Many enterprises are not coping with digital reality well

enterprise digital transformation
Image credit: Kentoh

Despite all the hoopla about the need for digital transformation and the touted benefits, most enterprises are not adjusting to that reality fast enough. According to KMPG, it’s not because those enterprises don’t want to go digital – it’s mainly because of talent shortages and uncertainty over which technologies to invest in first.  

Adam Stuckert, partner for CIO Advisory at KPMG China, says that enterprise C-levels generally understand the need for digital and the potential payoff, but many are struggling to keep up with digital’s breakneck evolutionary pace.

“Digital and technology are changing too quickly for any of us to keep up,” he said during the opening keynote of a summit for chief digital officers on Friday.

According to a recent survey from KPMG and Harvey Nash, enterprises are investing mostly in cloud, which is considered the baseline for digitization. But for other emerging digital technologies – including process automation, AI and distributed ledger technologies like blockchain – large-scale deployments are rare.

One reason it’s tough to keep up with hot new technologies is that their impact isn’t always immediate – sometimes it takes years for an emerging technology to deliver on its promise, and the timing is hard to predict.

For example, said Stuckert, a recent study from Visual Capitalist that analyzed the last 20 years worth of Gartner Hype Cycle reports notes that 4G was at peak hype in 2010; in 2014 it was IoT. But it’s only now in 2019 that IoT is starting to have a real impact on business, and that will be fuelled more by 5G than 4G.

“So if you were a digital leader in 2008 and you just look at what is hot [at the time], it doesn’t really tell you how you’re going to deliver that agility to the business overall,” Stuckert said.

That said, Stuckert added the top reason KMPG clients give for falling behind the digital curve is a shortage of talent necessary to apply emerging technologies to their organization’s needs, particularly in areas such as big data analytics and AI.

Fortunately, that’s not necessarily as big a barrier as enterprises may think – there are pockets of talent to tap here in Asia and across the globe for all kinds of skills. The secret is to know where they are and how to access them.

Stuckert recommends establishing a pipeline with education and research institutions with programs in the tech areas you need. Another key recommendation, albeit a familiar one: change your culture and put that at the center of your digital transformation initiative so that the talent you pursue will want to work for you.

This is how you digital

Indeed, fostering a digital culture is crucial in any case, because the companies succeeding at digital transformation are the ones who have done just that.

Stuckert said that successful organizations tend to display three characteristics: (1) all staff have sufficient digital skills – “not just the IT department, but HR, marketing, finance, everyone”, (2) everyone from the front, middle and back office is involved in the company’s transformation initiative, and (3) digital initiatives are oriented around benefits and outcomes, rather than simply implementing and completing a new tech project.

On the latter point, Stuckert added that companies who truly want to be flexible and agile digital companies need to rethink their attitude when it comes to evaluating projects that might not make it past the proof-of-concept or pilot stage, or fail to produce the outcomes you expected.

“These aren’t really failures – they’re evolution along the path,” Stuckert said. “If you want to be able to be flexible – to adapt to as many of these emerging technologies as possible – we need to educate leadership and educate management to accept that kind of process.”

Stuckert offered three other recommendations for organizations chasing digital success.

First, adopt a more dynamic investment strategy that’s focused on business outcomes, not specific projects. “If you’re technology budget is $100 million, instead of saying, ‘We’re going to take this budget and do these ten projects, say, ‘We plan to enable x amount of revenue uplift and y amount of cost reduction,” he suggested. “Orient towards business outcomes, but allow a little bit more flexibility on what we actually spend our money in because digitization and technology are changing so rapidly that we really can’t predict necessarily what we’ll do in the next one or two years.”

Second, treat data as an asset – not just in terms of having lots of big data on hand, but also enabling and encouraging a culture where leaders across the organization can make decisions based around the data.

And third, put customer trust at the center of your digital strategy. That may sound obvious, but Stuckert says it’s easy to lose sight of this basic tenet when you’re caught up in the excitement of digital transformation. Put simply, he said, your digital strategy should not be focused just on growth – it should also ensure security by design so that your customers and supply chain ecosystem can trust you with their digital data.

“We can’t forget that the slightest misstep with our customers or our supply chain is going to have a lot greater impact negative impact on us than necessarily the technology we choose, or the way in which we implement it,” Stuckert warned.

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