Digital Transformation: This is Why UK Businesses Struggle to Totally Embrace New Tech
- New study finds leaders lean too heavily on technology understanding in digital transformation decisions
- Digital transformation-driven financial rewards difficult to show
- UK organisations report gap between digital transformation priorities and performance
- Whole-of-business approach required for digital transformation success
By placing an all-encompassing focus on the role of technology when making digital transformation decisions, UK businesses are ironically reducing their chances of success.
This was one of the main findings of Telstra’s Disruptive Decision-Making research, which 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.
Leaning too heavily on technology
When rating decision-making across four factors for success – people, processes, technology understanding and partnerships – British businesses ranked ‘technology understanding’ as the area where they feel by far the most confident.
Seventy-seven per cent of UK respondents felt their organisation makes technology decisions ‘well’ or ‘extremely well’. While the understanding of technology and its performance is important, other factors are equally significant.
Telstra’s Managing Director for EMEA Tom Homer said that organisations that are highly digitally mature (22% in the UK, compared to 21% globally) show greater focus on people and processes.
“I believe that digital transformation is technology-enabled, but people-led. Yet our research shows employees are not being given the attention they warrant,” Mr Homer said.
“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. Digital transformation should be a company journey that involves upskilling and changing employee mindsets, adapting structures and ways of working, and creating teams that can maximise the new technologies being introduced.”
Whole-of-business approach needed
The research found that a company-wide approach to digital transformation is significantly more likely to result in success. However 53% of UK organisations are allowing business departments to drive individual digital initiatives.
A further 15% said they outsource as much as possible and only 31% have an integrated, whole-of-company digital transformation strategy.
“Globally, organisations that have a whole-of-business digital transformation strategy are significantly more likely to be highly digitally mature, make extremely good digital decisions, and see the impact of digital transformation across the business,” Mr Homer said.
“The research demonstrates that UK organisations have an opportunity to integrate digital transformation activity across all areas of the business, but this needs to be led by a clear company strategy from the C-suite and board level down.”
Priorities and performance rankings are inversed
The research also revealed a substantial gap between digital transformation priorities and performance.
Organisations in the UK rated their top three digital transformation priorities as (1) optimise technology to move faster, (2) manage risk and compliance, and (3) protect digital assets from cyber threats.
However when it came to decision-making performance, these priorities ranked as among the lowest.
“One of the most interesting findings in this research was the gap between what UK businesses ranked as their highest priorities, and their performance in the same areas,” Mr Homer said.
“Cyber security was identified as a particular focus area in the UK. But despite ‘protecting digital assets from cyber threats’ rating as the third top priority – it achieved one of the lowest performances score in terms of ability to deliver. This was the same for the UK’s top priority of optimising technology to move faster, which was ranked 16th out of 17 priorities for performance.
“The lack of alignment between digital transformation performance and priorities such as security and agility is symptomatic of the fact that UK businesses are not taking the whole whole-of-business approach necessary to address these priorities.”
Increased customer experience, but increasing profit harder
The research found that while organisations in the UK are increasing their investment in digital transformation, many businesses had yet to realise the financial impact of their efforts.
A quarter of UK businesses (25%) invested more than US$1 million in digital transformation products and services over the past year. This is set to increase as 24% of respondents said their company’s total spend on digital transformation would grow by more than 10% in the next three years. However, showing ‘hard outcomes’ of this investment was more difficult.
“In looking at measurement of digital transformation programs, we found that UK companies find it particularly tough to show financial outcomes. In fact, of all the business outcomes surveyed, increasing profit margins scored the second lowest, while the softer qualitative measure of increased customer experience ranked first,” Mr Homer said.
“Successful companies are clear on what digital transformation means for their organisation, they have empowered their people, strengthened their processes and identified their key partners.”