Without a clear understanding of corporate priorities, businesses undergoing “me-too” digitalization may not gain all the possible benefits.
The current pandemic has underlined the importance of being digitalized, and digital transformation (DX) is the buzzword in almost every country.
While many businesses will benefit from any effort to digitalize or step up DX, a recent study is pointing to the possibility that ‘getting it right’ may be more complex than merely ‘going through the motions’ of cloud migration and increasing digital presence.
Global law firm Baker McKenzie has data showing that just one in three companies that has gone through DX cited that it actually improved operations, despite business agility being cited as the number one reason for embarking on the process.
Other respondents also expressed concern around increased operational confusion, and the need to imbed additional processes and technology in the wake of digitalization.
Operational efficiency vs growth
According to the survey of 300 executives, who as part of their roles were buyers, users and/or suppliers of Cloud and digital services, other key drivers cited for DX included the ability to attract and retain talent, to improve collaboration and internal processes, and to understand customers better.
Agility and innovation were uppermost in the minds of businesses when they invested in DX. Other key factors included bringing new products and services to market more quickly; using data to support new, strategic decision making; and improving data management to monetize data, according to the firm’s IP, Data & Technology Partner Sue McLean.
However, the monetization of data and new tech appears to be one of the great untapped benefits of digitalization, with most companies still focused first and foremost on becoming more operationally-efficient rather than to use DX to seize new business opportunities and monetize new offerings.
The vast majority of respondents, spread across countries including the US, Brazil, UK, France, Germany, Australia and Singapore also said they were currently investing “heavily or very heavily”’ in data security. The executives surveyed remained particularly concerned about cybersecurity, with 42% of respondents citing the need to improve cybersecurity as one of the top-three drivers of accelerating DX due to the pandemic.
Meanwhile, trying to integrate new and legacy systems remained the leading barrier to DX. Therefore, business leaders were looking to learn from recent experiences of similar companies, cut through the tech hype, and reduce financial and operational risks.
Cloud? Blockchain? Data is the key
Meanwhile, the number one DX enabler cited by the respondents was cloud computing. There was a marked increase in reliance on private cloud services, driven in part by the promise of better data security and disaster recovery. This had been further accelerated by the adoption of remote-working among businesses due to COVID-19 lockdowns.
According to Adam Aft, Technology Partner and Cloud specialist, Baker McKenzie: “Consumers are creating and acquiring digital content across multiple platforms, and the way in which they use and share that content itself creates an extensive data footprint. This means Big Data applications depend heavily on the availability of cloud computing services and infrastructure to quantify, interpret and respond to trends on a real-time basis.”
On that note, of the industries surveyed, over 50% of both consumer goods and retailing companies and financial institutions identified ‘building new revenue streams’ as a potential impact of cloud; this was higher than any other industry featured. It was one of the few clear links to monetization, with most business rather looking at efficiencies, customer insights and colleague collaboration as key drivers.
As a central goal, operational efficiency was linked to adopting cloud-based services, but this varied quite significantly across industries. Financial institutions (68%) and healthcare and life sciences companies (67%) were most likely to benefit from becoming more operationally-efficient as a result of Cloud-based IT, while tech, media/telecoms, and consumer goods and retail companies viewed cloud as helping to improve the company’s business agility.
Another perceived enabler of DX success was Blockchain. The report found usage of blockchain in supply chain management had increased more than ten-fold in just three years, with 42% of survey respondents using blockchain, versus the mere 4% that did so in 2017.
Businesses in the industrials, manufacturing and transportation sector (IMT) were some of the most likely to have adopted Blockchain technology, given the complexity of supply chains in these industries.
Above all, data remained at the absolute core of DX challenges and opportunities. Another partner at the firm, Peter George, concluded: “The value of data to business is undeniable. It lies at the core of a successful technology strategy in 2020, whether it is the storage, collection, protection, analysis or use of this data. Respondents from this year’s survey saw it as one of the most important business drivers they have.”