Earlier this year, the decades-old shift from atoms to bits got a rocket booster: the COVID-19 pandemic. Overnight, people headed home to work as cities enforced lockdowns. But while many businesses transitioned to remote work without missing a beat, in other ways they were caught off guard. In short, they discovered they’re digital – but not digital enough for the world we now live in.
We know this because we surveyed close to 300 executives across 11 industries in North America, Europe and Asia-Pacific this July. The vast majority work at large companies, 63% of them with annual revenue over USD $5 billion.
They told us how the pandemic had impacted their revenue. What digital capabilities they had in place or were actively developing. Which management issues were most important to them during the pandemic and beyond – and which ones were the most difficult to implement. Finally, they told us the remote status of their workforces, both before and during the pandemic, and what they project for 2025.
Our findings range from expected to highly surprising. You can download and read the full report here.
These are the top 5 key insights we found:
The pandemic has exposed cracks in the digital armor
While we found two-thirds of the average workforce were able to support employees working from home, the vast majority lacked other key digital capabilities. Only about a fifth to a quarter had these six digital capabilities that are essential to competing effectively in the current era:
- An end-to-end digital customer experience (CX)
- AI-based analytics to continually improve the CX
- Core enterprise systems in the cloud
- Highly automated core business processes
- Digital sensors tracking products
- Key partnerships in digital ecosystems
During the pandemic, underdeveloped digital capabilities are proving to be a major liability. As legendary investor and Berkshire Hathaway CEO Warren Buffett once said, “It’s only when the tide goes out that you learn who’s been swimming naked.” Likewise, the pandemic has revealed which companies have further to go in their digital transformations.
Companies with essential digital capabilities are coping better during the pandemic
Essential digital capabilities are separating leading from trailing companies in the pandemic. We compared the results of two groups of survey respondents: “Leaders” whose companies had at least four of six digital capabilities that are essential to being a digital enterprise, and “Followers” that had few if any of those capabilities in place.
The differences between Leaders and Followers were striking:
- Although the pandemic reduced the revenue of the majority of Leaders and Followers, a smaller percentage of Leaders (64%) had seen declines than Followers (73%).
- Even those Leaders whose revenue had fallen were more likely to say they’ll bounce back to old levels within two years (74% said they would vs. only 54% of Followers whose revenue had fallen).
- Leaders were also significantly better prepared to accommodate remote employees. A full 100% of Leaders said their remote employees were operating productively, securely and collaboratively from home. Only a minority of Followers (45%) could say the same thing.
Trailing organizations are racing hard to catch up digitally
The pandemic is proving to be a historic catalyst for digital transformation. Organizations recognize that these technologies are critical for resilience in the face of the pandemic, and that digital capabilities will continue to be essential in the post-pandemic world.
A large proportion of companies are now actively developing essential digital capabilities. These findings suggest that the percentage of companies that can call themselves Leaders today (only 12.5% of our sample) should expand fivefold, to 60%. If you include companies that are planning to make these investments, more than 80% of the organizations surveyed will have the essential digital capabilities.
Digital transformation projects are largely immune from budget cuts
While COVID-19 is above all a health crisis, the economic pain has also been excruciating. In the midst of soaring unemployment, physical distancing and shuttered businesses, at least two-thirds of those surveyed do not expect their revenue to recover for more than a year. This has created intense budget pressure. Executives ranked cash and cost management among their top concerns, alongside IT security and employee health and safety.
Nonetheless, two-thirds of the executives we surveyed are maintaining digital transformation (DX) budgets in their business functions. And a quarter are actually increasing their DX budgets, by an average of 33%.
Remote work is here to stay
The executives surveyed believe that working from home will outlast the pandemic and continue well into the future. Some 64% of their employees are working primarily from home now, a nine-fold jump from the number prior to the pandemic. By 2025, they expect about 40% to continue working remotely once the crisis ends.
But giving employees a computer and an Internet connection is easy. Keeping them productive, secure, and working in agile teams from home has been much more challenging. In fact, the most common areas of increased technology investment serve to boost the efficiency and safety of remote work.
Taking the digital plunge
It bears repeating that digital transformation is not a new agenda item. Most organizations have long been planning and preparing their organizations for these initiatives. And though the call for action may have been abrupt, organizations are heeding it. We believe the key challenge for many organizations will be deciding exactly where to accelerate their digital investments. Those that answer that question best will emerge stronger in the post-pandemic world.
Read the full report here: Digital Readiness and the Pandemic: Assessing the Impact
By Rajashree R | Source
