The numbers paint a stark picture: Worldwide IT spending is expected to total $5.26 trillion in 2024, yet between 70% to 95% of digital transformations fail to meet their objectives. This catastrophic failure rate persists despite companies burning through $2.3 trillion on transformation efforts. The culprit? Only 37% of executives think business and IT leaders agree on IT's role, down from nearly two-thirds just six years ago.
The best business minds often come from the most fundamental commercial environments. Market traders understand something that many corporate executives forget: business, at its core, is devastatingly simple. Buy something, sell it for more than you paid, minimise your costs, maximise your margin. The product might be apples today and electronics tomorrow, but the fundamental equation never changes.
This clarity of purpose, generating revenue while minimising investment, is what makes traders successful. They never confuse the means with the end. A trader would never say "I'm in the trucking business" just because they use a truck to transport their goods. Yet in modern corporations, we've somehow convinced ourselves that the tools we use define who we are.
As organisations scale, something peculiar happens. The elegant simplicity of commerce, creating value and capturing it efficiently, gets buried under layers of organisational complexity. IT spending as a percentage of revenue varies wildly by industry, ranging from 1.4% in discrete manufacturing to over 11% in financial services. Yet regardless of industry, the pattern remains consistent: functions grow, departments expand, and suddenly everyone believes they're the star of the show.
Consider this: 76% of companies outsource IT functions, while 65% of companies report that outsourcing non-core functions allows them to focus on their primary business activities. This tells us something important, most businesses inherently understand what's core and what's not. Yet somehow, this clarity evaporates when it comes to internal IT departments.
Marketing thinks they're the company because they "create the brand." HR believes they're the core because "people are our greatest asset." Finance sees themselves as indispensable because "you can't manage what you can't measure." And IT? IT has perhaps the most seductive delusion of all: "We're a technology company that happens to deliver [insert actual service here]."
This is where organisations lose their way. A retail company that thinks it's a technology company will never be as good at technology as actual technology companies. More critically, while they're busy playing Silicon Valley, they're getting worse at retail, their actual business. They're like a restaurant owner who becomes so obsessed with their new point-of-sale system that they forget to check if the food tastes good.
The phrase "every company is now a technology company" has become corporate gospel, but it's fundamentally flawed thinking. The data supports this skepticism: McKinsey found that only 20% of companies achieved more than three-quarters of the revenue gains they anticipated from digital transformation, while only 17% achieved the expected cost savings. Meanwhile, IT services spending is growing at 7.1% annually, becoming the largest segment of IT spending for the first time in 2024 at $1.5 trillion.
No, your insurance company is not a technology company. It's an insurance company that uses technology. This isn't semantic pedantry, it's about organisational focus and resource allocation. The failure statistics prove the point: 84% of digital transformations fail, often because companies try to become something they're not rather than leveraging technology for what they actually are.
When IT departments begin believing they are the business rather than serving the business, several predictable failures emerge:
Mission Drift: Technology initiatives become ends in themselves. Digital transformation projects multiply like rabbits, each one promising to revolutionise the business, most delivering expensive complexity that customers never asked for. Research shows 54% of employees feel unprepared to handle changes brought by new technologies, while 47% of executives believe less than half of their employees have embraced digital transformation.
Resource Misallocation: Companies pour millions into building custom systems that already exist in the market, believing that their unique snowflake of a business requires bespoke everything. The average company spends 8.1% of its budget on IT outsourcing alone, a 1.7% increase from 2019, yet many still insist on building everything in-house. Meanwhile, the actual unique value proposition, the thing customers pay for, withers from neglect.
Cultural Confusion: When support functions believe they're the product, accountability becomes muddled. IT starts making business decisions, business leaders abdicate responsibility for technology decisions, and customers get lost in the shuffle. Harvard Business Review found that companies with strong IT-business collaboration are 2.5 times more likely to be market leaders, but this collaboration breaks down when IT sees itself as the business rather than its partner.
Here's a radical but clarifying thought: everything except your unique selling proposition should be considered outsourceable. Not necessarily outsourced, but outsourceable. This mental model forces brutal clarity about what actually matters.
The market already understands this: 92% of G2000 companies use IT outsourcing, and 52% of executives outsource business processes. The most commonly outsourced functions? Legal (64%), tax (61%), HR (57%), and IT services (76%). These companies haven't abdicated responsibility—they've recognised that excellence in payroll processing doesn't differentiate them from competitors.
If you're a logistics company, your USP might be fastest delivery or network efficiency. Everything else, including your IT infrastructure, is a candidate for external provision. This doesn't mean you should outsource everything, but you should be clear-eyed about what's core and what's context. Studies show that 65% of companies report outsourcing enables them to concentrate on their primary business activities, enhancing innovation and growth.
The moment a support function can't imagine being outsourced, it's lost perspective. IT departments that see themselves as irreplaceable have usually forgotten that their job is to enable the business, not to be the business.
Technology teams face a particular paradox. Their work can be transformative, a true multiplier of business value. A well-designed system can make a slow process instant, a costly operation cheap, an impossible service possible. This multiplier effect is powerful, but it's still multiplication. Multiply zero by anything, and you still get zero.
IT is the amplifier, not the signal. It's the leverage, not the weight. When technology teams understand this, they become incredibly powerful. They ask different questions: "What business process can we accelerate?" rather than "What cool technology can we implement?" They measure success by business outcomes, not system uptime.
Organisations that want to rediscover their commercial essence need to take deliberate steps. The stakes are high: Bain & Company found that only 12% of business transformations achieve their original ambition, while 88% fail. Those that succeed avoid overloading their top talent and maintain laser focus on business outcomes.
Ruthless Focus on Value Creation: Every function, every role, every project should be able to draw a clear line to either revenue generation or cost reduction. If it can't, question its existence. Remember, studies show outsourcing can boost efficiency by up to 25% and reduce time-to-market by the same percentage, but only when companies know what to keep and what to delegate.
Education and Hiring: Bring in people who understand business fundamentals. Promote IT leaders who've worked in operations. Hire technologists who've run P&Ls. Create cross-functional rotations that give support functions exposure to customer-facing realities. The data shows this matters: 76% of successful transformers understood which mission-critical roles were essential, versus only 58% of poor performers.
Governance Reform: Stop letting support functions grade their own homework. IT success should be measured by business metrics, not technology metrics. Customer satisfaction and revenue impact matter more than system sophistication. Organisations with a dedicated Chief Transformation Officer achieve 24% more of their planned value than those without.
Strategic Clarity: Be explicit about what you are and what you're not. If you're a bank, own that identity. Use technology brilliantly, but never forget you're in the business of managing money, not managing servers. Companies that maintain this clarity while leveraging modern tools are the ones joining the successful 16% of digital transformations.
The organisations that will thrive in the coming decades will be those that return to market trader clarity while leveraging modern tools. They'll understand that whether they're selling apples or algorithms, the fundamentals remain unchanged: create value, capture it efficiently, and never confuse the tools with the trade.
IT departments in these organisations will be powerful precisely because they know their place, not as the business itself, but as the master enablers who multiply the value the business creates. They'll be the difference between a market stall and a global marketplace, but they'll never forget which one pays the bills.
The best technology teams, like the best traders, understand that business is ultimately about buying and selling. Everything else, no matter how sophisticated or essential, is just the means to that timeless end.
86-90 Paul Street
London
EC2A 4NE
.png){kind=small}