The Infosys Digital Radar 2019 report interviewed 1,000 C-suite and high level execs at companies with revenues exceeding $1 billion across four continents.
Infosys unveiled new research exploring global business maturity in digital transformation – comparing how businesses have fared over the course of the last year, including success factors and barriers to progress.Legacy systems predicted as the single biggest barrier to digital transformation in 2019 Click To Tweet
From November 3 to 23, 2018, Infosys used a blind format to conduct an online survey that attracted responses from more than 1,000 CXO and other senior-level respondents from companies with revenue upwards of US$1 Billion. Respondents represented multiple industries and hailed from Australia, China, France, Germany, India, U.K. and the U.S. To gain additional qualitative insights, phone interviews were also conducted with a few practitioners and subject matter experts.
“Understanding the distinct practices of visionary businesses is valuable for companies seeking to navigate the next step of their digital transformation journey,” explains Jeff Kavanaugh, Executive Editor at Infosys Knowledge Institute.
What can businesses expect in 2019?
Infosys found businesses can be grouped into three clusters based on their progress along the digital transformation journey, with visionaries the most advanced, followed by explorers and then watchers.
- Visionaries understand the potential of digital to completely transform their business
- Explorers commit to digital programs driven by the need to enhance customer experience
- Watchers see digital through the prism of efficiency
Interviewed executives express confidence in their companies to advance from the watcher to the explorer level without too much difficulty but feel that reaching the visionary level is much harder
What sets visionaries apart?
To more deeply understand what characterizes organizations at different stages of the transformation journey, Infosys identified 22 key digital initiatives and surveyed where companies stood on implementing each one. Companies were then assigned a Digital Maturity Index score from 0 to 100 according to their progress on pursuing and implementing these 22 key initiatives.
The research revealed that as companies advance in their journey, they begin to operate more digital initiatives at scale, with visionaries averaging 12 at scale, and having completed pilots on seven additional initiatives. Explorers average six digital initiatives at scale and have completed pilot projects for seven more. While watchers typically operate at scale on only one or two digital initiatives, with another one or two initiatives in the pilot testing phase.Infosys Digital Radar 2019 reveals the digital transformation maturity of businesses in 2018, and what it takes to navigate the next stage Click To Tweet
22 digital initiative were categorized under four “buckets”
- Foundation initiatives – implemented to modernize legacy systems
- Mainstay initiatives – focused on core digital transformation elements such as automation and AI
- Customer initiatives – focused on improving the customer experience
- Forefront initiatives – focused on harnessing cutting edge technologies, such as augmented and virtual reality, drones and blockchain.
As companies advance along the digital transformation journey, they tend to focus on different buckets. Watchers concentrate on scaling up foundation initiatives. Explorers focus on a broader range of initiatives including mainstay and customer – yet are sometimes held back by a lack of progress in scaling up foundation initiatives. And visionaries bring many initiatives to scale alongside the foundation, mainstay and customer categories. Visionaries are also the only businesses making substantial progress on scaling up forefront initiatives.To reach advanced stages of digital transformation, companies must operate key initiatives at scale and focus on a broad range of technologies Click To Tweet
What might hold businesses back in 2019?
When asked about what the biggest barriers to digital transformation will be in 2019, the percentage of respondents citing the ‘inability to experiment quickly’ was 22 percent and ‘insufficient budget’ was 30 percent. However, ‘legacy systems’ was at 41 percent – making it the single biggest barrier predicted for 2019. Lack of change management capabilities and relevant skills are also seen as key hurdles in 2019. As companies navigate their digital journey, the need to digitize their core and manage change at scale will grow in importance.
Comparing different industry sectors
The highest maturity levels were found in technology, manufacturing, telco and financial services sectors, while industries such as consumer goods, logistics and healthcare ranked near the bottom regarding their digital transformation progress.
Compared to other industries, retail is in the middle of the pack, with many legacy retailers not having made much headway. Perhaps surprisingly, the automotive sector lags other sectors in terms of its digital maturity. While autonomous and connected vehicles grab headlines, much work is needed to modernize legacy systems and integrate the automotive ecosystem.As companies navigate their digital journey, the need to digitize their core and manage change at scale will grow in importance Click To Tweet
What action to take?
To become more like visionaries, companies should develop and implement a comprehensive strategy for using automation and AI to bolster human capabilities, rather than focusing shortsightedly on cutting costs. They need to put in place a formal digital transformation strategy, and share that plan with employees, customers and partners alike.
“2019 will be the year of ‘how’. The ‘why’ (customer experience, revenue impact, internal alignment) and the ‘what’ (emerging technologies) of transformation are now clear to enterprise leaders, after the intense debate of the last couple of years,” says Phil Fersht, CEO and Chief Analyst, Horses for Sources. “The findings of the Infosys Digital Radar 2019 point to the core need for enterprises to address the ‘how’ and focus on executing their digital transformation. Execution requires integration in every sense of the word – technology, talent, organizational change and leadership to achieve scale and deliver exponential benefits.”
Incumbent companies need to do three things well, and simultaneously: first – establish the technical foundations for digital transformation; second – build technological capabilities and talent; and third – innovate at the speed of agile development. Two ways that companies can enable themselves to do this are by amplifying their existing capabilities, by focusing on high-value projects with the greatest potential impact. And, by partnering with the ecosystem to gain access to complementary skills and resources. The research revealed that companies currently partner for two-thirds of their digital initiatives.
The Infosys Digital Radar 2019 reveals the digital transformation progress that companies have made since The New Champions of Digital Disruption: Incumbent Organizations report in 2018, which clustered companies into three personas: ‘visionaries’ (the most advanced in their digital transformation journey), followed by ‘explorers’ and then ‘watchers’.
- Over two thirds of UK businesses are explorers (69%), compared to the global average of 61%. Nearly a fifth (19%) of UK businesses are visionaries. Fewer UK companies than the global average are at the less advanced watcher stage (12% vs 18%).
- The biggest barriers to transformation in the UK are an inability to experiment quickly (45%), legacy systems (45%), insufficient budget (44%) and risk adverse company culture (41%).
- Overall the UK has a Digital Maturity Index of 60.7, significantly higher than the global average of 57.4. The UK is more digitally mature than the US (55.1) and Germany (54.8), but lags behind France (65.3) and India (77.9).
- The highest digital maturity in UK industries was found in telecommunication businesses (with a Digital Maturity Index of 76.9), followed by insurance (70.5), technology (70.2) and manufacturing (67.3) companies.
You can read the full report here and check out the infographic summarising the findings below:
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Alice Bonasio is a VR and Digital Transformation Consultant and Tech Trends’ Editor in Chief. She also regularly writes for Fast Company, Ars Technica, Quartz, Wired and others. Connect with her on LinkedIn and follow @alicebonasio on Twitter.