Although much has been written about digital transformation, businesses are finding that transformation is about more than just the application of technology or simply a drive to modernise the IT estate. According to Richard Davies, managing director, Leading Edge Forum, and vice president, DXC Technology, it is about a comprehensive business transformation, a whole new way of thinking, and everyone in the business must be on board.
In our recent global survey of 1,186 executives, findings revealed that although leaders understand the benefits of transformation and are making progress, many continue to struggle with cultural and technological change.
What is working?
The next decade will present companies with an opportunity to reap a greater share of dividends from their digital investments and more chances to capitalise on the data they have worked so hard to collect and curate. For example, 79 per cent of leaders overall stated that they seek to leverage digital technologies to become market leaders, with 77 per cent saying that the collection and use of data is now built into the way they innovate and compete.
What is clear is that new technology is not only driving innovation and creating new revenue streams but is also enhancing reputations with 89 per cent of leaders reporting that being technically up to date is important for their brand and recruitment. In today’s high-pressure environment, competitors can come from anywhere, multiple countries and sectors, leaders are focused on continuous improvement and innovation:
- 57 per cent say improving the customer journey and experience is one of their top three competitive strategies
- 55 per cent say developing smart products and services is in their top three
- 55 per cent rank becoming more innovative and willing to take more risks in their top three
Moreover, digital technology is helping them implement these competitive strategies and most have already made significant investments. When asked to prioritise the emerging technologies they believe will most positively impact their organisations, business leaders voted decisively:
- High-speed 5G networks (60 per cent)
- Artificial intelligence and machine learning (59 per cent)
- Sensors and the Internet of Things (55 per cent)
- Robots and robotic process automation (54 per cent)
- Virtual and augmented reality (53 per cent)
- Voice interfaces such as Alexa, Siri, and Google Assist (52 per cent).
The digital deficit: barriers to transformation
The positives, though, are only part of the picture. More needs to be done before true transformation can take place. Fragmented strategies and internal stumbling blocks continue to obstruct progress. Our survey findings revealed that technological and cultural barriers are creating deficits which, in turn, are reducing the dividend of business transformation.
While 79 per cent of business leaders, as previously cited, stated that they are leveraging technology to become market leaders, over half of the respondents (52 per cent) believed that staff are not sufficiently using analytics to make decisions based on data insights, meaning that insights are being missed. In addition, two-thirds (66 per cent) confessed that their mission-critical systems are so complex that they are wary of changing them. A further 62 per cent responded that they lack a common set of tools and platforms across the organisation, resulting in a collection of digital islands: units working with the right technologies but independently of each other.
While enterprises have been focused on data- and technology-driven transformation for some time, business leaders say they must also get the people and culture aspects right for effective, long-term change in the 2020s. According to 70 per cent of our survey respondents, they agreed or strongly agreed that lack of effective leadership across the organisation is creating a barrier to technology-enabled organisational change.
In some cases, leaders may have questions about modernisation, such as where to start and how to do safe, large-scale change rapidly. Or, they may have heard many times how new rivals are destined to fundamentally disrupt their industry. These are reasonable concerns that contribute to sluggishness in some companies.
But leadership is not wholly to blame. Employee resistance to change, time pressures and general skills shortages also impede progress:
- 65 per cent agree or strongly agree that employee reluctance to change work habits is a barrier
- 65 per cent agree or strongly agree that their people are just too busy with their current workloads
- 62 per cent agree or strongly agree that their organisations lack the necessary training and skills.
Creating conditions for change
Business transformation will gain momentum and become more successful as organisations create conditions for change. The 2020s could be the decade in which the cultural, technological and market barriers finally come down. As such, the following five steps can help provide the unifying vision, the employee buy-in and the single IT architecture to make a real difference to the future of organisations:
- Develop 21st-century executives, leaders, and employees. Both C-level leaders and mid-level managers need to be tech-savvy, and they need the skills to lead people effectively. These leaders will advocate for technologies that can make the enterprise more agile, productive, and innovative, and they will secure buy-in across the organisation.
The ability to create high-performing, interconnected teams of employees with diverse and complementary skills is just as important, such teams can unlock the organisation’s full potential.
- Review team performance and make sure skills and experience circulate. Reviewing teams will help identify the strengths and weaknesses of individuals and enable resources to be deployed more efficiently and effectively. The remixing of teams, at both junior and more senior levels, will help strengthen the aggregate level of skills in the organisation, cut across silos and spread knowledge.
- Build a modern technical foundation, and especially a modern data foundation. Finding a path to modern infrastructures, freeing themselves from proprietary solutions and collecting data in ways that make it more available to artificial intelligence enabled applications are priorities for organisations in the 2020s. As companies move up the technology stack from cloud, security and applications to data and analytics, they will be able to harness data flows to drive new products, services, customer experiences and operational efficiencies.
- Embrace a strategic set of ecosystem partners and suppliers. In a platform economy, there is simply no reason for enterprises to go it alone. And, in fact, they cannot. Companies, in all industries, will grow stronger and faster, and develop greater resilience when they build a set of strategic partners and suppliers who can help them identify and respond to market changes faster and with greater differentiation. These partner and supplier ecosystems will create data exchanges, with proper controls, to meet business goals previously unachievable.
- Plan to change course often and in mid-flight. If the last 10 years have taught us anything, it is that our future can change overnight with the introduction of a single technology or tool. The impact of smartphones alone alerts us to the fact that out there, somewhere, a new idea is lurking that will change the way we do business and serve customers. In this environment, it is vital to have the confidence to be flexible and dynamic, to experiment, to fail fast and learn.
Getting the right combination of people, culture and technology is essential for making effective, long-term change. Competitive threats mean the need for business transformation is becoming more urgent and companies have a lot of work to do, work that should have happened some time ago.