With almost two thirds of businesses surveyed for a new global report currently undertaking a digital transformation program, and another quarter planning one, digitalization is clearly one of the leading strategic priorities for companies globally. But according to this new research, for many organizations it is also one that is proving particularly difficult to get right.
In fact, leading global law firm Baker McKenzie's new Digital Transformation & Cloud Survey reveals that just one in three companies that have been through a digital transformation process say it has actually improved operations, despite business agility being cited as the number one reason for embarking on the process.
Many of those surveyed also expressed concern around increased operational confusion, and the need to imbed additional processes and technology in the wake of digitalization.
However, these issues do not appear to be reducing the appetite for transformative digitalization amongst executives surveyed for the report; in fact the pandemic has accelerated this activity for many as the world moves ever more quickly online, and competitive pressures increase.
According to the survey of 300 executives, who as part of their roles are buyers, users and/or suppliers of cloud and digital services, other key drivers for digital transformation include the ability to attract and retain talent, to improve collaboration and internal processes, and to better understand customers.
London-based Sue McLean, IP, Data & Technology Partner, Baker McKenzie said: "Agility and innovation are uppermost in the minds of businesses when they are considering transformation. Factors such as bringing new products and services to market more quickly or using data to support new, strategic decision making as well as data monetization weigh heavily in the decision for digital transformation."
However, the monetization of data and new tech appears to be one of the great untapped benefits of digitalization, with most companies still focused first and foremost on becoming more operationally efficient rather than to use digital transformation to seize new business opportunities and monetize new offerings.
Those executives surveyed also remain particularly concerned about cybersecurity, with 42% of respondents citing the need to "improve cybersecurity" as one of the top-three drivers of accelerating digital transformation, due to the pandemic.
The vast majority of respondents, spread across countries including the US, Brazil, UK, France, Germany, Australia and Singapore, also said they were currently investing 'heavily or very heavily' in data security.
Meanwhile, trying to integrate new and legacy systems remains the leading barrier to digital transformation. Therefore business leaders are now looking to learn from recent experiences of similar companies, cut through the tech hype, and reduce financial and operational risks.
Cloud and Blockchain as Key Enablers
Meanwhile, the number one digital transformation enabler remains cloud computing, with the survey also finding a marked increase in the reliance on private cloud services, driven in part by the promise of better data security and disaster recovery. This has been further accelerated by the adoption of remote working among businesses due to COVID-19 lockdowns.
Adam Aft, Technology Partner and Cloud specialist, Baker McKenzie, Chicago, said:
"Consumers are creating and acquiring digital content across multiple platforms, and the way in which they use and share that content itself creates an extensive data footprint. This means “big data” applications — quantifying, interpreting and responding to individuals', groups', companies' and governments' activities on a real-time basis — depends heavily on the availability of cloud computing services and infrastructure."
Operational efficiency was a central goal when adopting cloud-based services, but this varied quite significantly across industries. Financial institutions (68%) and healthcare and life sciences companies (67%) are most likely to benefit from becoming more operationally efficient as a result of cloud-based IT, while tech, media/telecoms, and consumer goods and retail (CG&R) companies view cloud as helping to improve the company’s business agility.
Of the industries surveyed, over 50% of both CG&R companies and financial institutions identify building 'new revenue streams' as a potential impact of cloud; this is higher than any other industry featured. It was one of the few clear links to monetization, with most business rather looking at efficiencies, customer insights and colleague collaboration as key drivers.
Blockchain has also grown rapidly in importance as an enabler to success. The report found usage of blockchain in supply chain management has increased more than ten-fold in just three years, with 42% of survey respondents reporting they use blockchain today, versus just 4% who did so in 2017.
Businesses in the industrials, manufacturing and transportation sector (IMT) are some of the most likely to have adopted Blockchain technology, given their complexity of supply chains in these industries.
And data remains at the absolute core of all of these discussions. As Peter George, Partner, Technology Transactions, Baker McKenzie, concluded:"The value of data to business is undeniable. It lies at the core of a successful technology strategy in 2020, whether it is the storage, collection, protection, analysis or use of this data. Respondents from this year's survey see it as one of the most important business drivers they have."