Only 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 consultancy PwC.

With the average spend on new software projects exceeding £2,200,000, large businesses are 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% still intend 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%).

Furthermore, the survey of 250 CIOs and IT leaders at large UK-based companies reveals that software ROI is most frequently measured in terms of productivity improvements (76%), new business generated (73%), streamlined processes (70%), a reduced need for hiring (70%), and higher customer satisfaction (69%).

CIOs will face significant pressure to deliver RIO for software projects under the challenging economic circumstances, including supply-chain issues and talent shortages.

Respondents consider their most significant areas 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%).

While digital adoption was noted as significantly important, every CIO surveyed that their business is facing one or more challenges in their digital adoption pursuits.

Obstacles include a higher number of IT support tickets (33%), employees struggling to quickly adopt and use new software (33%), too much time and money spent on software training (28%), an acceleration of software requirements due to hybrid working (28%), and a lack of investment in tools and processes to improve digital adoption (27%).

Hartmut Hahn, chief executive, Userlane, commented: “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.”

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.

“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,” Hahn continued.

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“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, added: “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.”

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