Canadian Underwriter

Hurdles to digital transformation remain, half of respondents have formal strategy: global survey

May 24, 2017   by Canadian Underwriter

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Some things seem to persist, including how inflexible IT systems, organizational silos and security concerns continue to rear their heads as obstacles to global enterprises adopting formal strategies for digital transformation.

So suggests the Enterprise Digital Transformation Strategies: Turning Disruption into Differentiation, prepared by information technology research and advisory company 451 Research for CenturyLink, a global provider of network and data systems management, big data analytics, managed security services, hosting, cloud and IT consulting services.

Reflecting input from 1,400-plus decision-makers at global enterprises in North America, Europe and Asia-Pacific, the study released Tuesday offers insight based on the progress, obstacles and pace of digital transformation – defined as the result of IT innovation aligned with and driven by a well-planned business strategy – among participants.

The barriers to successful digital transformation are familiar, CenturyLink reports in a company statement:

  • 35% of respondents pointed to inflexible IT systems and the need for agility;
  • 33% cited organizational silos and the need to uncouple legacy practices; and
  • 31% noted risk and security, including the need for assured data custody.

Overall, just 51% of enterprises taking part in the study reported having a formal digital transformation strategy, 23% are working on siloed digital projects, 19% are still in the planning stages and 7% currently have no ongoing digital transformation strategy.

Among Canadian enterprises, adoption is just as concerning. Slightly more than half, 54%, of Canadian respondents said their enterprises have a formal digital transformation strategy and are actively working on change. This is ahead of the United States, the United Kingdom Australia and Switzerland.

Related: 42% of global CEOs have begun digital business transformation: Gartner

Globally, “almost 60% of businesses with formal digital transformation strategies expect to obtain much more strategic value from their IT investments, envisioning continued infrastructural and business process improvements and new cloud-based capabilities to provide them with gains,” notes the study report.

“There is a growing concern among business leaders in every vertical sector about staying competitive,” it points out.

“By investing in modern infrastructure and operating wholly digitally, they can leverage massive scale to transform markets on a global basis,” the report notes, adding “digital transformation of business represents both a competitive threat and a market opportunity.”

Findings indicate disruption will continue to ramp up over the next three years, with 42% of respondents reporting they anticipate major disruption as the deployment of new digital technologies continues to play out in their respective fields.

Respondents were asked specifically about the impact of digital technologies such as the cloud, smartphone apps, Internet of Things automation and intelligent software on their industries.

Although speed is of the essence, “the complexities associated with digital transformation can result in numerous roadblocks,” Bill Hurley, chief marketing officer for CenturyLink, says in the statement.

Hurley’s view is that a superior network and employing agile cloud technologies are key to simplifying the transformation process.

But most enterprises also realize full digital transformation takes time, with more than 40% of respondents estimating adoption at their enterprises will take three to five years.

To help bring that about, CenturyLink cites the four pillars of digital transformation noted in the report:

  • improved level of business agility – noted by 53% of respondents;
  • better manage business risk – cited by 49%;
  • improved operational efficiency – reported by 41%; and
  • enhanced internal or external customer experience – noted by 41%.

“Digital transformation programs are now being viewed as strategic, long-term initiatives and, typically, receive the support of top-level executives,” Sheryl Kingstone, 451 Research’s director of customer experience and commerce, says in the CenturyLink statement.

Kingstone, who authored the survey, says 60% of polled enterprises “are increasing their IT spending levels to achieve the significant benefits of digital transformation.”

Related: Global organizations will spend US$1.2 trillion on “digital transformation technologies” in 2017: International Data Corporation

Other survey findings include the following:

  • 59% of those with a formal digital transformation strategy already in place rated their organization as more capable and faster to innovate, with 18% feeling their organization was slow to innovate;
  • potential failure to secure sensitive data was noted by 30% of respondents as a significant barrier, while lack of available funding, capital or budget was noted by 30%, and challenges of getting multiple service providers/partners working together was reported by 27%;
  • enterprises with a mature digital transformation strategy ranked the importance of cloud services 15% higher than companies in the early stages of a transformation; and
  • 49% of respondents said their organizations are using or expect to use an IT services (including telco services) partner in support of their digital transformation programs, while 45% use or plan to use a cloud-service provider.

“We have entered an era of digital revolution, where competitive advantage depends on how well organizations use the enterprise digital infrastructure, and utilize the business applications and massive amounts of data flowing across it,” the report notes.

The study findings offer a number of lessons learned:

  • fixate on the customer – customer experience continues to be a center or gravity for business competitiveness;
  • be willing to use a variety of partners;
  • build in security layer by layer – there needs to be multiple layers of network-based security, which is about fundamentally securing company data throughout its lifecycle; and
  • engineer a cloud-enabled enterprise network.

Related: Incumbent insurers should rethink businesses, embrace opportunity in digital technology: McKinsey & Company

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