How to Make Digital Transformation Work
According to a study by Harvard Business Review Analytic Services, 43% of companies surveyed are achieving positive outcomes from digital transformation investments.
These include using digital technology at all levels of operations, from supply chains and distribution networks to compliance activities and analytics.
However, these digital transformation leaders stand in sharp contrast to many other organizations that are finding digital transformation more of a challenge.
The report provides insights into the state of digital transformation worldwide, showing what differentiates digital transformation leaders.
It also looks at the risks these companies face, including those associated with new technologies and the risk of disruption by competitors who are ahead of the digital curve.
Key findings include:
- While a minority of companies are achieving positive outcomes from their investments in digital transformation (leaders), they stand in contrast to those achieving only modest benefits (followers) or negligible benefits (laggards).
- Leaders are considerably outpacing the other two groups in business performance, with 73% reporting increased revenues, versus 20% of followers and 12% of laggards.
- Among Digital Transformation leaders, 68% report improved profitability, versus 25% of followers and 14% of laggards.
- Nearly 40% of survey respondents say their core business is at risk of digital disruption from other businesses that may be further along the digitization path or quicker on the draw.
- Nearly 50% say they will, at the least, lag behind their competitors if they fail to do a better job of interconnecting the various parts of their businesses digitally.
- More than 80% of companies say the biggest risk associated with digitization is not embracing it.
- Legacy systems, siloed operations/information systems, and budgetary constraints are the top three challenges that organizations face in leveraging digital capabilities to improve operations.
Alex Clemente, Managing Director of HBR-AS, noted “It’s somewhat logical that many organizations began their digital transformation at customer touchpoints, being driven by consumer demand. However leading organizations know that back office functions (e.g. general operations, supply chain, and distribution) are equally fundamental to operationalizing digital transformation.”
The HBR-AS study surveyed 335 respondents across a wide variety of industries around the globe. The report includes commentary from digital transformation experts as well as insights from other published research.
Survey respondents represent regions in the following percentages: North America 31%, Asia-Pacific 27%, Europe 23%, South America 9%, Africa 7% and other regions 2%. As a result the study offers a global view of the state of digital transformation, which the re/insurance and reinsurance industry must help enable across the wide range of businesses it supports.
The survey was sponsored by XL Catlin, a provider of insurance products and services.
Greg Hendrick, President Property & Casualty at XL Catlin commented: “As re/insurers, it is imperative that we understand how the use of digital technologies is transforming the way our clients across all industries work and the risks they face.”
To read the full study visit Operationalizing Digital Transformation: New Insights into Making Digital Transformation Work.
HBR Analytics Services is an independent commercial research unit within Harvard Business Review Group.