Senior Pensions Consultant
Out-Law Analysis | 14 Dec 2020 | 9:54 am | 4 min. read
The coronavirus crisis has fundamentally changed the way businesses think about the link between technology and the way they operate. Many slow to embrace technological change previously are now focused on digital transformation and the benefits that come with it.
The link between a business' technology and its operational resiliencewas brought into sharp focus by the initial impact of Covid-19. This impact was felt in a multi-faceted way – very few, if any, aspects of internal operations or customer engagement went untouched. The legacy of this initial impact is largely one of disruption from which businesses can ultimately benefit greatly.
Partner, Head of Technology, Media and Telecoms
Most businesses responded rapidly to the effects of Covid-19 making adjustments necessary to continue to operate and supply their goods and services in a way that would secure their survival. Some were able to innovate to respond to the new ways of doing business such that they saw a very positive impact on their bottom line. Many businesses are now moving from crisis management and immediate response mode to a new phase of 'business as usual' in an entirely new trading environment. Market demands, customer expectations, routes to market, and personnel needs have changed. Businesses are rethinking how they do business, not just to survive, but to recover to pre-pandemic trading positions and beyond.
It is evident that in order to do so in this new trading environment, digital is king.
The fact that digital is the future has been recognised by the European Commission in its roadmap for recovery at a macro economic level. The Commission's view is that "investing in clean and digital technologies and capacities, together with a circular economy, will help create jobs and growth and allow Europe to make the most of the first-mover advantage in the global race to recovery" and that "it will also help make us more resilient and less dependent by diversifying our key supply chains".
This 'future is digital' strategy has also been identified by the Commission in its roadmap as underpinning Europe's digital single market, not only at a policy level, but also across all echelons of investment: "This should be a coordinated effort drawing on public investment at European and national levels and on mobilising private investment. It should be targeted on our commonly agreed objectives and on where it is most needed."
The views of the Commission can be distilled down to a key message – investing in a digital future now is not only seen as a means of future proofing operational resilience, but also presents an opportunity for recovery and ultimately achieving a competitive advantage and future growth.
Digital transformation is at the heart of this. George Westerman, MIT principal research scientist and author of 'Leading Digital: Turning Technology Into Business Transformation', has described digital transformation as "a radical rethinking of how an organisation uses technology, people and processes to fundamentally change business performance".
Of course, digital transformation is not new. According to Statista, the digital transformation market in 2017 is thought to have been worth in the region of $0.96 trillion. However, the willingness to spend on digital transformation even before the pandemic is impressive – it was estimated by Statista that by 2023 the market will increase nearly three-fold to $2.3 trillion. The market has to date been divided up globally, which is not unexpected, with the US having the largest market share, accounting for circa 34% in 2019, followed by Western Europe with 20% and China with 18.5%.
Then came Covid-19, which highlighted weaknesses in business operations in a way that very few other events could have. When CEOs were asked by Statista what the top three priorities are for them to help preserve their business through the disruption caused by Covid-19, leading on digital business and digital transformation activities was the tied top answer, with 37% of respondents prioritising this. The other was to improve remote working experiences.
Bearing in mind this prioritisation and the Commission's views on investment in digital, it will be interesting to see how the global market division for digital transformation will evolve in the short to medium term and if we will see a significant increase in spend in Europe.
When asked to consider whether, in the next three years, their workforce would be moved into new roles due to digital transformation, nearly a third of respondents to a Statista survey said they thought between 41% and 60% would – over a quarter felt it would be between 61% and 80%. Accordingly, for a programme to be successful, it will need buy-in at all levels, and in all facets, of a business.
Investing in a digital future now is not only seen as a means of future proofing operational resilience, but also presents an opportunity for recovery and ultimately achieving a competitive advantage and future growth
How a business designs a programme for digital transformation will be largely driven by the business' objectives and desired outcomes. These will vary, and are likely to be weighted towards revenue generating activities with a focus on developing and delivering customer services digitally. But they should all be aligned with a wider, more holistic goal, and that is to re-organise business operations on a fulsome basis to utilise technology and data as a bed rock for more efficient internal operations and to achieve or maintain a competitive advantage.
Digital transformation, therefore, is not a task that is just for a business' IT function, or limited to buying in new technology to service an existing business model. It is something that permeates an entire business. Its success will depend, therefore, in large part on a business' agility for organisational change.
Senior Pensions Consultant