvements (76%)
  2. New business generated (73%)
  3. Streamlined processes (70%)
  4. A reduced need for hiring (70%)
  5. Higher customer satisfaction (69%)

Delivering ROI under challenging circumstances will place significant additional pressure on CIOs, who already have an increasingly wide-ranging and complex remit. Respondents consider their most significant area of responsibility to be digital transformation (43%), followed by digital adoption (37%). Other key focus areas include business productivity (35%), employee experience (33%), and learning and skills development (29%)

It is reassuring to see that digital adoption is a top priority, second only to digital transformation, as strong adoption is key to achieving cost-effective digital transformations and maximising software ROI. However, every CIO surveyed reported that their business is facing one or more digital adoption challenges, with the five most common being:

  1. A higher number of IT support tickets (33%)
  2. Employees struggling to quickly adopt and use new software (33%)
  3. Too much time and money spent on software training (28%)
  4. An acceleration of software requirements due to hybrid working (28%)
  5. A lack of investment in tools and processes to improve digital adoption (27%)

Userlane’s new report highlights that CIOs lack a clear consensus on how best to measure digital adoption. Many CIOs track employee happiness (73%), the number of IT support tickets raised (73%), task completion rate (72%), number of application logins (70%) and process quality improvements (70%).

Yet there is no single, unified measurement framework for digital adoption, despite 37% of CIOs admitting that their company is facing a significant digital skills gaps.

Hartmut Hahn, chief executive, Userlane, comments: “It’s a truly difficult time to be a CIO or IT leader. Businesses are asking a lot from them, and the macroeconomic conditions mean that there is little margin for error. In fact, our research shows that 64% of CIOs feel that their organisation doesn’t fully appreciate the value they provide. Despite digital transformation being a priority for years, the directly measurable impact on employee productivity has been mostly a black box. Even worse, people complain about friction as they have to deal with rapid change amid a constant flow of new technologies and processes.

“Understanding what works and what doesn’t is essential for a successful digital transformation. If  CIOs can’t measure how employees are using new software to drive positive business outcomes, they will struggle to make the case for future technology investments. That’s why, in our report, we reveal a new method for quantifying software usage and adoption: a single, robust framework called HEART which aggregates data over several dimensions to identify areas for improvement and optimise IT spend efficiency. We’re excited about its potential to support CIOs in the year ahead.”

Wolfgang Hufnagel, senior consultant, change management (People & Organisation), PwC, adds: “CIOs today face the complicated task of fully understanding and optimising the return on investment on their company’s software purchases. A crucial piece of this puzzle is developing the capability to track and measure digital adoption among employees, identify areas for improvement, and tailor training and support programs to better meet their needs.

“Having a user-centric, cross application analytics tool completely transforms the way CIOs are able to make decisions today. It empowers executives to track progress in adoption over time and make more informed, data-driven decisions, faster. This will ultimately lead to IT driving critical business growth and a culture of innovation through smarter technology investments.” 

The full results of Userlane’s research and expert analysis are available here.

SME Publications/ SME XPO 2024