Business leaders across the globe understand that continued investment in technology is non-negotiable, despite juggling a multitude of other priorities and the impact of the coronavirus pandemic.
Even though budgets are shrinking, the commitment to digital transformation is strong, with organizations investing at the same level or more to expand their digital capabilities. And there is a lot of catching up to do, according to a global survey by Tata Consultancy Services (TCS), which also highlights the link between digitalization and a firm’s resilience and adaptability.
“The pandemic has been an unintended catalyst,” says Ved Sen, Digital Evangelist & Business Innovation Lead at TCS. “Organizations recognize that digital capabilities are not only critical for their resilience in the face of the pandemic, but that they will continue to be essential for survival and success in the post-pandemic world, given the emergent landscape and the need for new operating models.”
Essential digital capabilities are lagging
While the successful move from offices to remote working garnered a lot of airtime, it couldn’t hide the fact that other digital skillsets are often less developed.
Two-thirds of those surveyed by TCS were able to support staff working from home. However, less than a third of companies had technology developed enough to support remote business operations in other ways. This is based on their rating against a set of six key digital criteria, including their ability to provide end-to-end digital customer experiences, their level of automation, the use of AI analytics and cloud-based enterprise systems.
The high-tech and retail sectors have emerged as leaders in their deployment of the six essential digital capabilities.
While the technology sector may be more of an obvious trailblazer, retailers have also become very sophisticated in using digitalization to retain customers and build loyalty in a highly price-competitive industry. Core process automation and providing an end-to-end digital customer experience – supported by AI analytics – were a focus before COVID-19, and accelerated as shoppers rapidly switched from physical to online shopping.
Among those whose digital skillsets trailed behind were government agencies and energy companies.
There were marked differences between regions, too. European companies were found to be lagging significantly when it came to their standard of digitalization (17%) compared to the US (26%) and Asia (25%).
Commitment to a digital future
Despite shrinking budgets, digital transformation continues to be a priority.
Two-thirds of companies have maintained their digitalization budgets, and a quarter have even increased it during the pandemic. Spending on digitalization among the latter increased by a third – a considerable commitment in these difficult times.
A core area of investment is making remote working more efficient and safer through cybersecurity, collaborative and cloud-native technologies.
For those companies lacking in essential digital capabilities, the focus is on improving their digital customer experience (44%), automating core business processes (44%), and moving enterprise software to the cloud (39%).
Again, there’s significant variation between industries in terms of the commitment to advancing their technological development.
Although they already have a comparatively strong digital skillset, high-tech and retail continue to invest heavily. At the same time, lagging industries such as public services and the energy and utilities sector, are putting their weight behind the need to catch-up.
Regionally, firms in Asia (43%) and Europe (41%) outperform their peers in the US (34%) in terms of advancing their digital transformation, while European organizations are also the most aggressive in expanding their capabilities.
Where to invest?
Almost all companies on a digital transformation journey will find spending has to be carefully balanced against other business priorities as companies look to both rebuild and lay the foundations of future growth.
“Companies are being forced to choose between the dual imperatives of making urgent and radical changes towards digital operating models and effectively investing into a new strategic direction on the one hand, and managing cash flow in the face of a number of uncertainties spanning the pandemic, its recessionary impact, and concurrent geo-political changes, on the other hand,” explains Sen.
And while many decisions will revolve around technology, organizations must also remember the other important factors in successful digitalization.
For example, companies need to forge strong partnership ecosystems. This is both to make their supply chains more resilient but also to create increasingly sophisticated experiences that need more complex delivery networks and affiliations. Digital connectivity is key to linking these ecosystems together.
Another consideration is talent management: while the combination of remote working and digitalization will create a global talent pool to draw on, firms will also need to reskill their existing employees.
And both existing and new workers will need a bigger organizational purpose to rally around – including the firm’s stance on sustainability and climate change.
The pandemic has woven an intricate web of complex threads. Continuing to invest in technology is a key part of creating a more resilient, connected future.