Companies that commence transformation from their core are leading in digital disruption, however, lack of digital skill sets is the greatest barrier to transformation, according to IT services firm Infosys that released a new global research report.
The study reveals that under a quarter of organizations surveyed, understand that commitment to digital is at the heart of true transformation. And, it is these organizations that are reaping rewards from digital disruption. According to the research, more than half of all respondents surveyed, rank focus on digital skillset as the most important factor in successful transformation, followed by senior leadership commitment and change management, implying the need for a conducive organizational culture.
Digital is at the heart of true transformation
The research identifies three clusters of respondents based on the business objectives behind their digital transformation initiatives: Visionaries (22 percent) understand the potential of the digital revolution to completely transform their business; Explorers (50 percent) commit to digital programs driven by the need to enhance customer experience and Watchers (28 percent) who see digital transformation through the prism of efficiency.
While Watchers and Explorers are primarily focusing on emerging technologies like Artificial Intelligence (AI), Blockchain and 3D printing for digital transformation initiatives, Visionaries are not only looking at emerging technologies, but are also focusing strongly on core areas such as mainframe and ERP modernization, said the study, adding that visionaries believe that true transformation comes from the core and without this in the background, digital technologies will not perform to their potential. The study reflects that their commitment to modernizing from the core will yield benefits, such as improved productivity and efficiencies.
According to the study, Visionaries watch and explore futuristic trends which currently escape the notice of the other two cohorts. They boast of increased clarity on opportunities and threats of digital disruption over Explorer and Watchers, as well as an increased ability to execute on them. They look further into the future. They attach a higher rating to the impact of market drivers such as Emerging Technologies (86 percent Visionaries vs 63 percent Explorers, 50 percent Watchers) and Changing Ecosystems (63 percent vs 39 percent, 31 percent) – enabling them to be agile and disruptive.
Lack of digital skill set – greatest barrier
When ranking barriers on the path to digitization, building digital skill sets was found to be the most prevalent (54 percent) challenge for organizations, highlighting the lack of digital skill set available. Transforming from a low risk organization to an organization that rewards experimentation (43 percent) and lack of change management (43 percent) were the second and third greatest barriers, showcasing the turbulence and resistance to change associated with digital transformation, the study said.
Building in-house capabilities was on the list of 76 percent of Visionaries, who were keen on acquiring digital native firms, to quickly gain the digital skills that 71 percent of the Visionaries believed were lacking in-house. Thereby, showcasing the increasing trend towards acquisitions and development of a sustainable ecosystem. Comparatively, the proportion of Explorers and Watchers looking at the acquisition and ecosystem options was negligible.
Pravin Rao, Chief Operating Officer, Infosys, said, “Navigating the digital disruption requires companies to drive a holistic approach to transformation and foster a digital culture that brings together leadership commitment and a renewed approach to skill building. Infosys with its long standing partnerships with global corporations is focused on accelerating their digital transformation journey from their core systems while building new capability to drive competitive advantage.”
Overcoming barriers to digital transformation
The study said, enterprises are relying on their transformation partners to help them scale barriers. Preparing workforce for digital transformation and developing strong capability in managing large organizational change have emerged as top strategies to overcome these barriers. This is especially critical to Visionaries who are aiming to transform business culture.