Report: Technology Isn't Holding Back Digital Transformation

Few companies still are reaching their full potential when it comes to digital transformation, according to a new report from Infosys Knowledge Institute (IKI), the research arm of Infosys.

Infosys Digital Radar 2020 assessed the digital transformation efforts of companies on a digital maturity index and found year-over-year progress in basic areas, such as digital initiatives to improve a company’s efficiency. Most companies, however, come up against a “digital ceiling” when trying to achieve the most advanced levels of maturity, it said.

The report, which surveyed more than 1,000 executives globally, ranked the most digitally advanced companies as “visionaries,” followed by “explorers” and then “watchers.”

Infosys’ Salil Parekh

“We’ve seen enterprises successfully employ emerging technologies to optimize productivity and efficiency, but struggle at the next stage of digital maturity,” said Salil Parekh, Infosys‘ CEO and managing director. “Faster, better, and cheaper technology alone will not provide the improvements enterprises need. Our research has shown that companies which can keep pace with digital transformation are those that design digital initiatives to improve customer experiences and empower their employees, differentiating themselves and propelling their business to the most advanced levels of progress.”

Businesses reported big declines in the impact that technological barriers have on their transformation progress, including: inability to experiment quickly (down 49%); insufficient budget (down 40%); and cybersecurity challenges (down 40%).

Companies know how to achieve moderate transformation success, with an 18% increase in companies progressing this year from the lowest tier of watchers to the middle explorer tier, according to the report. However, explorers struggled to move into the top visionary cluster, with the top tier remaining the same, indicating a “digital ceiling” to transformation efforts, it said.

The visionary cluster remains unchanged despite companies reporting fewer barriers to digital transformation than last year. Human, rather than technological, barriers are now the most persistent, with the two of the top hurdles being the lack of talent or skills (34%) and a risk-averse corporate culture (35 %).

The technology and telecom industries continue to rank highest on the digital maturity index this year. Consumer packaged goods, logistics and health care achieved strong year-over-year improvements.

Most companies across the spectrum cited operational efficiency and increased productivity as a main transformation objective. But successful companies in the visionary cluster are particularly motivated to make improvements for their employees. Nearly half of visionaries describe “empowering employees” as a major business objective for transformation, compared with less than one third of explorers and less than one fifth of watchers.

Likewise, visionaries have an increased focus on customer-centered initiatives, being significantly more likely than other clusters to undertake transformation to improve customer experiences and engagement, and in order to respond more quickly to customer needs.

Traditional linear transformations result in long transformation timelines, meaning a company’s improvements are out of date by the time the process is complete. Instead, top performers demonstrate a cyclical mindset, implementing recurring rapid feedback loops to accelerate transformation and keep updates relevant. The visionary cluster is far ahead of others in digital initiatives tied to quick cycles: 75% operate at scale in agile and DevOps, compared with an overall average of 34% for the entire survey group.

“This year’s Digital Radar research revealed significant progress across transformation initiatives — however, traditional program models are not keeping up with the rapid pace of market change and companies face a distinct barrier in reaching top levels of digital maturity,” said Jeff Kavanaugh, IKI’s vice president and global head. “The most successful businesses in our survey have an employee focus and a circular transformation mindset, which enable top performers to kick off a virtuous cycle in the company. The result is a living enterprise that is constantly sensing, improving, and attuned to its customers and employees. This living enterprise is suited to serving a larger circle of stakeholders – employees, customers, suppliers, local communities, and larger society – not just shareholders.”