Companies with successful digital transformation strategies benefit from double the revenue growth compared to mainstream organisations, new research has revealed.
In a global survey of 1,442 senior executives at organisations with more than $250 million of revenue, 56% of UK respondents were found to be executing digital transformation as a coordinated strategic programme.
The most popular project cited related to workforce efficiency – by 48% of UK respondents – followed by product and service development (43%) and operations and efficiency (43%).
However, 18% of the UK organisations surveyed were still undertaking digital initiatives via separate, not-always-coordinated routes, and 16% used digital more to enhance rather than transform their business.
Despite some appetite for digital transformation, UK companies are not embracing the innovations needed to deliver that transformation fast enough, the research found.
When asked about technologies critical to customer engagement and market development, only 33% said that web-based applications and services are essential, while 27% saw mobile technology as critical and just 14% thought the same of wearable technology.
Additionally, 9% of UK respondents did not believe the Internet of Things will be applicable to their customer engagement.
“To stay ahead in the application economy, companies need to disrupt across their traditional organisation structures, processes and systems,” said Ritu Mahandru, VP solution sales at CA Technologies, which carried out the survey in partnership with Freeform Dynamics.
“Mainstream businesses simply cannot continue with the status quo – they must undergo significant change to fully integrate digital and new technologies into all aspects of their business if they want to deliver a superior customer experience and close the gap on competitors.”
The research shows that companies that achieve high levels of digital transformation are reaping the benefits. As a result of digital initiatives, 86% of UK respondents said they have seen or anticipate seeing growth in revenue, 85% in customer retention, and 69% in pace of to business opportunities.
The results of the study also allowed for the development of the Digital Effectiveness Index (DEI), a measurement tool developed from responses relating to market competitiveness and business scorecard metrics. These were translated into numeric scores and combined to form the DEI, and survey participants were then segmented according to their index scores.
Using this measure, an elite group of ‘Digital Disrupters’ has emerged: companies achieving high returns from digital investments and driving market and organisational disruption.
According to the research, there are more ‘digital disruptors’ – companies that score the highest in the Digital Effectiveness Index (DEI) – in the UK (14%) than Germany (13%), France (8%) and Italy (4%), but significantly fewer than the U.S. (26%) and India (25%).
Revenue growth among this group in the study was twice as high as among mainstream organisations, which are only making an average investment in digital transformation – and profit growth is 2.5 times higher.
The study has also highlighted the central role that software plays in digital transformation. More than half (53%) of the digital disrupters surveyed globally strongly agreed that in addition to their core business they are now also a software company, while 60% strongly agreed that they still need to become more of an app-centric, software driven business.
This compares to just 20% and 30% of all UK respondents, respectively.
Meanwhile, digital disrupters worldwide currently allocate 36% of their IT budget to digital investments, growing to 48% within three years. By contrast, the UK companies surveyed now devote a relatively low 20% of their IT budget to digital, increasing to 32% in the next three years.