A survey of over 1,200 executives has just revealed that despite massive and increasing investments in digital transformation and technologies such as artificial intelligence and big data, companies are struggling to turn those investments into real business results.
A survey unveiled today by Deloitte has found that the number of companies investing heavily in digital transformation has almost doubled in the past year.
The accounting and services giant questioned 1,200 executives at organizations of at least 500 people with above $250 million in revenue, finding that 19% planned to invest $20 million or more during 2019. When asked the same question at the start of 2018, 10% gave that answer.
Despite Massive Investments In AI And Digital Transformation, Survey Finds Poor Results And 7 Enabling Capabilities
The term “digital transformation” has come to mean steps that move an organization towards adopting data-driven business models, typically involving artificial intelligence (AI), big data and predictive analytics technology.
The survey also found that budgets dedicated to this transformation at medium to large-sized companies increased from an average of $11 million to $13.5 million this year.
However, it also highlighted the finding that most organizations still report a gap between their investment in this technology and the impact it is having on key performance indicators such as profits, revenues and customer satisfaction.
In an effort to understand this, it identifies 7 “pivots” - capabilities that, when developed, contribute towards a business successfully bringing about positive growth through a technology initiative.
It found that "higher maturity" organizations – those who had progressed their digital transformation to the point where they are driving positive growth - deploy an average of 40 initiatives targeting these pivots capabilities, suggesting they are indeed a contributing factor.
Data mastery is about aggregating, activating and monetizing data that is still often siloed and underutilized in order to generate better products, services and business operations that will drive business success.
“Those are the enabling pivots that allow us to begin thinking about transformation.”
Data mastery involves generating value from data to increase the efficiency and effectiveness of business processes.
“I would say that 90% of the corporate world is not going to capture value through naked monetization of their data assets the way Google or Amazon does. For the most part, they will capture data to increase the efficiency and effectiveness of their company.”
That could mean finding better ways of targeting customers and understanding their behavior and optimizing marketing and retail channels based on the data they collect. In other words, the majority of companies approaching levels of digital maturity where their data becomes a valuable asset is doing so by creating growth for existing, core products and services, rather than creating new ones from their "data exhaust."
The next key pivot – talent – revolves around the way data is used to understand and nurture a business’s most vital asset – it’s employees.
“This is actually the hardest thing to do,” explains Gurumurthy. “One can figure out cloud migration strategies, one can figure out how to collect and store data, and how to run analytics on it, but its harder to manage change around talent.
“If you ask people what their biggest challenges are in digital transformation they will say it is the talent deficit – there's often resistance to cultural change and a deficiency in the kind of talent that's needed.”
This is challenging because of the different mindset which becomes necessary when transitioning to data-driven business models, particularly when human staff are being asked to put their faith in technology like artificial intelligence and advanced analytics which may result in insights and observations which seem counter-intuitive to many of us.
"It's often about retraining the talent – another phrase we use is the ‘digital mindset,'" explains Gurumurthy.
So, what is holding businesses back from unlocking the full potential of digital transformation? Well, aside from the talent deficiency already mentioned (cited by 36% as a barrier), challenges posed by existing, legacy operating models, and a lack of a strategy for clearly prioritizing adoption of transformative technology were cited by 49% and 45% of respondents, respectively.
This makes it clear that whatever industry you’re in, the rewards of driving growth through digital transformation are there for the taking.
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