To innovate, serve customers or work more efficiently than competitors, a company today must use digital technologies such as cloud and mobility effectively. But what exactly makes an enterprise a digital leader? CSC recently commissioned the Economist Intelligence Unit to survey more than 500 CIOs and other senior executives at companies around the world to better understand the links between digital technologies and strategic success.
We looked at how these companies view IT’s role, their current technology investments and their plans for adopting digital technologies over the next three years.
The benefits of leading the pack
The results were surprising. Of the 500 surveyed, only 8 percent were identified as “digital leaders” — that is, organizations that are entirely digital across major functions.
What was not surprising was that the digital leaders displayed distinct advantages over their counterparts: They view IT as more crucial to meeting their companies’ strategic goals, they’re more globally integrated and they are much more effective at information sharing across functions and regions. In fact, 37 percent of digital leaders report that their financial performance was much higher than that of their competitors in the past fiscal year, compared with just 11 percent of respondents at other companies. And it’s worth noting that digital leaders outpace other companies in prioritizing investments in the public cloud, collaboration software and cloud-based application services.
The recipe for creating a digital leader
While success can be attributed to many factors, it’s clear that digital leaders have digital in their DNA. Of those surveyed, 44 percent of digital leaders indicated that the CEO is the primary driver of IT strategy. And 63 percent plan to increase overall IT spending in the next three years — compared with just 52 percent of other companies.
The study also noted that while digital leaders place a high value on IT’s contribution to an organization’s success, other companies see IT as helpful but not crucial to an organization’s strategy. This is reflected in budget control, where the central IT function controls at least some of the budget at 85 percent of digital leaders, compared to only 63 percent at all other companies.
And while digital leaders currently only make up a small percentage of all organizations, the survey found that most companies expect to become more digital, with 54 percent indicating they are doing so to increase efficiencies and 35 percent going digital to cut costs.
Differences in digital leaders
Companies in different regions of the world tend to have different approaches to IT, and this may affect their approach to digital leadership. For example, our survey found that CEOs from North American companies more often drive IT strategy than their counterparts in other regions, and executives in those companies more often believe that IT is crucial or useful to reaching the company’s strategic goals. In Europe, the Middle East and Africa, companies more often see digital investments as a way to drive efficiency and cost reductions. Meanwhile, executives in Australia, China, India and Singapore are embracing mobile technologies to fuel business growth.
We also saw differences across industries. Banking and capital market firms are aggressively adopting digital technologies. Healthcare organizations are focused on becoming more digital but are doing so as a competitive necessity rather than as a differentiator. And finally, insurance executives expect their companies to become much more digital in the coming years.
We’re all aware that a shift toward all things digital is becoming an increasingly important part of business. What this survey showed is just how crucial digital is to an organization’s success and what drives it. I anticipate that we’ll see the number of digital leaders grow in the coming years, and those organizations will further reap the benefits of going digital.
I hope you will have a chance to read the survey for yourself.
(About the author: Dan Hushon is the chief technology officer, vice president and general manager, cybersecurity, for CSC)
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