- Telstra study finds leaders lean too heavily on technology in digital transformation decisions.
- Whole-company approach needed for digital transformation success.
- Hong Kong organisations are not delivering on digital transformation priorities.
- Many companies are yet to realise financial rewards for digital transformation initiatives.
The success of digital transformation initiatives undertaken by Hong Kong organisations fall short of expectations due to their heavy emphasis on technology and lack of focus on people and processes.
This was one of the main findings of Telstra’s Disruptive Decision-Making research, which surveyed 3,810 senior decision-makers from 12 industries in 14 markets around the world to uncover insights into strengths and weaknesses around their digital transformation programs.
Leaning too heavily on technology
When rating decision-making across four factors for success – people, processes, technology understanding and partnerships – Hong Kong businesses ranked ‘technology understanding’ as the area where they feel by far the most confident.
70% of Hong Kong respondents felt their organisation makes technology decisions ‘well’ or ‘extremely well’. While understanding technology, however, and its performance is important, other factors are equally significant.
Telstra’s Head of North Asia and Global Wholesale, Paul Abfalter, said the study showed that while investing in the right technology is critical, placing too much importance on its role and not enough on people, processes and partnerships will hold back success.
“Beyond the right technology, successful digital transformation relies on people. You need the right culture and the right people, but also the right processes to support them,” Mr Abfalter said.
“Successful digital transformation is a whole-of-business journey that involves upskilling and changing employee mindsets, adapting structures and ways of working, and creating teams that can maximise new technologies being introduced.”
Opportunity for greater integration
While the research found a company-wide approach to digital transformation is significantly more likely to result in success, 60% of Hong Kong organisations are allowing business departments to drive individual digital initiatives, compared to 51% globally.
A further 14% said they outsource as much as possible (vs 15% globally), and just 24% say they have an integrated, whole-of-company digital transformation strategy (vs 31% globally).
“The research demonstrates that Hong Kong organisations have an opportunity to integrate digital transformation activity across all areas of the business, but this needs to be led by a clear company strategy from the C-suite and company boards down,” Mr Abfalter said.
Hong Kong businesses not delivering on priorities
The report found there was a substantial gap between digital transformation priorities and performance – organisations in Hong Kong rated their top three digital transformation priorities as ‘optimise technology to be more competitive’, ‘accelerate time to market to remain relevant to customers’, and ‘manage risk and compliance’.
However, when it came to decision-making performance, these priorities ranked particularly poorly.
“One of the most interesting findings in this research was the gap between what Hong Kong businesses ranked as their highest priorities, and their performance in the same areas,” Mr Abfalter said.
“In general, barriers to achievement cited by respondents included concerns around security and ongoing costs as their biggest obstacles in general,” he said.
Hard financial outcomes difficult to show, strength in customer experience
The research found that while organisations in Hong Kong are increasing their investment in digital transformation, many businesses had yet to realise the financial impact of their efforts.
Almost a quarter of Hong Kong businesses invested more than US$1 million in digital transformation products and services over the past year (25%), while almost one in 10 spent more than US$5 million (9%). This figure is set to increase as 35% of respondents said their company’s total spend on digital transformation would grow by more than 10% in the next three years.
However, when it came to measuring the impact of digital transformation, showing hard outcomes such as financial returns of this investment was difficult. Where Hong Kong businesses identified the most effective outcomes of their digital transformation was in increased customer experience.
“Measuring the progress and success of any digital transformation strategy or individual project is an absolute essential. But the metrics in which we measure success are just as important,” Mr Abfalter said.
“What we do know is that successful companies are clear on what digital transformation means for their organisation, they have empowered their people, strengthened their processes and identified their key partners.”