Research Study: Companies Adopting Enterprise-wide Digital Strategies Compete Better Amid Increasing DisruptionDate:2018-03-28 16:58:32
SYDNEY - Australian companies that adopt a strategic, enterprise-wide approach to digital technology are better prepared to transform, innovate and compete amid an increasingly disruptive and rapidly changing marketplace, according to research released by Telsyte in association with DXC Technology, the world’s leading independent, end-to-end IT services company.
“Beyond Disruption: How Australian Organisations Can Transform and Thrive in the Digital Age” provides new insights into the digital challenges and opportunities of more than 400 leading Australian companies. The research has three key findings:
• IT budgets are set to grow in Australia, but -- somewhat paradoxically -- acceptance of digital disruption remains low;
• Organisations who have company-wide digital strategies have an advantage over those who don’t; and
• Although many Australian organizations are on a path to digital maturity, approaches vary widely.
“This new research underscores the importance for Australian businesses to adopt an enterprise-wide digital strategy in order to thrive in an era of rapidly increasing change and disruption,” said Seelan Nayagam, managing director of DXC Technology Australia and New Zealand. “Leaving strategic technology decisions to disparate business units is simply not sustainable.
“Abandoning disparate programs in favor of holistic digital strategies driven by corporate leaders, including the CEO and the board, ensures that all business units and everyone they serve can benefit from digital transformation.”
The research reveals that Australian IT budgets are set to grow at an average of 5.4 percent in 2018, across both IT and non-IT business units – a rate higher than inflation, wages and GDP growth. The main driver of this growth has been the increasing focus on digital transformation.
This growing trend towards digital transformation raises questions about the optimum level of spending on digital technology in Australian organizations. Despite the shift in spending, many organizations remain complacent about digital disruption: just half (52 percent) of IT and business leaders believe their company, sector or products are being impacted.
The research further shows that 43 percent of organizations have pilot projects in view for larger scale IT transformation, indicating a desire to modernize across the business, but at varying levels of success and maturity. Conversely, only 20 percent of organizations are ‘playing the disrupter’ by creating new products and services outside their industry. The majority (60 percent) admit they are only “keeping an eye” on disruption and reacting “if and when it begins to impact us.”
To understand how Australian organizations were handling the digital challenges they face, the research segmented the market into four main groups: 1) Those with no digital strategy (9 percent); 2) those who recognised disruption (23 percent), but were simply investigating or piloting various digital technologies and models; 3) companies deferring digital strategies (34 percent) to their business units; and 4) those with an organisation-wide digital strategy (32 percent).
The last group controlled digital spend without losing agility, and were more focused on developing new products and services to disrupt their industry. These companies were most likely to have empowered CIOs and knowledgeable CEOs, along with engaged boards; more importantly, these companies were much more likely to be digital disruptors themselves.
“There is a level of complacency among Australian businesses that enough is being done to handle the impending disruption to their markets and go-to-market strategies,” said Foad Fadaghi, Telsyte managing director. “The challenge is that when you dig a little deeper, many organizations are simply equating digital with building more mobile apps.”
To date, the predominant approach to managing digital disruption has been to fund quick development of new products and services and to tap into changing customer behavior, particularly around smart devices. This has led to business units taking control of their technology initiatives, deploying web and mobile apps, and undertaking digital optimization of their business activities.
While this approach arms organizations with better technology skills and competencies, Telsyte forecasts that by 2022, two-thirds of all Australian corporations will have moved on from a separate business unit-owned programs to a comprehensive, more strategic, CEO-led approach to enterprise-wide digital transformation that include key IT partners.
“Technology-driven disruption today is increasingly global and much faster moving than in previous generations, noted DXC’s Nayagam. “Therefore, digital transformation needs to be considered enterprise-wide from the outset. As companies gain experience with emerging technologies that underpin any digital strategy such as data analytics, artificial intelligence, cloud infrastructure, automation and cybersecurity, it becomes clear that the true power of innovation comes from applying a digital strategy across the organization.”
Telsyte used an online survey of 403 business and technology decision makers across Australian organizations with greater than 20 employees. Sampling was conducted on a size of spend weighting basis, with 45 percent of respondents coming from organizations with greater than 200 employees. Respondents were required to have a strong understanding of their organization’s IT & technology purchasing and digital strategy, but were not limited to the CIO or IT department. The sample used was representative of the top 54,202 operating businesses in Australia and took approximately 30 minutes to complete. The survey had a confidence interval of +/-4.87 at a confidence level of 95 percent. Interviews were conducted via an online survey and completed by respondents on computers, tablets and smartphones.