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October 14, 2016

Digital innovation is failing the business culture test but firms need to embrace it fast

UK and European C-suite execs are reporting big barriers to making digital transformation work

By Sam

A majority (59 percent) of European C-Suite executives say digital innovation has not delivered high business impact at their organisation, according to a new survey from global managing consultancy A.T. Kearney.

Despite the potential opportunity for digital innovation to drive business growth, integrating new technologies into an established infrastructure (59 percent) and a corporate culture that is not ready to embrace digital technologies (51 percent) are the two biggest barriers to successfully integrating digital innovation.

Although there is potential to create business impact as a result of effective digitisation, significant barriers remain.

The absence of leadership engagement (41 percent) as well as overcoming internal ‘red tape’ (25 percent) ranked high when asked about the top two obstacles to the integration of digital innovation. Only 12 percent of respondents believe access to adequate financing, followed by access to external resources (7 percent), such as emerging technologies and partnerships, are the primary challenges to overcome.

Despite these hurdles, enhanced brand image (19 percent), increased collaboration (15 percent) and increased profits (10 percent) were considered to be significant business outcomes as a result of digitisation.

“Companies need to recognize the disruptive power that lies in digital technologies, and evaluate the practical potential of innovations within their organization. Therefore, succeeding in an increasingly digital world requires an innovative, forward-thinking approach combined with the practical usage that is focused on solving business problems.” Michael Roemer, Partner and EMEA-lead of A.T. Kearney’s Digital Transformation practice. “In order to bring vision to value, established companies must embrace a culture of connectivity that enables innovation across the organisation.”

at-kearney-michael-roemerThe survey was conducted by A.T. Kearney at the firm’s Digital Business Forum in London. Respondents consisted of 100 C-Suite business executives in Europe across the finance, healthcare, consumer, chemicals, travel, communications, automotive and energy sectors.

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“Companies can no longer ignore the impact digitisation can have on all aspects of commerce, including business processes, services, and transactions,” said Ramyani Basu, Principal at A.T. Kearney. “Our data demonstrates a significant opportunity for organisations to leverage the power of digital innovation both internally and with an external ecosystem of players to build a long-term competitive advantage across business functions. And, while doing that, organisations shouldn’t forget the social responsibility of bringing the whole organisation with them in this digital journey.”

The potential to catalyse growth is the leading driver of digital innovation, according to survey findings, with 36 percent of respondents stating greater customer acquisition as the most significant business outcome of digital innovation, followed by increased revenue (20 percent).

Consequently, 68 percent felt that sales and customer services will benefit the most from digital innovation over the next three years. Operations and logistics were ranked second (37 percent) when asked what two business functions will benefit most from digitisation over the next three years, with marketing and innovation and R&D split for third place at 27 percent each.  Interestingly, only 20 percent of respondents said digital innovation will benefit the back-office (finance, human resources, IT, etc.) operations of their business and only 17 percent said it will benefit production.

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