Organizations struggle to make progress with their digital transformation investments, most organizations lack the digital and leadership capabilities to make digital transformation a success
New research from Capgemini’s Digital Transformation Institute highlights that the minority of businesses feel they have the digital (39%) and leadership (35%) capabilities needed to make their digital transformation journey a success. The report, “Understanding Digital Mastery Today: Why companies are struggling with their digital transformations” reveals that while companies are making progress on evolving their customer experience, they are struggling to transform their back-end operations. Furthermore, businesses are failing to create the strong digital culture needed to bring their employees into their digital transformation agendas.
The report, which surveyed more than 1,300 business leaders in over 750 organizations with the majority (71%) reporting revenues of over $1 billion, compares digital transformation progress against Capgemini Consulting and MIT Sloan’s 2012 report, “The Digital Advantage: How Digital Peers Outperform Their Peers in Every Industry”. The new research shows that despite huge investments in digital transformation initiatives, set to exceed $2 trillion by 2021, organizations today feel less equipped with the right leadership capabilities than they were six years ago (45% in 2012 compared to 35% in 2018), while less than half still feel they have the right digital capabilities to advance their transformations (39% in both 2012 and 2018.)
When it comes to digital capabilities, organizations have prioritized customer experience – making the most progress in this sphere. For example, 43% of organizations today are using mobile channels to sell products and services, compared to 23% in 2012. Moreover, nearly 40% are improving their knowledge of markets and customers through devices embedded in products, compared to 17% in 2012. These gains are not surprising given the widespread use of mobile channels and apps among consumers, and advancements in Internet of Things (IoT) technologies.
However, only 36% of organizations said that operation was an area they excelled in. While there were small gains from 2012 to 2018 in the percentage of organizations that design their products digitally (38% to 40%), only 35% are monitoring operations in real-time (48% in 2012), only 29% modify their operational processes to quickly adapt to external challenges (34% in 2012), and many organizations are not providing the tools and capabilities that their employees might expect. For example, only 38% of organizations say that their employees can collaborate digitally with other employees and just 33% of organizations agree that digital technologies improve communication between senior executives and employees (compared to 70% and 62% in 2012, respectively).
While the relationship between the CIO and other members of the leadership team is critical in a digital age, there appears to be a disconnect here. In 2012, 65% of organizations felt that the CIO and senior business executives had a shared understanding of the role of IT in their organization, but this has declined to 37% in 2018. While 59% of respondents in 2012 felt that the CIO and senior business executives have a shared understanding of how IT can be used to increase productivity of the organization’s operations, this has declined to 35% in 2018. Six years ago, 53% of respondents agreed that the CIO and senior business executives have a common view of IT investment priorities, but that has also declined in 2018 to 36%. The report concludes that these reductions suggest optimization is still occurring in silos or that business leaders are impatient with the pace of IT and are spinning off shadow IT to lead their initiatives.
“Speed of products, solutions and digital innovation development has greatly increased,” said Enrico Maria Bagnasco, Head of Technology Innovation at Telecom Italia. “It is therefore important that companies keep an open dialogue with the external ecosystem and find a balance between business and technology to achieve the goals of digital transformation projects.”
