DAVOS, Switzerland, Jan. 22: Businesses worldwide encounter a "digital ceiling" when it comes to digital change, as stated in a fresh study from Infosys Knowledge Institute (IKI), the thought leadership and research wing of Infosys, a worldwide pioneer in next-generation digital services and consulting. The research shows that businesses must change their attitude to obtain advanced stages of digital maturity.
Infosys Digital Radar 2020 evaluated the digital transformation endeavors of companies on a Digital Maturity Index and noted year-over-year advancement in fundamental zones, for example digital efforts to enhance a company's capability. However, the majority companies come up against a "digital ceiling" when attempting to obtain the most developed levels of maturity.
The report, which surveyed over 1,000 executives worldwide, positioned the most digitally advanced organisations as "Visionaries", trailed by "Explorers" and then "Watchers."
Companies are aware how to obtain moderate transformation success, with an 18 per cent growth in companies advancing this year from the lowest tier of Watchers to the middle Explorer tier. However, Explorers tried their best to move into the leading Visionary cluster, with the key tier remaining the same, showing a "digital ceiling" to transformation endeavors.
The Visionary cluster remains unchanged in spite of companies reporting fewer obstacles to digital transformation than the previous year. Human, rather than technological, obstacles are presently the most constant, with the two of the top obstacles being the scarcity of talent or skills (34 per cent) and a risk-averse corporate culture (35 per cent).
How to break through the digital ceiling?
The research shows that leading performers break through the digital ceiling since they think differently.
Firstly, successful companies concentrate robustly on people, utilizing digital transformation to make enhancements centred on clients and employees.
The majority of companies (68 per cent) across the spectrum stated functional capability and enhanced productivity as a key transformation goal. But successful companies in the Visionary cluster are specifically encouraged to make enhancements for their employees. Approximately half of Visionaries describe "empowering employees" as a chief business goal for transformation, compared with less than one third of Explorers and less than one fifth of Watchers.
Similarly, Visionaries have an enhanced concentration on client centred endeavors, being considerably more likely than other clusters to undertake transformation to boost client experiences and engagement and in order to react more swiftly to client requirements.
Secondly, successful companies have a unique attitude when it comes to transformation procedures.
Conventional linear transformations result in long transformation timelines, signifying a company's enhancements are obsolete by the time the procedure is complete. Instead, leading performers exhibit a cyclical attitude, executing recurring swift feedback loops to promote transformation and keep updates relevant. The Visionary cluster is far ahead of others in digital endeavors tied to rapid cycles: 75 per cent function at scale in Agile and DevOps, compared with an overall average of 34 per cent for the total survey group.
Businesses overestimate tech obstacles and underestimate the significance of a company's attitude
The significance of culture and a cyclical transformation mindset to breaking through the digital ceiling were underestimated by businesses the previous year.
In the 2019 Digital Radar report, companies were asked to forecast the toughest obstacles to their transformation development for the subsequent year. This year's Infosys Digital Radar 2020 compares these forecasts to the real problems businesses encountered in 2019.
Businesses reported remarkable declines in the influence that technological obstacles have on their transformation advancement, including:
- Inability to experiment quickly (down 49 per cent);
- Insufficient budget (down 40 per cent);
- Cybersecurity challenges (down 40 per cent).
However, businesses made much less advancement against cultural obstacles, including scarcity of change management capabilities (down 7 per cent) and lack of skill (down 6 per cent).
Development across industries and geographies
- The technology and telecom industries continue to rank highest on the Digital Maturity Index this year.
- Consumer packaged goods, logistics, and healthcare achieved strong year-on-year improvements. The report's anecdotes from executive interviews suggest that the adoption of telematics, the Internet of Things and smart medical devices contributed to these increases. Likewise, the automotive industry placed fourth by digital maturity and featured the second highest percentage of Visionaries (30 per cent of those surveyed).
- The insurance industry lags significantly behind other sectors, featuring the highest percentage of Watchers (17 per cent).
- The digital ceiling was most dramatic in China, where 23 per cent of companies moved from Watcher to Explorer (which rose from 64 per cent to 87 per cent), but the percentage in the Visionary category (8 per cent) remained the same.
Salil Parekh, CEO and MD at Infosys, observed: "We've seen enterprises successfully employ emerging technologies to optimise productivity and efficiency, but struggle at the next stage of digital maturity. Faster, better, and cheaper technology alone will not provide the improvements enterprises need. Our research has shown that companies which can keep pace with digital transformation are those that design digital initiatives to improve customer experiences and empower their employees, differentiating themselves and propelling their business to the most advanced levels of progress."
Jeff Kavanaugh, VP and Global Head at Infosys Knowledge Institute, remarked: "This year's Digital Radar research revealed significant progress across transformation initiatives – however, traditional programme models are not keeping up with the rapid pace of market change and companies face a distinct barrier in reaching top levels of digital maturity.
"The most successful businesses in our survey have an employee focus and a circular transformation mindset, which enable top performers to kick off a virtuous cycle in the company. The result is a "living enterprise" that is constantly sensing, improving, and attuned to its customers and employees. This living enterprise is suited to serving a larger circle of stakeholders – employees, customers, suppliers, local communities, and larger society – not just shareholders."
By ANJISHNU BISWAS
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