An urgency for change and business continuity is driving digital transformation across sectors, but few are investing to sustain changes long term.
Capgemini surveyed 1,000 executives from organizations with at least $1 billion in revenue across sectors and found a digital transformation boom occurred by 2020 after seeing no "clear advancement" in digital transformation in a 2018 survey.
Here's what was happening then, what's happening now and what business leaders can expect next for digital transformation:
Then: Innovation stifled, digital transformation stalled
Digital transformation efforts were few and far between in the years prior to the pandemic. In 2018, 24% of executives had the digital capabilities required for digital transformation; only 26% had the necessary leadership capabilities required.
The majority of businesses lacked the foundation for strong transformation. Just 35% of executives promoted the exploration of new ideas and experimentation in employees and 36% of organizations involved employees in their digital initiatives.
"We've been on this digital transformation journey for a long time, at least 10 years," said Brian Metzger, CMO at Caspio. "And it's like we've been on the scenic route," but the pandemic forced businesses to pick up the pace.
Now: Open to new ideas, businesses accelerate digital transformation
Companies are optimizing their digital transformation strategies by improving leadership and encouraging employee ideas.
In Capgemini's 2020 version of the survey, 60% of organizations said they have the digital capabilities and 62% said they have the leadership capabilities required for digital transformation — a big jump in two short years.
Digital transformation disparities between 2018 and 2020
|Organizations that said they have the digital capabilities required for digital transformation
|Organizations that said they have the leadership capabilities required for digital transformation
|Organizations that said they actively promote the exploration of new ideas and experimentation
|Organizations that said they involve employees in their digital initiatives
SOURCE: Capgemini's 2020 Digital Mastery report
"The continued rapid pace of technology innovation and business model disruption over the past two years – with COVID-19 forcing many companies to reinvent themselves – has possibly driven this advancement,” Claudia Crummenerl, managing director, people and organization at Capgemini Invent, said of the increased transformation.
The COVID-19 pandemic changed technology priorities and increased the return on investment for digital transformation efforts. While businesses aren't likely to go back on their transformation investments, only time will determine the sustainability of 2020 accelerants in a still changing landscape.
"[In] the past, you were in the office day in, day out," John Lunt, CEO at Certero, said in an email. "The present is you're in front of screen[s] in your own home. The future will be a combination of the two."
Sixty-seven percent of organizations said they actively promote the exploration of new ideas and experimentation and 63% of organizations said they involve employees in their digital initiatives.
Employees have become the key to transformation efforts; digital literacy provides employees throughout the organization with the tools to enable businesswide transformations.
"Either you significantly up level the digital literacy of the employees in teaching them how to code, and how to be programmers, or you drastically simplify and reduce the complexity," said Metzger.
Next: Investing in employees to sustain transformation
In the next 12 months, 31% of organizations will increase their transformation spending due to COVID-19 compared to last year, according to the Capgemini report. As businesses up investments, keeping purpose and upskilling for employees in mind could help make the most of digital transformations.
But not all businesses are making those investments. Only 36% of executives said they have the necessary learning infrastructure to upskill their employees, according to the report. Less than half (48%) said they are investing in building soft skills, such as adaptability and collaboration.
"Businesses need to consider how they are going to look after their people, how they are going to prepare them for the future," said Lunt. In particular, the "adoption of practices relating to well-being, it's a crucial string to a bow of a business that will lead to function going forward."
HR and IT departments will likely team up to realize the employee investments improving digital transformation. Much of the effort, however, lands in the office of the CIO.
"Post-pandemic, the CIO has a new job," said Valaine Anderson, director of product marketing at Caspio. "It's to foster innovation, to empower their employees and to ensure that their employees have the tools to do their job in a remote work scenario and not be held back."