Tuesday, 05 March 2019 10:30

Australian companies take ‘fragmented approach’ to digital transformation: report Featured

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A company-wide approach to digital transformation is significantly more likely to deliver business success, yet more than half of Australian organisations are taking a fragmented, business unit led approach, according to newly published research.  

The research, undertaken by Telstra, found that 55% of Australian businesses take a fragmented approach to digital transformation driven by individual business departments.  

According to the report, this approach is leading to a major misalignment between digital transformation priorities and performance, as companies fail to deliver on plans to improve cyber security and customer experience.

Globally, organisations with a whole-of-business digital transformation strategy conversely, are significantly more likely to be highly digitally mature (45%), make extremely good digital decisions (52%), and consider the impact of digital transformation decisions across the business (52%).

The research delved into the parts of the digital transformation journey companies are struggling with the most “with the start of a transformation journey identified as the greatest challenge for Australian companies”.

When rating their ability through seven stages of digital transformation decision-making, Australian businesses rated themselves weakest on “having the right vision”.

Telstra Enterprise group executive Michael Ebeid said the report showed a clear opportunity for businesses to elevate and integrate their approach.

“Disruptive decision-making studies the challenges leaders face as they seek to make the right decisions on how to approach digital transformation, and ultimately drive growth for their company,” Ebeid said.

“We found that there is significant opportunity for Australian organisations to better integrate digital transformation activity across all areas of business, but this needs to be led by a clear company strategy.  

“Not having the right vision at the start of a digital transformation journey means there is no foundation for transformation teams to guide execution plans and determine success.  

 “This report provides helpful insight for any executive transforming or looking to transform his or her business.”

Researchers surveyed 3810 senior decision-makers from 12 industries in 14 markets around the world to uncover insights into strengths and weaknesses around digital transformation programs.

The research found a quarter (26%) of Australian businesses invested more than US$1 million in digital transformation products and services over the past year, while 12% spent more than US$5 million each.  

Respondents indicated investment was set to increase, with 27% saying their company’s total spend on digital transformation would grow by more than 10% in the next three years.

But, the research found that more than a third of Australian organisations (37%), had barely begun their digital transformation journey, placing Australian businesses slightly behind their global counterparts (30%).

Priorities and performance rankings are reversed, with one of the report’s key findings showing a substantial gap between digital transformation priorities and performance.

Australian organisations rated their top three digital transformation priorities as protecting digital assets from cyber threats, optimising technology to move faster, and delivering great, consistent customer experiences.  

When it came to decision-making performance, however, these priorities ranked among the lowest. While companies recognised the importance of agility as a top priority in the digital world, it ranked lowest of all 17 priorities.

“The lack of alignment between digital transformation performance and priorities such as security and agility, is symptomatic of the fact that Australian businesses are not taking the whole whole-of-business approach necessary to address these priorities,” Ebeid said.

According to him, Australian organisations are placing too much emphasis on technology alone as a differentiator for digital transformation decisions.

When rating decision-making across four factors for success — people, processes, technology understanding and partnerships — Australian businesses ranked "technology understanding" as the area where they feel most confident.

 And two-thirds of Australian respondents felt their organisations made technology decisions “well or extremely well".

Ebeid said that while the understanding of technology and its performance was important, other factors were equally significant, and organisations that were highly digitally mature (15% in Australia, compared to 21% globally) showed greater focus on people and processes.

“There is a common misconception that technology alone is a silver bullet for digital transformation. Although investing in the right technology is essential, placing too much emphasis on this part of the digital transformation puzzle will be at the detriment of other factors for success and can act as a barrier to success,” Ebeid said.  

“Technology can have a profound impact on business, but it is only when people, processes and partnerships are brought together that true transformation be achieved.”

He said the benefits of a successful, leadership-led approach to digital transformation could not be understated.  

 “The impact is not only digital, but also on the bottom line. We know that because Australian organisations that show high digital maturity are much more likely to achieve increased profit margins (28%) than organisations that haven’t started their digital transformation journey (13%).

“These companies are clear on what digital transformation means for their organisation, they have empowered their people, strengthened their processes and identified their partners.”

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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