Digital transformation has become a necessity for companies in all industries. Long histories and distinguished accomplishments offer no defence against disruptive competitors. Consider the case of Thomas Cook, which abruptly closed in 2019 after 178 years in business. The storied travel business attempted to reorganise and restructure, but in the end, could not survive against online discount competitors.
Last Autumn, the Infosys Knowledge Institute assessed how enterprises are implementing digital transformation. We surveyed more than 1,000 executives of companies with at least $1 billion revenue. Respondents included executives based in Australia, Canada, China, France, Germany, India, New Zealand, the United Kingdom, and the United States.
A top performer
Companies in the United Kingdom perform among the world’s elite in advancing digital technology, according to Infosys’ Digital Radar 2020 report. When measured against 22 digital transformation initiatives, UK respondents achieved the second-highest digital maturity globally, with a score of 63. India was the only country surveyed which beat the UK, with a digital maturity index of 71.
That’s despite the survey unearthing that UK respondents face the greatest challenges from legacy systems of any nation surveyed. Some 38% of UK companies listed legacy systems as their biggest challenge this year and also in the coming year. Globally 28% of respondents mentioned legacy systems as their primary challenge. Rapidly developing China reported the lowest level of struggles with legacy systems at 17%.
Breaking silos and embracing clouds
A closer look at the survey shows that UK respondents stand out for the way they embrace collaboration and have adopted cloud computing. UK companies have enthusiastically embraced the initiative of cloud computing, with 44% of companies now operating at scale in this discipline – above the survey average by two percentage points – the highest performance for cloud computing by any country group surveyed. Several top-performing companies from the UK commented on the power of cloud technology. A UK manufacturing company said that cloud was a good way to overcome risk aversion and slow adoption by senior management. A UK telecommunications company noted that engaging in multiple cloud products enabled it to correct previous poor implementations.
In contrast with the challenge of operating through legacy systems, British companies excel at working together across business lines – they were the country least likely to name the inability to work across silos as a major business challenge. These two strengths relate: Cloud computing allows for greater collaboration, and that is a critical component for companies to evolve at the pace of technology change.
The digital ceiling looms
The survey and the rest of the research in our Digital Radar 2020 report revealed significant progress from basic to middle-tier digital maturity, for respondents around the globe and in the UK. However, many UK companies saw diminishing returns from their technology investments, reaching what we at Infosys have termed the “digital ceiling.” A small number of UK companies have broken through the 70% digital maturity score, and this is consistent with the global average.
The rate of market change is faster than the pace of a business transformation cycle, and this is a fundamental problem for executives seeking to improve capabilities. Technology also changes faster than companies can react, and keeping pace with future digital evolutions requires a mindset change from company leaders and technology specialists alike.
We found the most advanced companies show distinction in their achievements, and in their motivations to pursue advanced technology. These top performers are much more likely to adopt technology to empower employees and improve customer satisfaction. Respondents in the United Kingdom also indicated strong motivation to improve customer satisfaction. Some 61% called improving customer experience and engagement a top reason to pursue digital transformation.
However, the survey revealed UK companies have an opportunity to improve when it comes to their employees. Only 35% of UK respondents said their companies wanted to put technology to work to empower employees to act and lead change.
Employee empowerment is a critical success factor for top digital companies. The most advanced companies in our survey look for ways that technology can make things better for employees and clients alike. They work in quick cycles and behave like a living organism. They sense and respond, learn and adjust, and evolve.
Several top performing UK companies list employee education and external training as a critical factor to increase their digital maturity. In contrast, the lower performing companies viewed technology as mainly a tool for cutting costs and increasing efficiency.
Faster, better and cheaper technology alone will not provide the improvements that enterprises need. Leading enterprises bring these digital tools to bear with an employee-centered mindset. When companies do that, employees use technology to meet their needs and serve customers better, which ultimately generates the economic returns that power the enterprise to serve all stakeholders and keep pace with global markets.