Five key questions

to get a tech
transformation right
The most financially successful companies approach tech
transformations differently from the rest, and their methods
suggest a road map for success that others can follow.

July 2023
 Why do some technology transformations1
succeed while others fail? This is a perennial
question that has frustrated IT departments for
years, presenting both a clear-cut opportunity for
growth and the risk of falling further behind. Our
latest McKinsey Global Survey of technology and
business leaders2 set out to better understand
the keys to transformation success. We identified
respondents working for the most financially
successful organizations (whom we refer to as
“top performers”3), whose results suggest that
they reap greater benefits than others from their
tech transformations.
technologies, and they are better at retaining their
tech talent. What’s more, the top performers are
more likely than others to combine their initiatives—
a set of eight “plays” that comprise our Tech:Forward
approach to technology transformations4—in ways
that maximize business value.
All told, we see their methods as a foundation for
successful tech transformations—and the source
of five critical questions that every organization
should ask itself in order to increase its chances of
achieving similar success.

According to the survey, these top performers 1. What value is IT delivering?

pursue transformations differently from their peers
in a few critical ways: they are more likely than
others to anchor their technology and digital
strategies in their overall business strategies,
they report greater effectiveness at building
environments that foster organizational change,
they are more likely to invest in foundational
Most respondents with experience in tech
transformations continue to report meaningful
benefits from their efforts, as we have seen in
previous years.5 For example, at least 60 percent
of all respondents credit their transformations with
improving performance on a range of metrics.

Top financial performers are more

likely than others to anchor their tech
transformations in strategic business
priorities, to build environments that
foster change, to invest in foundational
technologies, and to retain tech talent.

1
In the survey and in this article, we define technology transformations as large-scale change efforts that are more comprehensive than short-
term improvement programs.
2
The online survey was in the field from April 11 to April 22, 2022, and garnered responses from 468 participants, including responses from
mostly C-suite and senior managers in a variety of industries. The participants represent the full range of regions, industries, company sizes,
and tenures. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.
3
Top performers are defined as organizations that, according to respondents, have seen an average growth rate of at least 10 percent in both
revenue and EBIT over the past three years. Of the 468 respondents in the survey sample, 84 qualified as top performers.
4
“The Tech:Forward recipe for a successful technology transformation,” McKinsey, December 15, 2022.
5
“Prioritizing technology transformations to win,” McKinsey, March 24, 2022.

2 Five key questions to get a tech transformation right

Yet the top performers seem to have positioned
themselves even better than others in terms of
maximizing a transformation’s impact, especially to
spur business growth (Exhibit 1). These respondents
report a stronger financial return from their
investment in tech transformations (87 percent of
top performers say they have seen a positive impact
on generating new revenue streams, compared
with 58 percent of everyone else), as well as greater
impact on all other metrics we tested.
How did they do it? One reason for their success
appears to be that top performers tend to anchor
their technology and digital strategy in their overall
business strategy. In our survey, respondents
from these companies are 14 percent more likely
than others to say they develop their business and
technology and digital strategies in tandem, which
can enhance the business value they reap from
tech transformations.
One financial-services firm, Allianz, has
taken a business-led approach in its recent
tech transformation. Chief technology and
transformation officer for Austria, Germany, and
Switzerland Axel Schell says the company has
shifted its mindset during this transformation:
from putting the technology first to cracking
business problems with technology. This means
not only optimizing purely technical KPIs (such as
the number of app features and releases) but also

Web <2023>
<Transition>
Exhibit 1
Exhibit <1> of <4>

Top financial performers report outsize impact from their tech

transformations, especially to drive business growth.

Respondents reporting positive impact from their organizations’ tech Top performers² (n = 84)
transformations in the past 2 years, by type,¹ % of respondents All others (n = 384)

+10
87 +10 +5
86
+29
percentage 79
76 77
points 72
69

58

Realization of new Improved employee Increased revenue from Reduced costs

revenue streams experience existing streams

1
Includes responses “some positive impact” or “significant positive impact”; those who said “significant negative impact,” “some negative impact,” and “don’t
know” are not shown.
²Top-performing organizations are defined as those where respondents report an average growth rate of at least 10% in both revenue and EBIT over the past 3
years. Of the 468 survey respondents, 18%—84 in total—are top performers.
Source: McKinsey Global Survey on technology transformations, 468 participants in the C-suite and IT function, Apr 11–22, 2022

McKinsey & Company

Five key questions to get a tech transformation right 3

 Axel Schell
Education
Earned a PhD in business administration
and economics, an MBA, and a bachelor’s
degree in information systems from the University
of Augsburg
Career highlights
Allianz Technology
(2021–present)
Chief technology and transformation officer
Yexi Liu
Education
Earned an MBA from Clemson University; received
a bachelor’s degree in international finance from
Southwestern University of Finance and Economics
Career highlights
Rich Products Corporation
(2019–present)
Executive vice president and chief
information officer
favoring specific business KPIs (such as customer
interactions and purchases in the app).
In the recent modernization of its IT organization,
B2B and consumer player Rich Products
Corporation has made digital technology a critical
part of creating value for the company’s customers
and enabling its long-term growth and productivity.
According to executive vice president and global
chief information officer Yexi Liu, the company
deployed new digital systems and tools at scale, so
technology touches every corner of the company:
from the sales and culinary teams, which now have
access to data and analytics that help them deliver
4 Five key questions to get a tech transformation right
Allianz Deutschland
(2018–21)
Chief technology officer
Allianz Technology of America
(2015–19)
CEO and president
Fast facts
Board member at Deutsche Sporthilfe (German
national sports funding organization) since 2020
Westinghouse Electric Company
(2017–19)
Chief information officer
Fast facts
Has served in IT leadership roles in Asia, Europe,
Latin America, and North America
solutions to customers in real time, to supply chain
teams, which enjoy greater transparency and
access to information at a speed the company has
never experienced before.
2. How holistic is your approach
to transformation?
In general, the top performers appear to be taking
a more comprehensive and strategic approach to
their tech transformations than others. Relative
to their peers, they have pursued a higher number
of tech initiatives (an average of 3.5 initiatives, out
of 8.0 we asked about, compared with 2.7) in their
transformations of the past two years. But their
distinctiveness is about more than just the number
of initiatives in play.
In line with our other research,6 the survey results
confirm that deploying certain plays in combination
with others can unleash even greater impact than
if they were deployed in isolation, as many of these
plays have effects on one another.
Exploring the combinations that most top
performers have pursued offers insights into
the relationships between the initiatives that
have underpinned their success and that other
companies can also follow (Exhibit 2). For example,
at least 50 percent of top performers who say their
Web <2023>
<Transition>
Exhibit 2
Exhibit <2> of <4>
Top performers report strong interdependencies between several of their tech
transformations’ initiatives.
At least 50% of respondents at
top-performing organizations¹ who . . .
Enhanced IT infrastructure
Shaped a technology-backed business strategy
Redesigned the technology organization and operating model Shaping a technology-backed business strategy
1
Top-performing organizations are defined as those where respondents report an average growth rate of at least 10% in both revenue and EBIT over the past 3
years. Of the 468 survey respondents, 18%—84 in total—are top performers.
Source: McKinsey Global Survey on technology transformations, 468 participants in the C-suite and IT function, Apr 11–22, 2022
McKinsey & Company
6
“The Tech:Forward recipe,” December 15, 2022.
companies reshaped their business strategy to be
more technology based say they also redesigned
their tech organization and operating model, scaled
their data-related capabilities, and transformed
talent management and sourcing.
Fittingly, Rich Products has taken a holistic
approach to its recent technology transformation.
Liu says the company is implementing multiple
company-wide initiatives that focus on future
proofing its technology foundation and enabling
future scaling and growth—for example, shifting
to a global software as a service (SaaS) enterprise
resource planning solution and embedding new
customer relationship management, supply chain,
and procurement platforms in more than 60
countries. At the same time, Rich Products is also
. . . said the following tech-transformation
initiatives had a material impact on the first one
Modernizing infrastructure
Shaping a technology-backed business strategy
Data capabilities
Redesigning the technology organization and operating model
Data capabilities
Transforming talent management and sourcing partnerships
Delivery model and core engineering principles
Five key questions to get a tech transformation right 5
 changing how its technology function operates, are enabling Allianz to move more quickly and
from a decentralized and regionally managed autonomously when following standards but also
approach to a global model with teams organized making it deliberately more difficult in the case
around enterprise products and platforms. of exceptions.

At Allianz, Schell says the company is taking

a similarly comprehensive route. Allianz is
approaching the modernization of its IT function
holistically, setting minimum standards on
architecture across applications and infrastructure
platforms, data, and cybersecurity. The company
is also adjusting governance processes in its
operating model to enforce this in daily work and
investing in engineering capabilities to foster good
technology craftmanship over time. These shifts,
along with ongoing efforts to scale cloud solutions,
3. What is holding you back
from developing and deploying
new technology at the rate and
quality of top performers?
The survey suggests that top performers are
also more likely than others to have invested in
modernizing and securing their IT foundation—that
is, their infrastructure, data, and cybersecurity—so
they can deploy technology rapidly and effectively
(Exhibit 3). They are three times more likely than

Web <2023>
<Transition>
Exhibit 3
Exhibit <3> of <4>

Top performers are more likely than others to report making investments in
modernizing and securing their IT foundations.

Share of respondents whose organizations have pursued the following Top performers¹ (n = 84)
tech-transformation initiatives, past 2 years, % of respondents All others (n = 384)

+11
+26
61
56 58

50
+38
percentage
points

32

18

Data capabilities Cybersecurity and data privacy Modernizing infrastructure

Building next-generation data Proactively running cyberthreat drills, using A focus on cloud migration
platforms, enabling AI use across next-gen defenses and threat intelligence to and management,
the organization respond to emerging attacks in real time infrastructure automation

1
Top-performing organizations are defined as those where respondents report an average growth rate of at least 10% in both revenue and EBIT over the past 3
years. Of the 468 survey respondents, 18%—84 in total—are top performers.
Source: McKinsey Global Survey on technology transformations, 468 participants in the C-suite and IT function, Apr 11–22, 2022

McKinsey & Company

6 Five key questions to get a tech transformation right

others to report building next-generation data
platforms and enabling AI applications throughout
their organizations. They are also more likely to say
they are strengthening their cybersecurity defenses
and modernizing their infrastructure, through
initiatives such as automation and cloud migration
and management.
Top performers are also less likely than others
to say their existing technology foundation is an
impediment to their tech aspirations. Twenty-
two percent of them cite the slow speed of their
legacy platforms as a top three challenge during
their transformations, compared with 38 percent
of their peers. What’s more, the top-performing
organizations are more effective overall at managing
their data architecture and infrastructure.
In our experience, there are multiple reasons that
could prevent companies from leveraging their
tech foundations to the fullest. One is a lack of
investment, as technology organizations often
meet ad hoc demand from multiple stakeholders
on the business side and aren’t always able
to focus enough time or resources on making
foundational improvements, which are difficult
and often time-consuming to execute. Second
is that products are often built in silos without
communication or alignment between technology
and business stakeholders. Third, it can be hard
to get buy-in for modernizing legacy technology
without a strong business case or strategic
alignment on the need for these changes.
4. How can you make the most of
the talent you already have?
Finding and retaining tech talent is a perennial
challenge and tops the agenda for nearly
every technology and business leader. But the
competition for tech talent will only intensify
as organizations seek to attract and retain an
7
We define a mature operating model as one that is either digitally integrated (that is, both conventional and digital technologies are delivered
at scale through a unified operating model, which is often organized by tech products or platforms) or fully digital (that is, cross-functional, full-
stack, product-based teams are responsible for technology delivery and operate in a digital manner).
8
Ross Frazier, Naufal Khan, Gautam Lunawat, and Amit Rahul, “Products and platforms: Is your technology operating model ready?,” McKinsey,
February 28, 2020.
increasingly mobile, ambitious, and purpose-
driven workforce.
Yet, even when it comes to broad corporate
concerns such as talent, the top performers are
significantly ahead of their peers. According to the
survey, top performers are more likely than others
to say they were effective at retaining top talent,
recruiting new talent, training existing talent, and
having a healthy IT work culture (Exhibit 4).
At Allianz, Schell says people are the most important
factor for their transformation activities’ success.
The company fosters global collaboration through
teams that are staffed with colleagues in different
continents and across communities of practices,
where engineers regularly exchange their ideas. The
combination of individual strengths and diversified
expertise is a powerful asset and enables these
teams to perform in an even more customer-centric
way. In its transformation, Allianz has also increased
internal awareness of what individuals, teams,
and the entire organization are capable of—and
communicated that self-awareness externally as
part of its employer brand.
5. Does your operating model reflect
the changes you are making to
your technology foundation?
While transforming the IT organization and
operating model is a critical way for companies
to get the most out of their technology, that
change alone will not necessarily lead to better
performance. In fact, the proportion of respondents
who say they have a mature operating model
is nearly the same among top performers as
it is among everyone else.7 What sets the top
performers apart is that they are twice as likely as
their peers to rely on operating models that are
product- and platform-centric.8
Five key questions to get a tech transformation right 7
 Web <2023>
<Transition>
Exhibit 4 of <4>
Exhibit <4>

Almost half of all respondents rank tech talent and reskilling as a challenge
during tech transformations, but top performers report stronger capabilities.

Difference in share of respondents reporting effective talent-management capabilities,¹ %

Top performers¹ (n = 84) All others (n = 384)

+41 +44
+26 +25

more likely to be more likely to be more likely to be more likely to be

effective at effective at effective at effective at
attracting and managing employee training and engaging and
recruiting new talent performance² developing talent retaining top talent

1
Top-performing organizations are defined as those where respondents report an average growth rate of at least 10% in both revenue and EBIT over the past 3
years. Of the 468 survey respondents, 18%—84 in total—are top performers.
²For example, evaluating and rewarding employees.
Source: McKinsey Global Survey on technology transformations, 468 participants in the C-suite and IT function, Apr 11–22, 2022

McKinsey & Company

Our experience suggests that these types of
operating models,9 which focus on the end-
user experience, present tremendous business
benefits. To name a few, product- and platform-
centric operating models can help streamline
product development, reduce time to market,
help cut costs, promote accountability within
the organization, and ensure that the company is
creating the highest-quality products.
At Rich Products, Liu says the company has
continued to emphasize that the transformation
is not only an implementation of new systems
but also a fundamental transformation of its
work, workforce, and workplace—all enabled by
technology that is simple, standard, and global.
Indeed, the company has organized work around
product- and platform-based teams, which has
enabled it to benefit from business and technology
partnerships across the organization while also
maintaining the agility to account for local nuances.
In its tech transformation, Allianz also made
meaningful operating-model changes to get
the most out of its foundational improvements.
According to Schell, agile tribes are assuming more
end-to-end ownership of their products, including
innovation and operations. Agile teams are staffed
with experts from the business and technology
sides of the organization, and on the best teams
there is no distinction between people who came
from the business and who came from IT. This setup
enables more autonomous decision making at the
team level rather than by steering committees that
don’t fully understand a decision or have to deal with
its consequences.

9
We define a product- or platform-centric operating model as one where teams and their work are cross-functional, led by product managers,
and organized around a user-facing product or platform rather than a project.

8 Five key questions to get a tech transformation right

 Allianz’s agile journey also involves reducing
Find more content like this on the
complexity: that is, moving from large, long-term
McKinsey Insights App
programs and monolithic platforms to a minimum
viable product approach and microsystems. One
recent example of where the transformation’s
efforts are already paying off: the migration of the
Allianz Business System from the mainframe to
Linux, where the business case is clearly positive.

The survey content and analysis were developed by Anusha Dhasarathy, Pranav Himatsingka, and Naufal Khan, a
partner, associate partner, and senior partner, respectively, in McKinsey’s Chicago office; and Thomas Elsner, a partner
Scan • Download • Personalize in the Munich office.

They wish to thank Vilde Haslund and Mary Morris for their contributions to this work.

Designed by McKinsey Global Publishing

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Five key questions to get a tech transformation right 9