2020 State of
Digital
Transformation
Building a Framework for Digital Success
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Executive Summary
decoding the digital evolution
Digital transformation. Digital business. Digital technology. Digital disruption. No matter how you refer to it, the digital revolution is here. Nine out of 10 C-suite respondents from our research say their company is fully embracing digital transformation. But what does digital transformation truly mean? And where are organizations in their transformation journey? More importantly, what are they trying to achieve?
Customers at the epicenter
Digital business has obliterated established industry lines and ways of doing business, opening the door to new players from nontraditional sectors of the market. Their prize? The customer. Our research reveals that 72% of organizations are focused on improving customer experience through their digital transformation efforts. And with good reason:
Customers define the journey
Customer expectations have never been higher. Customers demand personalized experiences in every interaction with a company’s products and services. Organizations must iterate and innovate quicker and better than ever before. Technologies such as cloud computing, IoT and AI are enabling the innovation that will deliver value to the customer. Executives feel pressure to transform the business in order to position themselves to take advantage of new opportunities.
Digital transformation has become an ambiguous, catchall term that encompasses a whole host of technology and business initiatives—from modernization, to cloud migrations, to digital platforms, digital transformation is seemingly everywhere. In the big picture, digital transformation refers to the process of using digital technologies to create new—or enhance existing—business processes, culture and customer experiences to meet changing business and market requirements.
While nearly all organizations realize embracing digital technologies is imperative to moving their business forward, everyone is at different phases in their transformation journey. In fact, almost half (47%) report their organization is maturing and advancing digital transformation plans across the enterprise. The other half (53%) are adopting gradually in silos or still evaluating their ability to digitally transform.
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While digital transformation offers a promise of new business models, improved customer experience and, ultimately, higher financial performance, it doesn’t simply mean taking the latest technology off the shelf and calling yourself “digital”. Successfully transforming to a digital organization and, more importantly, creating sustainable value includes holistic business modernization, adapting processes and ways of working, cultivating a new cultural mindset and reimagining workforce models. An endeavor that is complex, costly and time-consuming.
To decode digital transformation and provide a roadmap for achieving digital success, we surveyed technology and business decision-makers across three focus areas:
- What is the scope and maturity of digital transformation efforts?
- How can organizations navigate the challenges and complexities?
- How can organizations deliver value at scale?
Drawing a Difference in Digital: Leaders VS. Laggards
We then analyzed digital leaders versus digital laggards to highlight opportunities and achievement gaps so your company can navigate your own digital evolution. In this report, digital leaders are defined as companies with a mature digital transformation plan where digital processes and mindsets are ingrained in the DNA of the organization. Digital laggards are defined as companies with tentative plans and limited digital transformation initiatives and investments in place.
Our research explores what digital leaders are doing to transform their business and innovate while delivering on the outcomes that create value for their customers. We’ll explore how organizations are leveraging technology to achieve digital business and provide recommendations that will lead to digital transformation success.
SCope of Digital Transformation
Customers Co-create the Vision
An organization’s drive for digital transformation can take several forms. The organization might be focused on optimization and gaining efficiency. Or they might be more focused on disruption and boosting business agility. There isn’t necessarily a right or wrong path, as long as there is a vision with a customer-centric approach. Companies must align their transformation initiatives with the goals of the business and the value they aim to deliver to customers. When organizations “think big” and embrace the art of the possible, they can develop a vision for transformation that disrupts their industry, but also creates a value-focused path into their digital future.
Takeaway
What's driving organizations to transform?
Digital leaders and digital laggards are evenly split between either an internal focus of optimizing processes or an external focus of disrupting the market and creating new business models.
Takeaway
Be Bold and Act now.
Construct your comprehensive and customer-driven plan, focusing on future capabilities. Execute the tactical work—necessary for the end game—that will lead to quick wins while still allowing for flexibility along your journey.
Navigating Digital Transformation Challenges
Technology has never been more complex, and yet it has never been easier to access. Companies running workloads in the cloud can scale storage on demand. Brands can harness the power of data to reach a specific audience across diverse platforms, with personalized content.
Smart, Strategic Change
Technology is at everyone’s fingertips but realizing how to optimize its potential is complicated, particularly when technology adoption is arbitrary. That narrow mindset—lacking a common vision and failing to consider the entire ecosystem—is exactly where digital initiatives go wrong. Digital initiatives frequently get bogged down by the details and nuances of silos, improper alignment culture, competing priorities and other unforeseen complications. No company is immune, but digital leaders mitigate risks and deftly navigate these hurdles on their way to transforming the business.
We asked respondents to choose between a list of 15 DX challenges. Below is the ranked list of the percentage of respondents that included each challenge among their top 3.
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39%Complexity of current environment / Organizational structure is not aligned to support transformation / Siloed mindset and behaviors
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32%Too many competing tech priorities
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26%Change management and implementation complications / Aversion to risk
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23%Operating model transformation complications (current business processes are too rigid)
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22%Security concerns and compliance constraints
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20%High or unforeseen costs associated with digital transformation
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19%Gaps in technical talent
Aligning Vision, Culture and Structure
AI, cloud, edge computing or blockchain—the technologies behind digital transformation efforts typically get the headlines. Yet, digital leaders know that technologies are just enablers—the vehicles for moving the organization forward. The strategy around the technologies being implemented is most critical, particularly around two inflection points: people and culture. The DNA of the organization. Shifting mindsets and creating new ways of working are what will ultimately define successful and sustainable digital transformation initiatives.
Delivering value at scale
Digital leaders are much more mature and are creating a competitive advantage in the marketplace. Time is a luxury the digital laggards can’t afford to lose. Two in five organizations expect to recapture the cost of their digital initiatives in less than 36 months. On average, organizations expect a 28% increase in revenue from their most profitable product/service line as a result of their digital transformation.
Digital leaders are investing more on digital technologies and, on average, are realizing 25% higher top-line growth through digital transformation initiatives compared to digital laggards.
Investment Amount
Select an investment amount to highlight the breakdown between DX Leaders and DX Laggards.
Digital Success is Nuanced
Organizations that fail to invest strategically in digital technologies risk losing market share to competitors. This isn’t to say that digital leaders are guaranteed success. Investing in and adopting technology are only part of the equation. Realizing the benefits and delivering business outcomes is still a challenge. So, what are digital leaders doing differently?
The value a company can expect to achieve from their digital transformation journey will be dictated by their unique goals and business requirements. Organizations are racing to leverage the right technologies that will activate their digital business so they can realize the tangible benefits that go along with a successful implementation.
We asked respondents to choose between a list of 14 DX technology benefits. Below is the ranked list of the percentage of respondents that included each benefit among their top 3.
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46%Integration of technology, systems and platforms
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44%analytics and business intelligence reporting
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43%Scalability
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40%Predictive Analytics
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35%Security
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32%Anytime Access to Data
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32%Ability to Customize
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28%Platform Management Capabilities
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26%Data Privacy
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26%Edge to Cloud Connectivity
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25%Device Management Connectivity
What’s driving organizations to transform their business and realize these benefits? The majority of company executives report that satisfying a specific business need is the primary catalyst for their digital transformation efforts.
That business need begins and ends with the customer. Improving customer experience and engagement is the top goal fueling digital transformation efforts for more than seven out of 10 organizations.
In terms of where they are in their adoption journey, most organizations are past the early phases and are either working on proof of concept or piloting digital technologies.
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Click here for an interactive look at this data, where you can drill down by the industry and size of company.
We asked respondents to select which of the following DX catalysts applied to them. Below is the ranked list of the percentage of respondents that listed each catalyst.
We asked respondents to choose between a list of 9 DX goals. Below is the ranked list of the percentage of respondents that included each goal among their top 3.
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72%Improve Customer Experience and Engagement
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48%Reduce Operational Inefficiency
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47%Replace or Upgrade Legacy IT Systems
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29%Increase Speed to Market of Existing Products or Services
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28%Increase / Achieve innovation
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27%Introduce New Business Models / Revenue Streams
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25%Introduce New Products or Services
The Transformation Toolset
People, Process And Technology
People
How Talent Accelerates a Digital Ecosystem
Talent and expertise are critical assets for any organization. Without the right people in place, the technology won’t work optimally and value can’t be realized. In fact, 93% of C-suite executives believe digital technologies will fundamentally change the way people work in their organization. Digital leaders are blazing that trail by refining and developing their talent base. Establishing new processes for working and collaborating internally and with external partners is pivotal to the success of digital transformation efforts.
We asked respondents to choose between a list of 8 DX actions for people that were important for DX success. Below is the ranked list of the percentage of respondents that included each action among their top 3.
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49%Establish New Ways of working
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42%Quantify Skills Gap (Future vs. Current)
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41%Train and Develop new Employees with New Behaviors / Mindsets
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41%Identify skills required
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37%Train Employees with Digital Skills Across the ORganization
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34%Focus on retaining, Engaging and Developing existing employees versus Recruiting new employees
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Click here for an interactive look at this data, where you can drill down by the industry and size of company.
Process
Why Success Hinges on Adopting Change
Delivering value to the customer and creating a sustainable digital business model can only be accomplished by establishing a culture that embraces change and agility. Challenges arise when process hinders rather than empowers innovation. Success depends on the digitization of tools and processes that will facilitate agile ways of working. When it comes to process, leading organizations:
- Implement digital tools to make information more accessible across the organization
- Adapt standard operating procedures to include new digital technologies
- Implement digital tools to facilitate analysis of complex information
We asked respondents to choose between a list of 6 DX actions around tools and processes that were important for DX success. Below is the ranked list of the percentage of respondents that included each action among their top 3.
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Click here for an interactive look at this data, where you can drill down by the industry and size of company.
Technology
What Enables Effective Transformation
Digital leaders have a clear edge when it comes to technology adoption. They set themselves apart and create a clear competitive advantage by implementing the right technologies, at the right time, with a specific strategy and clear roadmap. Many of these technologies are well-established, yet in some ways are nascent in their adoption across the enterprise. Cloud computing and data and analytics are foundational pillars of a transformation strategy. It’s no surprise that they’re leading the way in terms of enabling digital transformation, but organizations are also making inroads with emerging technologies that will accelerate their digital transformation journey.
We asked respondents to indicate their organization’s stage of adoption for each of the following digital technologies. Refer to Fig 2.2 for more information.
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Click here for an interactive look at this data, where you can drill down by the industry and size of company.
REimagining a Digital Workforce
How work gets done, who gets it done and where might be the biggest challenge organizations face in the new decade. Nine out of 10 organizations believe they need at least some new types of talent, and 37% believe extensive talent structure changes are needed for their digital transformation efforts to be successful. In many respects, the technical talent required simply doesn’t exist, at least not in the volume that the enterprise needs to drive digital initiatives forward. Organizations that fall into a trap of continually trying to fill technical talent gaps are ignoring the bigger problem. These futile efforts are magnified when you factor in the loss of institutional knowledge, decreased productivity and project delays associated with attrition. A strong inclusion and diversity strategy, coding boot camps, higher education partnerships and other training and development programs alleviate some pain, but they’re only part of the solution.
Conclusion
Own the Change Ahead
There’s no denying that organizations recognize the fundamental nature of digital transformation. There is a sense of urgency driven by the pace of change in technology and disruptions to traditional business models. While digital leaders have an edge, they still face difficulty optimizing value from emerging technologies, reshaping cultural mindsets and driving new behaviors and ways of working. And while digital leaders might have a head start, laggards can close the gap with a digital roadmap aligned to clearly defined business goals. Any organizations that develop a holistic vision, focused on creating value for their customers, can chart a successful course into their digital business future.
And while there are no shortcuts, there are ways to make it a better ride. Engage a practiced expert outside of your organization to help you navigate your digital transformation journey.
TEKsystems’ Tips to Digital Transformation Success
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01Make your customer the center of your digital transformation vision.
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02Secure consensus and conviction among senior leaders regarding digital transformation goals—utilize that alignment to break down organizational silos.
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03Cultivate a culture that embraces change and agility. Identifying the right metrics, measuring, and making data-driven decisions are critical to digital transformation success.
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04Organizational change efforts cannot be underestimated.
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05Identify the skills and expertise required to execute digital transformation efforts and determine how workforce models should be aligned to digital business.
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06Implement the right technologies that will achieve the desired outcomes and think about how they can be scaled across the enterprise.
Takeaway
Fill the Talent Gap
Don’t overlook the talent requirements that digital transformation demands.
Use digital technologies to reduce the complexity of work and subsequently reduce talent gaps. Modify workforce structures to enable better outcomes.
Takeaway
Keep Culture IN Mind
Don’t underestimate the cultural implications of digital transformation, which require a shift in mindsets and ways of working.
Implementing the technology is just part of the journey; leaders find sustained success by focusing on shifting culture and mindset.
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About TekSystems
About the Research
TEKsystems conducted an online survey from November to December 2019 with 510 technology and business decision-makers. Respondents included members of the C-suite, company executives, vice presidents, directors and managers who have final decision-making authority and/or influence on their organization’s digital transformation efforts. The sample includes a balance of decision-makers in enterprise IT and line-of-business functions across a broad spectrum of industries.
We’re partners in transformation. We help clients activate ideas and solutions to take advantage of a new world of opportunity. We are a team of 80,000 strong, working with over 6,000 clients, including 80% of the Fortune 500, across North America, Europe and Asia. As an industry leader in Full-Stack Technology Services, Talent Services and real-world application, we work with progressive leaders to drive change. That’s the power of true partnership. TEKsystems is an Allegis Group company.
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