US businesses over-emphasize the importance of technology in successful digital transformation

NEW YORK, March 4, 2019 /PRNewswire/ -- Leading telecommunications and information services company, Telstra, today released findings from its Disruptive Decision-Making research, which surveyed 3,810 senior decision-makers from 12 industries in 14 markets around the world to uncover insights into strengths and weaknesses around digital transformation decisions. The research showed US businesses over-emphasized the importance of technology understanding as a differentiator for digital transformation decisions, and didn't focus enough on people, processes and partnerships to successfully respond to increasing digital disruption.

Telstra's President for the Americas, Nicholas Collins, said the research showed a clear opportunity for US organizations to focus on the role of their people in driving digital change.

"Technology alone is not a silver bullet for digital transformation. While investing in the right technology is crucial, placing too much importance on the role and performance of technology in digital transformation is a barrier to success," Mr. Collins said.

"Successful digital transformation relies on more than the right technology, it requires the right culture, the right people – and the right processes to support them. The research results back this up. Globally, organizations that focus on multiple elements of digital transformation decision-making, including people and processes, are significantly more likely to be digitally mature (45%) and make excellent decisions (52%). By comparison, companies focusing on technology alone show less progress."

"Digital transformation must be a whole-of-company journey that involves upskilling and changing employee mindsets, adapting structures and ways of working, and creating teams that can maximize the new technologies being introduced."

The research found that while US organizations are increasing their investment in digital transformation, many businesses struggled to show the financial impact of their efforts. More than a third of US businesses invested more than $1 million in digital transformation products and services over the past year (35%), while one in six spent more than $5 million (16%).

This figure is set to increase as a third of US respondents said their company's total spend on digital transformation would grow by more than 10% in the next three years (33%).

However, showing 'hard outcomes' such as financial returns of this investment was more difficult. American companies found that, of all the business outcomes surveyed, increasing profit margins scored the lowest in decision-making effectiveness in the US – followed by increasing revenue growth and streamlining business costs.

"Measuring the progress and success of any digital transformation strategy or individual project is an absolute essential. But the metrics by which we measure success are just as important," Mr. Collins said.

"The lack of hard outcomes for US businesses highlights the need for an equal focus on the role of people, processes and partnerships, as well as technology in digital transformation journeys. Businesses can only deliver the full benefits of digital transformation if their people understand the technology capabilities and are trained to maximize them, there are the internal processes to optimize the experience, and the right partners are in place to support the business where required."

Key findings and quotes:

Focus on technology undermining digital transformation success

• Businesses rated their digital transformation decision-making ability and their effectiveness in achieving business outcomes across the four factors of people, processes, technology understanding and partnerships.
• The research found American companies ranked technology understanding as their strongest capability by far. The following are the four factors ranked by digital transformation decision-making ability scores, from highest to lowest:
1. Technology understanding
2. Partnerships
3. Processes
4. People
• While understanding of technology and its performance is important, the other factors are equally significant to digital transformation success.
• The research found that organizations which are highly digitally mature (23% in the US, compared with 21% globally) show greater focus on people and processes.

US businesses not delivering on digital transformation priorities

• The research found there was a substantial gap between digital transformation priorities and performance.
• US organizations ranked their top three digital transformation priorities (out of 17) as:
1. Protect digital assets from cyber threats
2. Optimize technology to move faster and adapt to change 
3. Deliver great, consistent customer experiences across global operations
• However, decision-making performance around these top priorities ranked particularly poorly.
• US organizations ranked the performance of their top three digital transformation priorities as follows:
• Protect digital assets from cyber threats (17^th out of 17)
• Optimize technology to move faster and adapt to change (6^th out of 17)
• Deliver great, consistent customer experiences across global operations (12^th out of 17)
• The results suggest some of US organizations' greatest priorities are the ones they are struggling most to deliver on.
• US organizations need to focus their attention at the outset of the digital transformation process. Our research ranked the ability of US companies across seven stages of digital transformation projects, with its founding stages – 'having the right vision or mindset' and 'establishing what digital transformation can mean for my business' – rating last.

Quotes:
Nicholas Collins, Telstra President for the Americas:

"One of the red flags we saw in this research was the gap between what US businesses ranked as their highest digital transformation priorities, and their performance in these areas. Cyber security was identified as a particular focus area. Despite 'protecting digital assets from cyber threats' rating as the highest priority, it achieved the lowest performance score of all priorities in terms of ability to deliver."

Mr Collins said there were a few factors to consider when analyzing this finding.

"When we look in more detail at protecting digital assets, it becomes clear where organizations need to focus their efforts. American companies are seeing positive results from their technology decisions, but people and partnerships are ranked very lowly when contributing to performance.

"Successful companies are clear on what digital transformation means for their organization, they have empowered their people, strengthened their processes and identified their key partners."

SOURCE Telstra