CSCMP's Supply Chain Quarterly
September 21, 2019
Forward Thinking

Study: Companies over-emphasize technology in digital transformation strategies

U.S. businesses lack focus on people, processes and partnerships when it comes to adapting to an increasingly digital business world, Telstra study shows.

U.S. businesses rank high when it comes to understanding technology and its performance, but they need to refocus their efforts on softer skills if they want to successfully navigate the increasingly digital business world, according to a study from telecommunications and information services company Telstra, released in late February.

Telstra's Disruptive Decision-Making research shows that U.S. businesses over-emphasize the importance of technology as a differentiator for their digital transformation decisions, and that they don't focus enough on people, processes and partnerships as a way to deal with digital disruption.

"Technology alone is not a silver bullet for digital transformation," Nicholas Collins, president of Telstra, said in statement announcing the findings. "While investing in the right technology is crucial, placing too much importance on the role and performance of technology in digital transformation is a barrier to success."

Collins added that digital transformation demands the right culture, the right people, and the right processes to support them, in addition to the right technology. Telstra's research found that globally, organizations that focus on multiple elements of digital transformation decision-making, including people and processes, are considerably more likely to be digitally mature (45 percent) and make excellent decisions (52 percent). By comparison, companies that focus on technology alone show less progress, he said.

The study also found that while U.S. organizations are increasing their investment in digital transformation, many struggle to show the financial impact of those efforts. More than a third of U.S. businesses invested more than $1 million in digital transformation products and services over the past year, while one in six spent more than $5 million. Despite that investment, increasing profit margins scored the lowest in decision-making effectiveness in the United States, followed by increasing revenue growth and streamlining business costs.

"Measuring the progress and success of any digital transformation strategy or individual project is an absolute essential. But the metrics by which we measure success are just as important," Collins said."The lack of hard outcomes for U.S. businesses highlights the need for an equal focus on the role of people, processes and partnerships, as well as technology in digital transformation journeys. Businesses can only deliver the full benefits of digital transformation if their people understand the technology capabilities and are trained to maximize them, there are the internal processes to optimize the experience, and the right partners are in place to support the business where required."

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