Global organisations leading the way on the path to digital transformation exhibit a totally different mindset about the role of technology, viewing it as an integrated part of a vastly different business future, while organisations lagging behind view it as simply another tool in their toolkit, risking their very survival. These are the findings of a new global study on digital transformation by SAP, supported by Oxford Economics and released at the SAP Asian Innovators Summit in Singapore.
‘SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart,’ which identifies the challenges, opportunities, value and key technologies driving digital transformation, is based on survey results from 3100 senior executives from 17 countries and regions, including 195 business leaders from Southeast Asia.
The study, which divided respondents into the top 100 firms and the remainder, found remarkable differences between the two groups.
Executives at the leading 100 firms demonstrated four characteristics that set them far apart from the rest:
1. Focused on true cross-organisational transformation
2. Prioritising the transformation of customer-facing functions
3. Investing in next-gen technology
4. Talent-driven
Digital transformation is a core business goal for 96 per cent of the leaders compared with 61 per cent of other firms. At the same time, 93 per cent of the leaders cite technology as critically important or very important to retaining their competitive advantage, compared with 72 per cent of the rest. Even more striking is the gap on organisational structure, with 56 per cent of leaders saying they have seen their organisational structure change as a result of digital transformation compared with just 10 per cent of the others.
While most respondents said their greatest challenge in digital transformation was lack of leadership, the top 100 cited lack of change management expertise. The struggle is heightened by the fact they have been implementing changes across various areas and functions to eliminate silos. Seventy per cent of leaders said implementing a multifunctional digital platform is a current priority, with 76 per cent planning to do so by 2018.
Starting with customer-facing functions is a real differentiator, with 92 per cent of leaders saying they have seen significant or transformational value from digital transformation in customer satisfaction and engagement compared with just 22 per cent of others. While 39 per cent of leaders cited customer empowerment as the most important trend of the next two years, just 23 per cent of others agreed. Perhaps this makes sense when one considers that 70 per cent of leaders have already seen significant or transformational value from digital transformation in customer satisfaction and engagement compared with just 22 per cent of others.
Leaders are already investing in next generation technologies and finding ways to apply new technologies to achieve productivity enhancements even in generic processes. In areas that provide competitive differentiation, leaders are creating agile teams to discover, respond to and adapt quickly to advances in technologies such as machine learning and IoT. With 62 per cent of leaders already having created these teams, the total is expected to rise to 82 per cent over the next two years.
What technologies are leaders embracing? Machine learning is leading the charge, with 94 per cent of leaders and 60 per cent of others investing here, followed by IoT at 76 per cent of leaders and 52 per cent of others. The gap widens further with bimodal architecture at 62 per cent of leaders and just 20 per cent of others and with machine learning at 50 per cent of leaders and just 7 per cent of others.
While 48 per cent of the top 100 leaders said that investing in digital skills and technology was most important for driving revenue in the next two years, only 30 per cent of others agreed. While 71 per cent of the leaders said that digital transformation makes it easier to attract and retain talent, only 54 per cent of others agreed.
Five times more leaders than others said that digitalisation has already changed their talent management efforts and 83 per cent of leaders said they expect talent management to be changed by digitalisation in the next two years compared with just 37 per cent of others. It appears to be working so far as 64 per cent of leaders said that their employees are already more engaged, compared to 20 per cent for other respondents.