Traditional enterprises, meaning companies which have been established for some years and are typically using older information technology, are struggling to keep up with their “digital native” counterparts, according to a new survey from Bain & Co. and Red Hat Inc.

The survey on the state of digital transformation, “For Traditional Enterprises, the Path to Digital and the Role of Containers,” reports that most established companies are merely reacting to digital moves by competitors when they upgrade their IT infrastructure. As such, the survey of 450 U.S. executives, IT leaders and IT personnel from across industries gives most traditional enterprises a failing grade. It ranked the companies on a 100-point scale assessing their progress in aligning digital technologies with business outcomes, and said 80 percent of them scored less than 65 points.

The report notes that “digital native” companies have a big advantage, being able to build their IT infrastructure from scratch in the cloud, with a big focus on cloud-native applications. In contrast, traditional enterprises are left struggling to mesh their legacy infrastructure and applications with new trends like cloud computing and agile application development.

For example, Red Hat says that while 63 percent of enterprises surveyed have built processes to respond to digital trends, only 19 percent see rapid innovation as a priority. In addition, for approximately 65 percent of survey respondents, the primary motivation driving their digital efforts is moves made by their competition, highlighting a highly reactive approach to digital transformation.

“We see many traditional enterprise companies still trailing on measures of digital maturity, even among the most advanced firms,” said Jeff Taylor, a partner in Bain’s Technology Practice and co-author of the report. “As we took a deeper look at these companies surveyed, we saw that those advancing further and faster on the adoption curve treat digital as more than just a singular function or activity. They view it as a comprehensive, cross-functional transformation, implementing changes across their leadership, organization, product development approach and processes, IT strategy and investments, data governance and tools.”

Red Hat’s survey also found that the business justification for shifting to cloud and other digital infrastructure varies depending on the nature of enterprises’ industry and current IT requirements. Besides keeping up with the competition, other incentives listed by survey respondents included boosting market share, accelerating new product and service delivery and streamlining application development.

With regards to the last point, traditional enterprises are showing a keen interest in making their current IT infrastructure more flexible, in order to speed up time to market and reduce costs. Consequently, Red Hat says a growing number of companies are adopting application containers, which offer greater flexibility due to their ability to run across both private and public clouds. The survey adds that those who’ve already adopted containers have reduced application development time by up to 30 percent, while gaining greater flexibility. In addition, Red Hat says container adopters could yield cost savings of up to 15 percent due to increased hardware productivity.

“Containers are on track to play an important role in not only application development for highly automated, scale-out platforms, but also in helping to drive the modern enterprise forward on their journey towards digital transformation,” said Tim Yeaton, senior vice president, Infrastructure Business Group, Red Hat. “While most survey respondents – about 80 percent – are currently using containers primarily for web apps, we expect to see this start to shift to include more mission-critical workloads.”

Still, Red Hat concedes that the speed of adoption for containers is still uncertain. Survey respondents cited issues including a lack of familiarity, talent gaps, hesitation to move from existing technology and immature ecosystems as the main obstacles in the way of adoption.

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