Global Survey Reveals Key Challenges and Technologies Expected to Drive the Next Phase of Digital Transformation

FUTURESTACK -- New Relic, Inc. (NYSE: NEWR), the industry's largest and most comprehensive cloud-based observability platform built to help customers create more perfect software, today announced findings from a global survey evaluating the success of digital transformation projects. According to the survey, progress has been made despite obstacles, however technology leaders are finding that running their digitally transformed organizations is challenging and they are under increased pressure to prove business value.

Key findings from the survey include:

• 1 in 2 tech leaders are challenged in managing and monitoring their digitally transformed organizations
• Almost 50 percent of respondents admit that their customers are more likely to uncover problems before them
• 89 percent of the survey respondents believe AI and ML will become important for how organizations run their digital systems

The study commissioned by New Relic in partnership with Vanson Bourne, a market research firm, surveyed 750 global senior IT decision makers of enterprises with 500 to 5,000-plus employees in Australia, France, Germany, U.K., and the U.S.

IDC predicts that by 2020, 30 percent of G2000 companies will have allocated capital budget equal to at least 10 percent of revenue to fuel their digital strategies [1]. This shift toward increased funding is an important one as business executives come to recognize digital transformation as a long-term commitment. With billions of dollars invested in digital transformation initiatives, executives are now exploring the impact of their investments and asking, "What's next?"

"The next phase of digital transformation will focus on making sense of all the data so that organizations can move faster, make better decisions, and create best-in-class digital experiences," said Buddy Brewer, GVP and GM Client Side Monitoring, New Relic. "As indicated in our research, observing and acting on insights from data collected will play a critical role in helping digitally transformed organizations truly scale and realize the benefits of modern technological advances."

The Challenges of Digital Transformation

Global organizations claim to be significantly progressing their digital transformation projects, with 39 percent of global respondents saying these are completed or close to completion. Satisfaction levels also seem to be high with 91 percent of respondents saying results met and exceeded. However, respondents shared that the top five challenges to successfully sustain digital transformation are:

1. Separate parts of the organization are moving at different speeds to embrace digital transformation, which holds back collective progress;
2. shortage of skilled employees;
3. restricted budgets;
4. understanding and measuring business benefits;
5. and finally, continued resistance to shutting down legacy systems.

Factors Contributing to These Challenges

• Increased complexity: More than 50 percent of respondents say they find their complex new software and infrastructure hard to manage and monitor for performance issues. Most (63 percent) say that the pressure to respond to business needs means they are having to work longer hours to observe and manage software performance correctly.
• Higher expectations: Most respondents (79 percent) agree that the rest of the business has higher expectations in how digital systems perform; and expect the technology team to deliver more and more innovations and updates (72 percent).
• Lack of visibility: 48 percent of respondents admitted that their end users or customers tell them about a problem with digital apps before they know about it, and a further 46 percent say they are told about these issues before they know how to fix them.
• Accountability: 46 percent of their C-suite executives want daily updates about how software systems are performing for staff and customers (54 percent of US respondents reported this trend). A further 40 percent of CEOs also want more answers when outages or performance problems happen.
• Challenges analyzing data: A root cause for how teams struggle to manage modern software may be how the amount of machine generated data is rising rapidly. More than half (56 percent) of all respondents acknowledged that it is humanly impossible to properly assess this data. Notably, the larger organizations agree more strongly this is a problem: 58 percent of respondents from businesses of 3,000 to 4,999 employees and 55 percent of those with more than 5,000 staff.
• Determining business metrics: 1 in 3 respondents report that they are challenged on business benefit metrics for their digital transformation projects.

Looking Ahead: Harnessing the Power of Cloud and AI to Fuel Digital Transformations

• Moving to public cloud: The majority of respondents agreed that migration to public cloud (i.e., Amazon Web Services, Azure, Google) is at the core of respondents' digital transformation journey ? 82 percent in U.S., 75 percent in the U.K., 75 percent in Australia, 66 percent in France, and 63 percent in Germany.
• Efficient way of using resources: Many (46 percent) agree that while migration to cloud is great, they don't have a clear way of knowing what their cloud bill is going to be every month. More than half (54 percent) also say that while cloud computing promises more efficient usage of resources, the promise of greater control is not a given.
• Expectations around AI and ML replacing jobs: Overall, 37 percent of the global respondents agree that AI and ML will replace their job in a decade, while 41 percent disagreed. These numbers were highest in France with 55 percent of the respondents confirming that they expect their current jobs to be replaced by these advanced technologies. These numbers were lowest in the US (32 percent) and U.K. (23 percent).
• Promise of AI and ML: Interestingly, more than 92 percent of U.S. respondents agree that Artificial Intelligence (AI) and Machine Learning (ML) will become important for how they run their digital systems. Globally, almost 84 percent of the respondents believe that AI and ML will make their role easier.

How the U.S. Stacks Up

In the U.S., technology leaders differed in key areas from their peers in other regions. More specifically:

• Early movers: The U.S. is leading the way on digital transformation, with roughly 50 percent of organizations from the region reporting that they have completed or are close to completing their digital transformation journeys -- more than any other country surveyed.
• A modern approach to software: DevOps has more popularity in the U.S. than any other region, with nearly two-thirds of respondents in the region claiming they've adopted the practice.
• The C-suite is invested: Senior U.S. business leaders (CEO, CFO) are more attuned than their international peers to the digital transformation process and want to stay more informed, with 54 percent requesting daily reports on how their systems are performing for staff and customers.

To learn more about this research, please see this infographic and visit New Relic's blog.

Forward Looking Statements

This press release contains "forward-looking" statements, as that term is defined under the federal securities laws, including but not limited to statements regarding expectations from the digital transformation survey results, the increasing funding budgets for digital strategies, the anticipated roles and benefits of digital transformation and technology advances and New Relic's ability to act on insights from this data and help customers achieve related outcomes. The achievement or success of the matters covered by such forward-looking statements are based on New Relic's current assumptions, expectations, and beliefs and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause New Relic's actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement. Further information on factors that could affect New Relic's financial and other results and the forward-looking statements in this press release is included in the filings New Relic makes with the SEC from time to time, including in New Relic's most recent Form 10-Q, particularly under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Copies of these documents may be obtained by visiting New Relic's Investor Relations website at http://ir.newrelic.com or the SEC's website at www.sec.gov. New Relic assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

[1] Worldwide Semiannual Digital Transformation Spending Guide; IDC; November 2018

About New Relic

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