What would happen if you put a regular driver in the seat of a Formula 1 car? While they might be able to get the vehicle moving, making it around the track in a reasonable time requires a lot of skill and training. Even top drivers need a clear strategy, the right partners, the support of their team and well-oiled systems in place, or there will be no podium finish.
The same could be said for digital transformation. There is a common perception that technology is the key to digital transformation success. While technology can have a profound impact on business, Telstra research has found that, like a Formula 1 car, it’s only when people, processes and partnerships are brought together that profound change is realised and tangible business results achieved.
As part of Telstra’s Disruptive Decision-Making research, we surveyed 3,810 senior decision-makers from 12 industries in 14 markets around the world to uncover insights into strengths and weaknesses around their digital transformation programs, focusing in on decision-making.
Our research shows digital transformation has become more complex and ambitious. Decision makers are bombarded with information from every angle and face a growing number of priorities – they need to enable digital transformation, ensure security, innovate, keep up with the competition and grow their business. To do all of this is almost impossible.
So leaders have to make hard choices. What are their priorities and why? How do they manage their digital transformation programs? What is best practice and where is it not working?
In trying to understand the best way to deal with these hard choices, we found four important themes.
A whole-company approach is not common, but is needed
We started our research looking at the state of play for digital transformation across the Asia Pacific, Americas and EMEA. We quickly found that digital transformation is still very much in its infancy. In fact, 30% of senior decision-makers said they had not started their digital transformation journey, and just 21% described their business as digitally mature.
Leaders told us their digital transformation projects were fragmented. More than half said their organisation had an incremental approach driven by individual business units, and only a quarter reported a whole-of-company digital transformation strategy and approach. The need for more integration came through loud and clear, with four-fifths of leaders reporting a need for better integration in their digital transformation initiatives.
Our research showed a company-wide approach is significantly more likely to deliver business success. Organisations that had a whole-of-business digital transformation strategy were much more likely to be highly digitally mature, make extremely good digital decisions, and see the impact of digital transformation across the business.
This shows a clear opportunity for businesses to both elevate and integrate their approach to digital transformation. While more can be done to integrate digital transformation activity across the business, this needs to be led by a clear company strategy from the C-suite and company boards down.
Cyber security is top priority, but there’s a performance gap
Having too many priorities clouds decision making. In designing this research, we knew our audience would want to understand the global digital transformation priorities of businesses. But one of the most interesting findings came when we asked leaders about their performance in priority areas.
Cyber security came through as an important theme, with protecting digital assets from cyber threats, optimising security investments, and protecting, detecting and responding in real time to events all listed in the top five priorities of global companies.
When we asked about decision-making performance, however, these priorities ranked as among the lowest. In fact, the top priority for businesses, protecting digital assets from cyber threats, ranked 17th of all 17 priorities in terms of ability to deliver.
We know that major companies receive hundreds of cyber threats every day. The results indicate that companies recognise the importance of cyber security, but don’t yet have a good understanding of it to manage it effectively.
The technology comfort blanket
We asked business leaders to rate decision-making across four factors for success – people, processes, technology understanding and partnerships. Globally, businesses said ‘technology understanding’ was the area where they are by far most confident, but were less confident in their organisation’s abilities across the other three ingredients to success.
The research found that organisations that are highly digitally mature in their digital journey show a greater focus on people and processes. This further affirms that successful digital transformation relies on more than the right technology, it requires the right culture, the right people, and the right processes to support them. It must be a company journey that involves upskilling and changing employee mindsets, adapting structures and ways of working, and creating teams that can take advantage of new technologies.
Hard financial outcomes are difficult to show
Measuring the progress and success of any digital transformation strategy or individual project is essential. We wanted to understand the metrics for success – and the outcomes organisations are seeing.
This is despite organisations increasing their investment in digital programs. Almost a third of decision makers said their company’s total spend on digital transformation would grow by more than 10% in the next three years.We found that businesses are seeing success in ‘softer’ measures, such as increased customers experience, increased customer loyalty and delivering business efficiencies. However, showing ‘hard’ outcomes such as financial returns was difficult. Of all the business outcomes surveyed, increasing profit margins and streamlining business costs saw the lowest levels of achievement.
The research told us that the benefits of a whole-of-company, leadership-led approach to digital transformation cannot be understated. The impact is not only digital, but also on the bottom line. We know that because organisations that show high digital maturity are much more likely to achieve better increases in profit margins than organisations that haven’t started their digital transformation journey. These companies are clear on what digital transformation means for their organisation, they have empowered their people, strengthened their processes and identified their partners.
For business leaders, making the right digital decisions provides enormous rewards. But it is not an easy task. No company has got this 100% right yet. It’s a journey and this research provides clear information to help businesses as they experiment, iterate and make the most of digital disruption.