We now live in the kind of connected world where established businesses that are not evolving digitally are in jeopardy of becoming extinct. Since 2000, more than 50 percent of Fortune 500 companies have either been acquired, merged, or declared bankruptcy. At the same time, we've seen an incredible amount of innovation and the emergence of new business models.
Yet while certain industries have embraced digital, others have been slow to adopt.
The good news is that new research shows companies are preparing to make digital transformation a priority in the near future. However most of them have a long way to go before achieving any kind of mastery over the multiple disciples required to effectively innovate. This is according to The Digital Transformation Race Has Begun, a study Virtusa commissioned and Forrester Consulting conducted to assess the digital maturity of firms worldwide.
The study, generated with input from more than 600 digital transformation decision makers in North America and Western Europe, evaluates the state of digital transformation across six key industries – retail, banking, healthcare, insurance, telco and media. The study found that 85 percent of firms surveyed said they plan on increasing their digital transformation budget in the next year, with 37 percent indicating the increase would be by 10 percent or more.
In today's business landscape, with industries being disrupted at every turn, companies must be able to quickly change their products and processes to pivot to take advantage of new market opportunities. As the study finds, improving digital maturity will be key to meeting the changing needs of customers in an evolving marketplace. Some industries, like financial services, have made digital innovation a priority and are better equipped to handle industry disruption, while others, most notably insurance and healthcare, are comprised of organizations still struggling to establish long-term strategies.
Regardless of industry, the study concludes that companies that are obsessed with the experience they provide to their customers, can achieve significant operational efficiencies, and put innovation at the heart of their respective cultures are the ones that will see the greatest benefits from digital transformation.
The following are some additional interesting insights:
■ Retail outperforms other industries and is setting the standard for creating innovative, digitally-driven customer experiences.
■ Banking firms are ease-of-use leaders, yet they face investment challenges, including slow economic growth, low interest margins, increased regulation, and changing consumer expectations.
■ Healthcare companies traditionally lag behind other industries in adopting business technologies that help with customer engagement. This is tied to intense regulatory requirements leading to a significant focus on security of customer data.
■ Insurance organizations are just beginning to digitally transform as the complexity of products and services, legacy technology reliance, and risk-averse cultures all affect how fast insurers can move forward with their digital transformation journeys.
■ Telco firms are shifting to customer-centricity, driven in part by low customer satisfaction and disruption caused by over-the-top (OTT) providers.
■ Media companies have the most ground to cover in digital transformation. They also represent the group least likely to increase investment in digital initiatives.
The biggest challenge across all industries is that most organizations are treating digital transformation as a loose correlation of technology projects. Yet digital transformation is not a project; it is a re-writing of the business and requires significant cultural change. Digital transformation is about streamlining the customer experience, optimizing operations and thinking differently about innovation. It's not about the ROI of a single digital program, but rather survival in your respective industry.
Methodology: In this study, Forrester conducted an online survey of 606 organizations representing six verticals in North America and Western Europe to evaluate the state of digital transformation readiness today. Survey participants included decision makers in customer insights, digital operations, or business innovation strategy.