Dell: Nearly All Businesses Face Big Barriers to Digital Transformation

Two years ago, a stunning 45 percent of business leaders expected their organizations to be obsolete in three to five years — according to a 2016 Dell Technologies Digital Transformation Index report. Now that figure is down to 33 percent, despite the fact that the lion’s share – a whopping 91 percent – of midsize and larger organizations face major hurdles to digital transformation. 

The Dell Technologies Digital Transformation Index II, released today, paints a grim picture of just how challenged businesses, worldwide, are on their digital transformation journey — which is not optional. The extensive report, conducted by VansonBourne on behalf of Dell and Intel, surveyed 4,600 cross-functional business leaders from director to C-suite, in more than 40 countries and 12 industries.

The report outlines six key findings, based on research that delves into sentiment about how businesses are performing, barriers to transformation, expected outcomes, priorities for transformation, and expectations and outlook. 

Given that 78 percent of respondents, globally, believe that digital transformation should be more widespread throughout their organization, it’s no surprise that the majority of businesses lag behind the curve. Seventy-two percent fall into three categories: digital evaluators (gradual transformation and planning) — 33 percent; digital followers (very little investment and tentative plans) — 30 percent; and digital laggards (no digital plans, limited initiatives and investments) — 9 percent. 

The remaining 28 percent lead the curve, and include: digital adopters (mature digital plans, investments, and innovations in place) — 23 percent, and digital leaders (digital ingrained in their DNA) — 5 percent. 

Dell’s Amanda Hodges

Dell’s Amanda Hodges, senior vice president of marketing, points out that while the digital-leader category remained unchanged since 2016, there is positive momentum in all the other categories, even if only by single digits. 

Emerging markets are the biggest digital disruptors, or 53 percent compared to 40 percent for the developed markets. India, Brazil and Thailand are the top three digital disruptors by country, with France, Denmark and Japan at the bottom of the list. 

“That emerging group is saying, we’ll disrupt rather than be disrupted within five years,” said Hodges.  

Emerging markets surpass the developed markets in the five-year outlook for their organization, how they’re transforming, as well as their investment plans over the next one to three years. 

In fact, there’s not one technology area where companies in emerging markets aren’t outspending companies in developed markets. For example, in response to the question – What new innovations or solutions is your organization investing in over the next one to three years to enable digital business? – the responses, by emerging versus developed, were as follows, looking at the top five technology investment areas: cybersecurity (61 percent versus 55 percent); IoT (53 percent versus 40 percent); multicloud environment (47 percent versus 42 percent); AI (42 percent versus 39 percent); and a compute-centric approach (42 percent versus 29 percent). 

If emerging-market businesses hold true to their survey responses when it comes to their five-year plans to embrace emerging technologies, they’ll lead the way in  …

… cryptocurrency transactions; transacting via blockchain; predicting customer demand and managing resources; and improving supply chain transparency, traceability and efficiency. 

The research shows that obstacles to transformation span technology, people and policy. The top ten barriers to progress, according to the 2018 report: data privacy and security concerns; lack of budget and resources; lack of the right in-house skill sets and expertise; regulation and legislative changes; immature digital culture; lack of the right technologies to work at the speed of business; information overload; lack of senior support and sponsorship; lack of a coherent digital strategy and vision; and weak digital governance and structure. 

There was a shift in the barriers to progress from the previous report. Data privacy and security concerns rose to the top in 2018 from fifth in 2016; regulation and legislative changes moved to the fourth spot from ninth, previously; and information overload is a bigger barrier today than in 2016, up from 13th to the seventh spot.

The next takeaway in the Dell report centers around a confidence and trust crisis, which Hodges says comes as no surprise.

“It’s about business leaders lacking the confidence and trust and the capabilities of their own organization to be able to perform in this digital era,” she said. 

One in three respondents doesn’t trust their organizations to comply with regulations such as GDPR, to safeguard customer data or look after employee data. Additionally, almost half (49 percent) of respondents believe their organization will struggle to prove it’s trustworthy within the next five years, and 43 percent of question whether they can be open and honest about business decisions. 

From a partner perspective, the business confidence and trust crisis could be a boon.

“It’s where partners could provide the guidance, capability and expertise to help accelerate the transformation of these businesses,” said Hodges. 

Despite the gloom and doom report results, survey respondents are optimistic when it comes to what digital-transformation benefits will ultimately mean to their companies, within five years of embarking on a successful digital strategy. Those benefits are: productivity, profitability, revenue growth, customer retention and return on IT investments. 

The message about the imperative to transform is getting through to organizations, and since 2016, business leaders have put a significant focus on the workforce. For example, nearly half (46 percent) of survey takers globally said that they’re developing their in-house digital skills and talent by teaching all employees how to code ,compared to 27 percent in 2016 (in the U.S. that figure is 38 percent in 2018). Forty-four percent of respondents noted sharing knowledge across functions by equipping IT leaders with business skills and business leaders with IT skills — among U.S. respondents, 54 percent reported sharing knowledge across business functions.

Again, there’s clearly a need for partners‘ skills and expertise.

“There are not enough critical skills and talent in future technologies, so they reskill their workers or supplement their staff with partners and with services to take advantage of this transformation,” said Hodges.