Digital technology — encompassing end-user devices, local and wide-area networks, cloud apps and services, data analytics, the Internet of Things (IoT) and much more — has profoundly changed the way businesses operate. However, ‘digital transformation‘ is, in many ways, an imperfect term, as it implies that some magical technology intervention can propel an organisation into a new, more efficient and more profitable state. Of course, with faultless planning, piloting, production deployment and operational management, such a rapid transformation may well be possible. But for many businesses there will be false starts, wrong turns and failures along the way, making for more incremental digital development.
No surprise, therefore, that at any given time, businesses will vary in their digital maturity, depending on the sector they’re in, the quality of their leadership and business planning, and the agility with which new business processes — both customer-facing and internal — can be developed and implemented.
The pandemic effect
The social and economic upheaval associated with the COVID-19 pandemic has provided an unsought means of evaluating the role of digital transformation in business. For example, have digitally mature businesses weathered the lockdown and recession better than those at an earlier stage in their digital transformation? And has the pandemic given digital ‘laggards’ the impetus to throw caution to the wind and adopt more digital technology?
On the first question (differential weathering of the pandemic), researchers at the London School of Economics (LSE) have been examining how businesses have responded to the current crisis, and the role played by digital technologies. (Usefully, comparable survey data are available from the economic downturns of 2000-2003 and 2008-2009.)
The LSE researchers identify four crisis-response scenarios: Sweat the assets(maintain the status quo, work staff harder, shelve IT investments, outsource), which was adopted by 30% of surveyed organisations; Underpin today’s business (focus on retaining and recruiting customers, and minimising costs, with technology and other spending limited to supporting these goals), which was adopted by 35% of organisations; Slow the strategy (modify the timescale of the business strategy, adapt it to a less predictable business environment, and maintain planned technology investments at a slower pace), which was adopted by 20% of organisations; and Adapt strategy and build resilience (invest in process, technology and people to ride out the crisis, shift business strategy and gain competitive advantage on a five-year horizon), which was adopted by 15% of organisations.
Compared to previous downturns, there is a high level of short-termism (Sweat the assets/Underpin today’s businesses) in 2020/21, but also more long-termism (Adapt strategy and build resilience). The latter observation was attributed to organisations that entered the crisis in good shape or were in ‘winner’ sectors, with digital transformation a key contributory factor.
In particular, the LSE researchers noted that: “In the recovery, organisations will emerge more technologised than ever before, but some will be much better placed competitively than others, perhaps irreversibly so, partly because of their technology policies before and during the crisis, and their good luck in being in the right sector at the right time. In this respect, the COVID-19 period may turn out as a significant turning point in the history of corporate digital transformation, exacerbating a pre-existing digital divide.”
On the second question (pandemic-accelerated digital transformation), a July 2020 survey by Studio Graphene of 502 senior decision-makers in UK organisations revealed that about half of respondents’ businesses had added new digital solutions that they were previously hesitant to embrace, while the same proportion had adopted solutions to enable them to continue delivering a product or service:
In addition, 47% successfully migrated their offering from in-person to online, and 39% invested in a technology they had never previously used. These COVID-related digital developments look set to persist, too: nearly two-thirds (65%) of respondents said that the technology adopted during the pandemic will become a core part of their operations and offerings going forward.
Naturally the technology-related response to the pandemic varies across sectors. It’s no surprise to find health leading the way when it came to embracing new digital solutions; education, finance and sales/media/marketing were also prominent in this respect:
Commenting on the survey, Ritam Gandhi, founder and director of Studio Graphene, said: “They say necessity is the mother of invention, and the pandemic is evidence of that. While COVID-19 has put unprecedented strain on businesses, it has also been key to fast-tracking digital innovation across the private sector.
“The research shows that the crisis has prompted businesses to break down the cultural barriers which previously stood in the way of experimenting with new digital solutions. This accelerated digital transformation offers a positive outlook for the future — armed with technology, businesses will now be much better-placed to adapt to any unforeseen challenges that may come their way.”
Digital transformation, whatever precise form it takes, is built on the internet and so, even in normal times, internet infrastructure needs to be robust. In abnormal times such as the current pandemic, with widespread remote working and increased reliance on online services generally, a resilient internet is vital. So how did it hold up in the first half of 2020?
Scooped from Zdnet, written by Chris mcLellan
Categories: Technology News