CXOs are prioritizing digital transformation and are reaping great benefits, but barriers lie ahead, says a new study.
For some years now, businesses have been under intense pressure to digitally transform or lose out to the competition. But it took a pandemic like Covid-19 to expedite the adoption of digital technologies by several years—and that many of these changes could be here for the long haul.
This was resonated in a recent study done by HCL Technologies, which reveals that 90% of businesses will invest in next-gen technologies in response to the pandemic. However, the study also indicates several problems faced by companies through the digital transformation journey, which could result in failure if not tackled head-on.
It’s Digital All The Way…BUT
Titled ‘The Digital Acceleration for Business Resilience’ report and done in conjunction with Vanson Bourne, the study saw participation from 420 senior business and IT decision-makers across industries. The respondents stated that cybersecurity and cloud are the top two technologies to receive increased investment as a direct result of Covid-19.
A key finding of the survey is a major increase in board-level focus on digital transformation pre-pandemic to today, jumping from 42% at the start of 2020 to 55% currently. As the pandemic situation evolves, this number started to rise. Additionally, those industries that started 2020 at the bottom in terms of board-level digital focus, such as healthcare and pharmaceuticals, have reported the greatest increases throughout the year, closing the gap and representing a leveling of digital investment focus across industries.
Good news is, the survey showed that 88% of organizations already have a formal digital transformation strategy in place, and 57% have a roadmap for the same. Further, 45% of respondents use a partner ecosystem to execute their enterprise digital transformation and 48% report external partners as playing a role in defining their digital transformation strategy.
As David Rogers Author of “The Digital Transformation Playbook” & Faculty, Executive Education at Columbia Business School, said, “In the new normal, digital is no longer a question of “if,” but “how fast?” Digital has been the big winner in the COVID era.”
However he made some interesting observations. “Transforming any large and complex organization for this era is an immense leadership challenge. It encompasses new strategy and business models, but also profound shifts in organizational process and culture. In order to lead the kind of agile, customer-focused, bottom-up organization demanded by today’s rapid pace of change, leaders need to invest in the right technology and business architecture,” Rogers said.
Hence, even though 88% of companies plan to invest more heavily in at least one next-gen technology as a direct result of the pandemic, the study highlights that accelerated technology investment alone does not equal digital acceleration.
“Synchronizing business and IT decisions toward an outcome of business architecture modernization calls for a board-level focus on your transformation strategy. Customer centricity remains a core driver of enterprise digital transformations, and this golden ticket is closely linked to the real gold in today’s value chains – a robust data strategy,” he explained.
At the same time, Customers today are going digital, and so are your employees. It is no wonder then, that 94% of survey respondents reported reliance on a public cloud to some extent. However, the study noted, while taking a cloud-native approach is the need of the hour, only one-third of the respondents indicate that their organization is fully cloud native.
Also, over 35% of companies lack in-house expertise to shoulder an organization-wide transformation, and more importantly, nail the ultimate outcomes of such a massive process. Again, as companies invest in upskilling and reskilling internally, building and leveraging a healthy partner ecosystem will be as critical to navigating an otherwise overwhelming business landscape.
There are even more barriers to digital transformation that IT leaders must face, said the study. It cited data security or governance concerns, lack of financial and resource investment, lack of clear vision from senior management as well as mindset and culture are currently key challenges in the enterprise digital transformation path.
For large and complex legacy organizations, the inability to quickly adapt and test business models in an iterative fashion poses a critical challenge to transformation. However, for those able to overcome these barriers, the efforts of this digital transformation are paying off, said the report.
The Road Ahead
“As global businesses rapidly transform to adapt to the new normal, it’s clear that we’re entering a new chapter in the adoption of enterprise digital transformation,” said Anand Birje Senior Corporate Vice President and Head, Digital & Analytics, HCL Technologies.
The report reveals some insights and key actions CXOs must take to realize the benefits of digital acceleration for their organizations and customers. These steps include the reprioritization of digital investments and shortening of implementation cycles, inspecting and reworking business architecture for operational agility, and auditing the partner ecosystem to ensure their companies have the right external expertise.
According to Birje, “It’s no secret that the pandemic has unveiled some unique weak spots across industry ecosystems. To emerge as a winner, integrating these signals into your transformation initiatives will be the key to speeding toward the right outcomes.”
While these actions are necessary for companies around the globe, the data also shows they must be uniquely designed and deployed for individual industries.