Digital transformation projects see GBP £8 million average spend
Research conducted by VML has found that an average of GBP £8 million is invested in each digital transformation project by businesses, but over one in three projects fail, with many others experiencing overruns and excess spending.
The findings come from a survey of mid- to senior-level business leaders involved in digital transformation initiatives, providing a detailed snapshot of the challenges facing many organisations. The figures highlight persistent friction points and underline the complexity of delivering technology-driven business change.
Financial planning and forecasting
One of the major issues identified relates to the challenge of accurately predicting project costs early in the process. According to the research, 76% of businesses reported difficulty in estimating budgets for digital transformation at the outset of a project. This frequently leads to budgets being underestimated, a problem acknowledged by 77% of respondents.
Budget inaccuracies can lead to significant financial overruns, particularly given the scale of investment involved. With the average project spend standing at GBP £8 million (USD $10.9 million), the stakes can be substantial for organisations of all sizes.
The impact of artificial intelligence
Another significant finding relates to the influence of artificial intelligence on project strategy and budgeting. The research shows that 77% of leaders have been compelled to revisit and revise their transformation strategies in response to the rapid emergence of AI. Furthermore, 73% have needed to review budgets specifically to accommodate AI-related initiatives.
This level of disruption is contributing to a fast-evolving landscape in which business plans and financial forecasts must be kept under constant review. The challenge of maintaining project alignment amid technological change is highlighted by 67% of leaders reporting "scope creep" over the course of their projects.
Additionally, 81% of respondents said that the pace of digital advancement means that budgets need to evolve continually throughout the duration of a project.
Return on investment and pressures in the economic climate
Proving clear returns on these significant investments remains challenging. Of those surveyed, 73% say that demonstrating return on investment (ROI) is difficult—an issue that has become more pronounced given current economic pressures.
Definitions of ROI go beyond traditional profit measures, with many business leaders pointing to improvements in operational efficiency, employee productivity and customer experience as equally valuable outcomes. This complex environment for measurement contributes to uncertainty and can make it more difficult for projects to secure ongoing stakeholder support.
Internal collaboration and alignment
Collaboration between teams also emerged as a key factor in project outcomes. Respondents highlighted that 73% believe differing objectives between teams can limit the success of digital transformation, citing a lack of shared vision, misalignment on objectives, and gaps in required skills as ongoing barriers.
Voices from the sector
This research exposes the historic but also the new challenges businesses face in their transformation journeys. The report reveals that successful digital transformation is as much about embracing change and adapting to evolving technologies as it is about strategic clarity. With 74% of leaders experiencing shifting objectives and 77% revisiting strategies due to AI, organisations must approach transformation with boldness, creativity, and flexibility. By fostering innovation, taking creative risks, and aligning efforts around customer needs, businesses can turn challenges into opportunities for sustainable growth.
This perspective was provided by Jeff Geheb, Global CEO at VML Enterprise Solutions, reflecting on the shifting environment and need for adaptability in digital transformation efforts.
Partnering for transformation
The research also found that 81% of organisations are turning to third-party partners to support their transformation projects. As the need for effective collaboration intensifies, the decision of who to work with is viewed as increasingly significant among business leaders.
Summary of the report
The full report, titled "Unlocking the Power of Digital Transformation", examines themes ranging from strategy and leadership to customer experience, AI implementation, and data governance. VML Enterprise Solutions, a GBP £1.2 billion technology and transformation division, was responsible for conducting the research. The company collects expertise across commerce, technology, consulting and customer experience, utilising an AI-driven operating system developed by WPP Open.
The data highlights the ongoing pressures and evolving dynamics that face organisations pursuing digital transformation, underlining both the risks and the considerable organisational change required to deliver successful outcomes in the sector.
