What does it take to succeed in digital transformation? What does it take to navigate the next stage of the digital journey? What can businesses expect in 2019?
Visionary, explorer and watcher
A report from Infosys, released today, has found that currently, businesses can be grouped into three clusters based on their progress along the digital transformation journey; with visionaries the most advanced, followed by explorers and then watchers.
The categories are defined as:
• Visionaries who understand the potential of digital to completely transform their business.
• Explorers who commit to digital programs driven by the need to enhance customer experience.
• Watchers who see digital through the prism of efficiency.
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What sets visionaries apart?
The clue was in the title: running multiple digital initiatives at scale.
As organisations advance in their journey, they begin to operate more digital initiatives at scale. According to the research, visionary companies are averaging 12 at scale, and have completed pilots on seven additional initiatives.
Explorers average six digital initiatives at scale and have completed pilot projects for seven more. Watchers, however, typically operate at scale on only one or two digital initiatives, with another one or two initiatives in the pilot testing phase.
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There are a number of digital initiatives ‘types’:
• Foundation initiatives — implemented to modernise legacy systems;
• Mainstay initiatives — focused on core digital transformation elements such as automation and AI;
• Customer initiatives — focused on improving the customer experience;
• Forefront initiatives — focused on harnessing cutting edge technologies, such as augmented and virtual reality, drones and blockchain.
According to the research, watchers concentrate on scaling up foundation initiatives, while explorers focus on a broader range of initiatives including mainstay and customer — yet are sometimes held back by a lack of progress in scaling up foundation initiatives.
The visionaries bring many initiatives to scale alongside the foundation, mainstay and customer categories. These leading companies are also the only businesses making substantial progress on scaling up forefront initiatives.
Jeff Kavanaugh, executive editor at Infosys Knowledge Institute, comments, “Understanding the distinct practices of visionary businesses is valuable for companies seeking to navigate the next step of their digital transformation journey. The Infosys Digital Radar 2019 is equally relevant for business leaders, such as those attending the World Economic Forum in Davos this week, who are looking to accelerate the global economy and evolve their mindset from efficiency to experience so everyone can contribute – and benefit from – the abundant opportunities that await discovery in 2019 and beyond.”
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The 2019 barriers
The ‘inability to experiment quickly’ and ‘insufficient budget’ were highlighted as significant barriers to digital transformation in 2019. However, legacy systems — surprise, surprise — remain the biggest barrier predicted for 2019. Lack of change management capabilities and relevant skills are other key hurdles.
As companies navigate their digital journey, the need to digitise their core and manage change at scale will grow in importance.
Phil Fersht, CEO and chief analyst, Horses for Sources, observes, “2019 will be the year of ‘how’. The ‘why’ (customer experience, revenue impact, internal alignment) and the ‘what’ (emerging technologies) of transformation are now clear to enterprise leaders, after the intense debate of the last couple of years. The findings of the Infosys Digital Radar 2019 point to the core need for enterprises to address the ‘how’ and focus on executing digital transformation. Execution requires integration in every sense of the word – technology, talent, organisational change and leadership to achieve scale and deliver exponential benefits.”
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Digital transformation by sector
There are significant differences in digital maturity by sector.
The highest maturity levels were found in technology, manufacturing, telco and financial services sectors, while industries such as consumer goods, logistics and healthcare ranked near the bottom regarding their digital transformation progress; according to the research.
Compared to other industries, retail is in the middle of the pack, with many legacy retailers not having made much headway.
Perhaps surprisingly, the automotive sector lags other sectors in terms of its digital maturity. While autonomous and connected vehicles grab headlines, much work is needed to modernise legacy systems and integrate the automotive ecosystem.
To become more like visionaries, companies should develop and implement a comprehensive strategy for using automation and AI to bolster human capabilities, rather than focusing shortsightedly on cutting costs, according to the announcement. The watchers and explorers need to put in place a formal digital transformation strategy, and share that plan with employees, customers and partners alike.
Incumbent companies need to do three things well, and simultaneously: first — establish the technical foundations for digital transformation; second — build technological capabilities and talent; and third — innovate at the speed of agile development.
How can companies achieve this? One, by amplifying their existing capabilities and two, by focusing on high-value projects with the greatest potential impact.