A new Microsoft-commissioned survey from IDC has outlined the top five attributes of those organisations that are succeeding with their digital transformation efforts.
Titled ‘Unlocking the Economic Impact of Digital Transformation’, the study surveyed 1,560 respondents in 15 Asia Pacific economies late last year. They were from a wide range of mid and large-sized companies and organisations in manufacturing, financial services, education, healthcare, government and retail.
While 85% of the organisations surveyed by IDC have embarked on digital transformation journeys, only 7% can be classified as digital transformation leaders. These leaders have a full digital strategy in place. They earn more than 30% of their income from digital products and services and see greater benefits from their digital transformation initiatives.
The study highlighted some fundamental differences in the mindsets of leaders, compared to those of followers:
1. Culture and change
According to Daniel-Zoe Jimenez, research director for Digital Transformation at IDC, many followers seem to know about some of the winning ingredients needed. But they fail at execution often because they lack a digital culture. “Leaders know where they are taking their teams and that produces a culture of collaboration across business functions. The data strategy helps infuse the culture with a solid goal,” he says.
2. Organisational behaviour
What sets leaders apart is their ability to ride the digital transformation wave from an organisational culture perspective. This is borne out by the study, which found that leaders prioritise business agility and innovation.
3. Digital transformation approaches
“Before, everyone was asking what digital transformation was, and why was it needed. But now the big question is: how we can accelerate the process,” Jimenez says. “This is where followers are left behind, because they will adopt a wait-and-see approach and rely on others to take risks.”
Jimenez argues that, in the world of digital transformation, that is a losing strategy. “An organisation’s ability to succeed is highly dependent on driving innovation at scale and learning from failures. Ultimately, this can lead to new business models that will help to monetise sets of data directly or develop new commercial digital services.”
“A series of micro-revolutions – small, quick projects that deliver positive business outcomes and accrue to a bigger and bolder digital transformation initiatives – are critical,” says Ralph Haupter, president of Microsoft Asia, in a recent blog post. “This approach will ultimately enable organisations to be at the forefront of innovations and to reap benefits from new digital transformation initiatives, leveraging the power of emerging technologies such as AI.”
4. Leadership and structure
Digital transformation leaders also realise that the path to winning is not just about plug-and-play change. As well as transforming internally, an organisation must learn how best to realign its entire ecosystem – including, supply chains, partners and employees.
“A big question is how to free people to be more creative and add more value,” says Jimenez. “Leaders look at how to move beyond just having the right technical skills and focus on changing the organisation’s culture. Leaders take an ecosystem-first approach in the way they create and deliver products and services to customers. Also, to become a Leader, an organisation must encourage data sharing and collaboration, both internally and externally, and in an open and trusted manner.”
5. Using data as an asset
The study shows that leaders invest more in new and disruptive technologies like big data and artificial intelligence. This helps to drive innovation and turn data assets into capital. In fact, IDC expects that by 2019, 65% of large organisations in Asia/Pacific will commit to becoming information-based companies.
But, in keeping with the times, leaders in digital transformation are also taking a fresh look at their key performance indicators (KPIs). On top of traditional metrics, like profit margins, sales volumes and market share, many are looking at new ways to measure success and better gauge the performance of digital transformation initiatives.
The study found that 53% of those surveyed are starting to use data as capital asset KPIs. Leaders are also now much more focused on leveraging data to grow revenue and productivity and measuring it as KPIs.
“Broadly, this is a three-step process: data collection helps to improve decision-making. The insight from the first step feeds the development of better products and services,” Jimenez says.
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