More than half a decade on, organisations investing in digital transformation are still struggling to turn their investments into business success, according to research from Capgemini which includes a comparison to its corresponding 2012 study. The latest research found most organisations lacked the leadership and operations required for successful digital transformation.
“Six years after our original research, organisations have had time to build capability and experience in driving digital transformation and one would expect the level of digital mastery to have progressed from 2012. However, our research does not find a clear advancement,” the report said.
The 2018 Capgemini research, Understanding digital mastery today: Why companies are struggling with their digital transformations, surveyed over 1300 business leaders from 757 organisations, most of which (71 per cent) had reported annual revenues of over $1 billion.
It found despite their resources and time, most are still struggling with digital. The commitment to invest in digital infrastructure is “not in question”, rather, it is a case of organisations lacking digital leadership and digital capabilities, according to the report.
The research confirms what Capgemini is seeing with their clients, according to a company spokesperson who spoke to Which-50. However, the apparent lack of progress must be considered along with the environment in which it is occurring – one where the pace of technology innovation has reached “dizzying” levels.
- LEARN: Join Which-50 and our partners and hear from senior executives including NAB’s Karen Ganschow, Iconic’s Anna Lee, Australia Post’s Andrew Walduck, Vectore’s Shamima Suntana, and Peoples Choice Credit Union’s Geoff Wenborn on the Real World Transformation panel and roundtable discussion in Sydney and Melbourne in late July and August. Register your interest today as places are limited.
“Yes there is, in some capacity, the fact that we haven’t gotten as good as we should be. But don’t discount how fast [digital] is also moving,” the spokesperson said, suggesting that pace of change was contributing significantly to the research results.
Looking for leadership
According to the research, just 35 per cent of organisations have the digital leadership required for their digital transformations. That number is down from 2012 when 45 per cent of organisations said they had the required leadership.
However, the drop off in leadership capabilities shouldn’t be surprising, according to the Capgemini spokesperson.
“Given the changes that have been happening within technology and the uptake within organisations, it’s so hard to keep abreast of it,” they said, noting that the more successful organisations were addressing the cultural changes needed for digital transformation and are better able to manage change.
However, for most the uptake of a digital culture remains slow, and organisation wide culture change remains a challenge, the spokesperson said. But digital leadership and culture “is just as important as having the actual digital capabilities”, and, importantly, it needs to come from the top.
“Show me your board members and show me the understanding of technology at the board level, and you’ll quickly be able to understand how fast an organisation can digitally transform.”
“If leadership doesn’t understand [digital transformation] than how is the wider organisation actually going to transform.”
The relationship between business and IT also appears to have degraded. In 2012, 65 per cent of organisations felt that the CIO and senior business executives had a shared understanding of the role of IT in their organisation. Today the number is just 37 per cent.
According to the authors, the growing IT disconnect is caused by optimisation occurring in silos and fellow executive being frustrated by the pace of IT, which is driving shadow IT purchases to lead digital initiatives.
Organisations also still struggle significantly with vision, governance and engagement, according to the report.
34 per cent of organisations say that senior executives have a digital transformation vision that crosses internal organisational units, down from 41 per cent in 2012. The number of organisations that feel roles and responsibilities for digital initiatives were clearly defined within the company has also dropped, 38 per cent in 21012, now 32 per cent.
“Organisations remain challenged to drive substantial progress. Six years on, they might have realised just how difficult it is to create an aligned organisation and a strong governance model that supports the vision, and to ensure employees are engaged in the journey,” the report said
Digitally incapable operations
One bright spot from the research, organisations are making headway on customer experience. The number of organisations using mobile channels to sell products and services has risen from 23 per cent in 2012 to 43 per cent in 2018. The amount of organisations using devices embedded in products to improve their knowledge of the customer has more than doubled to 40 per cent.
According to the Capgemini spokesperson, customer experience is where innovation usually occurs but organisations are struggling to transfer that innovation to business operations.
“[Using digital capability to improve customer experience] is not enough unless it actually embeds itself within operations, and that’s actually gone down.”
Compared to 2012 finding, today, fewer organisations are monitoring operations in real time, modifying operational processes to quickly adapt to external changes, or providing the tools and capabilities employees expect.
“Implementation challenges and the increased complexity of technology appear to be hindering organizations’ ability to make progress in operations,” the authors said.
“The movement in collaboration tools and capabilities might suggest that employees adopted tools and platforms with enthusiasm at the beginning but stopped using them. Furthermore, availability does not necessarily translate to actual use, particularly among senior executives who are already time-pressured.”