According to The Economist Intelligence Unit, digital transformation is defined as the reinvention of business practices to derive the maximum value from digital technologies such as social media, cloud computing, mobile technology, and Big Data analytics. Yet, while most companies are aware of the need to embark upon their own digital transformation, not all maintain the same pace with regard to innovation.
EIU's recent "Digital Evolution: Learning from the Leaders in Digital Transformation" report takes an in-depth look at how companies are managing these digital transformation initiatives and how they're boosting their digital capabilities to meet evolving customer needs and expectations. Sponsored by Accenture and Pegasystems, the study polled 444 executives with involvement in or familiarity with the digital transformation efforts at their respective organizations. Researchers discovered that, while most were actively pursuing such initiatives, some were more advanced than their fellow respondents. Those who described themselves as pioneers or leaders (290 respondents) were deemed to be ahead of the curve, while those who described themselves as being in the middle of the pack, followers, or laggards (154 respondents) were deemed to be behind the curve.
The following statistics explore where companies currently stand on the digital transformation spectrum and which strategies will likely impact future success:
- Thirty-six percent of respondents claim their business is split evenly between digital and traditional practices, while only 10 percent say their company is fully digitized. Seven percent remain fully traditional.
- Overall, 33 percent of respondents report that they've fully integrated their digital marketing capabilities with other customer-facing processes, while only 18 percent have fully integrated customer-facing processes with back-office systems. However, three times as many ahead-of-the-curve brands expect to be 100 percent digitally enabled within five years' time than those ranked behind the curve.
- For both ahead-of-the-curve and behind-the-curve companies, new technologies accelerating the pace of change (50 percent versus 32 percent), rapidly changing competitive dynamics (49 percent versus 37 percent), and evolving customer needs and expectations (47 percent versus 57 percent) represent the key drivers behind their organization's digital transformation efforts.
- While ahead-of-the-curve companies primarily aim to maintain or achieve market leadership in their industries (55 percent), behind-the-curve companies hope to improve operational efficiency (55 percent). However, both also rank enabling real-time transactions (65 percent versus 46 percent), enhancing operational efficiency (47 percent versus59 percent), and acquiring new customers (39 percent versus 47 percent) as top priorities when it comes to advancing and transforming business capabilities.
- Two or more C-level executives lead (65 percent) and govern (73 percent) digital transformation initiatives at ahead-of-the-curve companies, yet both types of organizations manage and execute digital efforts via their central strategic-initiatives unit, which reports to a C-level executive (45 percent versus 44 percent).
- Many ahead-of-the-curve companies gravitate toward the outsourcing of digital processes to third parties (51 percent), investing in digital start-ups (48 percent), and partnerships or joint ventures (38 percent) as they try to boost digital capabilities. Behind-the-curve companies, however, prefer to invest in internal capabilities (53 percent), outsource digital processes to third parties (38 percent), and pursue partnerships or joint ventures (25 percent) to advance their digital efforts.
Key takeaway: Digital innovation has arrived and it's here to stay. Thus, as new sources of disruption-virtual reality, machine learning, and cryptocurrencies-gather momentum, companies must be prepared to tackle these challenges and meet demands, as each will likely have their own unpredictable impact on any given organization. Ultimately, all companies must adopt the ability to transform constantly, as digital technologies and customer expectations are ever changing. Just as digital innovation will continue to progress, so must digital transformation. Companies cannot expect to conduct one major overhaul and then sit by the sidelines if they wish to remain competitive. In today's ecosystem, success has been reserved for those who are always willing to look for fresh ways to promote loyalty and sales. Brands must, therefore, look to the latest trends for inspiration and invest in technologies that advance traditional customer relationships.