Research – HG Insights bring you the key takeaways from a global survey which reveals a majority of businesses will increase their investments in digital technology and many expect IT modernization to fuel future transformation efforts that lead to cost savings and greater profitability.
Commissioned by DXC Technology, 2019: The Year of Digital Decisions explores how companies define digital transformation and the resulting business outcomes. Significantly, the report reveals that more than eight in ten survey respondents (83 percent) expect their organizations to increase their digital investments in 2019. And more than 40 percent of respondents predict that their organizations will increase their investments by 11 percent or more.
Currently, approximately half of companies surveyed have digitally enabled just three key organizational functions, according to the research. When asked to cite the top barriers to transformation, more than one-third (35 percent) of respondents flagged “cost or lack of funding,” second only to security concerns (40 percent).
Digital technology innovation is a requirement
However, most companies surveyed (76 percent) expect the cost savings from IT services modernization to help fund their digital strategy. Within the next three years, companies intend to greatly ramp up their efforts, and more than half of respondents (58 percent) expect every business unit to be digitally enabled in the next three years.
“Companies overwhelmingly recognize that digital innovation is now a requirement for them to compete and succeed,” said Dan Hushon, senior vice president and chief technology officer, DXC Technology. “The survey findings point to perhaps the most rapid, dramatic and sophisticated effort at reinvention that major businesses have attempted in many decades, and those surveyed are committed to investing to make digital happen.”
Survey respondents also linked digital transformation to profits. More than two-thirds (68 percent) say the annual profitability of their organizations has increased over the past three years thanks to their organizations’ digital strategy, and 74 percent say they expect it to rise over the next three years.
Digital decision drivers
The report reveals what companies aim to achieve by digitally remaking themselves, as well as the challenges they must overcome and the cultural changes they need to make. Key findings include:
- Digital and business strategy formulation are completely or almost completely aligned at 72 percent of companies.
- Three-fourths (75 percent) of respondents say digital transformation will lead to greater agility, and 76 percent report that modern digital IT infrastructures better position their companies to produce value for their stakeholders.
- Approximately one-third (33 percent) of respondents say the lack of a tech-savvy workforce is a barrier to transformation.
- Nearly three-fourths (72 percent) of companies agree that a change in culture is necessary to digitally transform any organization. That figure is even higher for companies in developing regions and those that have implemented digital strategies only in the past two years.
Regional and industry trends
- Companies that are further advanced – for example, those headquartered in North America and Europe and those in the financial services and manufacturing industries – tend to place greater emphasis on cross-functional collaboration, possibly because this helps them to optimize the digital investments they’ve already made.
- Financial services companies are more likely to stress AI/machine learning and blockchain while, for manufacturing companies, cloud computing and IoT are especially important.
- Social media is a somewhat higher priority for retailers than for other industries, given the importance to them of developing digital channels for sales and marketing. These tools play a growing role at marketing and communications firms as well.
621 senior executives were surveyed in September and October 2018 to discover where companies are in their digital development and what they want to achieve with digital transformation. Respondents were members of the C-suite or held other senior leadership roles, including executive vice presidents, managing directors, and directors. Companies surveyed ranged in size from US$500 million to US$5 billion or more in annual revenue. Respondents were widely distributed across functions and industries — healthcare, manufacturing, retail and insurance are the biggest sectors represented.
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