Even amidst the deepening economic downturn, recent research from Boston Consulting Group seems to support earlier forecasts that spending and investment in digital transformation will increase in 2023.
Investment in Digital Transformation
BCG’s research surveyed more than 2600 executives and key decision makers from larger companies (1000+ employees) in 13 different countries from around the world. Six out of 10 executives or 60% plan to increase their investment in digital transformation in 2023 versus 2022. Only 4% plan to reduce their investment and the remaining 36% will maintain current levels of investment.
The need to be able to adapt quickly to constantly changing circumstances was made clear by the impact of the pandemic and there is an ongoing need to develop some resilience ahead of a global recession.
Businesses are focusing on two key areas, business model transformation and sustainability, with 94% of respondents saying they wanted their digital transformation to have a substantial and rapid impact.
However, despite the willingness to invest, companies are still facing challenges with executing their digital transformations. The top five concerns from respondents were:
- Making the right disruptive technologies choices. 93% said they were struggling to navigate the rapidly expanding disruptive technologies landscape. Focus generally remains on Artificial Intelligence (AI), Blockchain and Internet of Things (IoT).
- Scaling new digital solutions from pilots into full operation across the business.
- Attracting and recruiting new talent to implement their transformation. The hardest three roles to fill being; data scientists, experts in advanced technology and software engineers.
- Prioritising investment and development.
- Managing the cost and uncertainty of return on investment.
Your business needs to be able to deal with uncertainty in today’s rapidly changing environment. Disruptors and technological advancements will keep coming at pace and customer needs will continue to change and be more demanding. Digital Transformation, if done correctly, should enable you to develop the core capability to be able to conduct change as quickly and often as you need to. Investing in digital transformation should not only solve existing problems in your business model or operating model but should position you to identify and grasp new opportunities and innovations.
Transformations are often complex changes, and need careful management and measurement, and should always start with a really clear vision, digital strategy and roadmap. Many organisations have an initial digital strategy, but they lack clarity and discipline, causing confusion around what needs to happen and in what order.
Trying to make major changes while conducting business as usual can generate friction and sometimes there isn’t the right skills or talent in-house to plan and deliver the changes. External resource is often drafted in to help when a crisis point is hit.
There’s also the perception that it’s only about technology, but new technology is likely only 20% of the solution. Digital transformation is far more than a technology upgrade, it’s also about the people in the business and transforming working practices. Leadership and company culture have a key role to play here and arguably technology is the easy bit to change; aligning and motivating your people to make the change is much harder.
Understanding your critical success factors for digital transformation is important. We have learnt from years of experience with many clients that getting these nine change factors right will help you fast track your transformation. For more information check out our free guide.