A new study by The Economist Intelligence Unit has found that while a majority of companies have yet to implement their digital transformation initiatives, most expect their operations to be 80 percent digital or more in the next five years. 

The study, sponsored by Accenture and Pegasystems, is based on a global survey of 444 executives from the healthcare, finance and telecommunications industries. The findings suggest that digital transformation aspirations are high, yet making progress can be complex.  Only 18 percent of organisations today have fully integrated customer facing processes with their back office systems and only 10 percent report their businesses are fully digital. Establishing the right operational governance model and evolving company culture are tied as the top challenges to digital transformation, while evolving customer expectations rank as the top driver.

Analysis by The EIU reveals two statistically significant groups within the survey sample: those who are ahead of the curve and those who are behind it. Those who are ahead of the curve are more likely to be driven by achieving market leadership and disrupting their core business as motivation for digital transformation. By contrast, behind-the-curve companies are more inward-facing in their focus and are more likely to cite cost pressure and regulatory compliance as drivers leading them to undertake digital initiatives.

The report also reveals the organisational practices that have helped some companies get ahead of the digital transformation curve. For example, they are more likely than behind-the-curve companies to have set up a separate unit with responsibility for digital business and have a chief digital officer leading their transformation initiatives.

However, these are transitional measures, the report concludes. “The ultimate aim of any digital transformation initiative should be the ability for the whole organisation to transform constantly in response to digital innovation,” says Pete Swabey, senior editor at The Economist Intelligence Unit.

The growing sophistication of digital consumer technologies, such as smartphones and social media platforms, means that customers have high expectations for their digital interaction with businesses. Half of all survey respondents identify evolving customer expectations as a key driver of their digital transformation initiatives.

When asked which capabilities they hope to improve through digital transformation, 57% of respondents identify the ability to support real-time transactions, more than any other capability. This was especially common among companies that are ahead of the curve. The ability to provide employees with real-time data on any device, and executives with real-time analytics, was also a common objective. This highlights the importance of information management capabilities in digital transformation—described by one executive interviewed for this report as “a foundational underlier” for any such initiative.

Over half of the survey respondents (52%) report that in their organisation, the chief information officer or chief technology officer holds a primary leadership role in digital transformation. However, this is rarely a one-person job, and at the majority of companies at least two members of senior management have a primary leadership role in digital transformation, reflecting its multi-disciplinary nature. Having a chief digital officer (CDO)—an executive with a specific remit for digital—who takes the lead in digital transformation is more prevalent among companies that are ahead of the curve. However, the role of the CDO is viewed as transitional: digital transformation may benefit from a dedicated leader at the beginning, but the need may fade as digital capabilities are established across the entire organisation.

The C-suite role most commonly identified as having primary leadership of digital transformation is the chief information officer or the chief technology officer, as selected by 52% of respondents. This is followed by the CEO, with 37%, and the chief operating officer (28%).

Only 21%  of  respondents  report  that  a  chief digital officer leads their transformation initiatives. However, CDOs leading digital transformation are significantly more common among ahead-of-the-curve companies.

The top driver of digital transformation for the whole sample is “evolving customer needs and expectations”, as indicated by 50% of respondents. This reflects the high standard of digital experiences that have been set by online giants such as Amazon, Google and Facebook, and against which all companies are now judged.

“The number-one driver [for digital transformation] is customer needs and behaviour,” confirms Andrew Brem, chief digital officer at Aviva, a UK insurance provider. “Today, customers want a simple, engaging, easy way to deal with their insurance company. They want to interact whenever and however they want and need to, and we, as a digital company, need to be able to answer those needs.”

For Aviva, this means building on some “pockets of excellence” within the organisation, such as its MyAviva app that allows companies to manage all their policies in one place, to provide a consistent digital experience across all channels, according to Mr Brem.

Read the full report at www.digitalevolution.eiu.com.