Digital transformation in companies has recently been driven by the three C’s: the CFO, the CIO and Covid-19. The pandemic certainly drove businesses to adopt digital tooling to enable communicating and working from home, but the levels of transformation of the business still vary greatly, as is illustrated in the results of the Fellowmind People & Technology Report 2022. While some companies are still starting on the road to cloud migration or multicloud adoption, others are transforming their business models and using data analytics and advanced AI models.
The area in which investment in digitalization is focused varies considerably by industry. Sectors that invest the most in digital initiatives are Energy and Finance. Interestingly, managers in the Energy and Finance sectors also feel that these tools tend to be too difficult to use: 42 and 41 percent of respondents respectively indicated this. Similar results are reported regardless of industry: the difficulty of the tooling is reported as the main challenge within 42 percent of companies with 501-1000 employees. These figures show a disconnect between the digital ambitions of companies and the practical implementation of technology.
Seeing the benefits
The reason could be a matter of education and training. While more than half of large companies (more than 1000 employees) invest in e-learning and other forms of online training, either the training efforts are inadequate, or the tooling is too complex for average users. Either way, it remains a challenge for IT departments to get to the root of the issue and improve internal training or IT solutions.
One of the reasons digital transformation is successful in some companies where others lag behind is getting specific stakeholders involved, especially those heavily involved in the daily business. Finance is a huge driver of business change. Both consultant Deloitte and Dutch technology company ASML report that moving towards robotic process automation (RPA) was requested by their financial departments. Evolving their digitalization approach to include AI/ML is at the request of departments that use RPA-agents daily. These employees are familiar with the tooling and recognize the benefits of these digital initiatives. Witnesses to positive change are the best ambassadors.
An outlier in the opposite direction is agriculture. Investing in CRM solutions is famously low on the agenda of these companies. Experts have lamented the lagging behind of the agricultural sector in adopting CRM as representing a missed opportunity. Such systems save companies time and resources, and they have the added benefit of leading to greater customer satisfaction. This would likely be a relatively simple and hugely beneficial solution for the agricultural sector, but still, adoption is way behind the curve compared to other industries.
Agriculture typically lags in the adoption of digital tooling, not just CRM. Part of this conservative approach stems from a lesson learned from failure. Companies that take the plunge and adopt CRM, run into several problems. Employees don’t see the benefits, find the software too difficult to use, and start to hate the new system. But the problem is also one of peer incentives. In sectors where adoption lags, the competitive pressure to adopt these technologies remains low, taking away a key driver of business change.
The above-mentioned problems might also explain the main reason why digital transformation differs per industry. If a critical mass of adoption remains out of reach, the incentive for peers to adopt technologies to be competitive does not exist. This makes companies in these industries vulnerable to the risk of disruption. New digital native competitors will have an enormous head start, as businesses within Finance, Banking, and Transportation have discovered the hard way.
How to solve this stagnation and introduce technology to deliver a more vibrant ecosystem? The takeaway for companies that seek to achieve the best results with their digital transformation efforts is that they need to get stakeholders within the business on board. Most notably, the employees who are expected to use these tools need to be intrinsically motivated to do so. Recruitment of digital natives within the company might also serve to instill the need for modernization. And adequate training is paramount, as the struggles within agriculture and the responses within the Fellowmind Report illustrate.