The Master Report: Digital transformation – easier said than done

This was a sponsored post by Domo under the Master Report series.

Over the past few years, the term digital transformation has washed over companies big and small in order to deliver the best revenue growth and survive the cut-throat economy. However, digital transformation is easier said than done with an increasing number of organisations having failed to successfully adopt their planned digital transformation initiatives.

According to Capgemini’s latest report “Understanding Digital Mastery Today”, while the expectations have kept increasing, many organisations have not kept up with the pace of change.

The report, which surveyed 1,300 business leaders from 757 organisations, many with annual revenues of more than US$1 billion, focused on the differences in companies’ opinions between 2012 and 2018. It also 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”.

In the original study in 2012, Capgemini established a framework that is an indicator of how organisations can progress with digital transformation initiatives. This framework relied on two factors – the digital and leadership capabilities – which served as indicators. However, the latest report highlights that despite the rising worldwide spending on digital transformation technologies over the past six years, not much progress has taken place on both these pillars. The percentage of executives who feel they are capable to take on digital transformation remains the same (39%) from the past six years, while executives who felt strongly about their leadership capabilities went in the opposite direction, dipping from 45% to 35%.

When it comes to digital capability, the report looked at two areas – operations and the organisation’s customer experience. On the latter, companies have made significant progress in areas such as social media and mobile. For example, only 23% of organisations in 2012 used mobile channels to sell their products/services compared with 43% today. Nearly double the percentage of companies are learning about their customers by embedding devices in their products (40% today versus 17% in 2012).

However, operations seems to be the key challenge as only a minority of the organisations believed that operations is an area they excelled in. Compared with 2012, fewer companies agree they are monitoring operations in real-time; fewer organisations believe they are modifying their processes to adapt to external changes; and fewer companies are providing the tools their employees expect.

On leadership capability, organisations and their leadership have not kept pace with their ambitions towards digital transformation. IT and core-business leadership teams do not appear to be in sync. In 2012, 65% of the surveyed companies felt their CIOs and senior leaders had a shared understanding of the role of IT in their businesses, but this dropped to 37% in 2018. A similar drop was observed in how organisations perceived IT investments could be used to increase productivity (59% to 35% today).

Moreover, some organisations are also not taking their employees along with them as part of their digital journey due to a lack of engagement, and organisations not creating the required culture. In 2018, only 38% of companies surveyed agreed there were possibilities for all employees to take part in their digital conversations compared with 49% in 2012.

If leadership is not available for people to speak with and get feedback, employees will not feel valued and will not contribute to the effort towards becoming a digital organisation.

While the initial effort revolves around a vision, which is a key step towards the digital transformational journey, only 31% of senior leaders agreed they share a common vision of how their business should change from the digital transformation initiatives. This is once again a drop compared with 2012, where 44% agreed they shared a vision. Nonetheless, companies with strong governance structure will help realise their vision and execute their plans.

This research, therefore, suggests that although organisations have made progress on the customer experience, the early enthusiasm that leaders showed in 2012 for overall digital transformation has dropped due to the realities of the challenges and struggles. This might be further driven by the fact that companies have realised how much of a challenge it is to take on and execute new initiatives.

This, in addition to the changing expectations from customers and employees is adding more pressure on the organisations, and is probably why organisations have not moved fast enough to realise their digital ambitions. While the jury is out on what a potential road map to success can be, one vital step would nonetheless be to have a clear vision, expectation and governance to ensure they create a culture that makes employees part of this transformational strategy.

Read more on Domo's insight on digital transformation here:

Digital Transformation: Why should marketing take the lead?

Understand Domo’s point of view on letting marketing and its expertise to better lead the organisation from the front and help leadership confidently forge a new direction in this age of digital change.

Digital Transformation: Case Study: Cisco’s marketing team transforms its business with Domo

Check out Cisco's transition from hardware provider to software and services delivery through its partnership with Domo as its marketing transformation partner, showing how marketers can be a change agent for business transformation.