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Aiming higher in the digital space
How modern IT can take companies beyond efficiency gains toward holistic transformation
Corporate excitement about the advances made possible by rapidly developing information technology (IT) is evident. Yet it is not always easy to distinguish the hype from the reality. What is often missing is hard data showing what companies are doing to maximize the value they can derive from these new technologies.
Roland Berger has taken a deep dive into the corporate world's responses to and expectations for the digital transformation, zooming in on STOXX Europe 600 and S&P 500 companies. The aim is to explore how firms themselves are (or are not) rising to the challenge of modern IT, and to help them find answers to the many questions they still have: What do they actually need in terms of IT resources, and what outcomes can they expect? What can they afford to invest? How should they recruit and retain the talent they need? And what about overcoming inherited organizational obstacles?
What top players on both sides of the Atlantic are already doing
The study is both broad – spanning more than a thousand of the premier listed companies in the US and Europe – and deep. It drills down into how and why players in different industries adopt very different approaches, and looks at how various IT roles have important parts to play. The study initially focuses on what companies are doing to secure the right talent, the challenges they face in recruitment, and how they can build a workforce that will take them forward. Moving on, it then addresses how organizational structures must change to unleash the full benefit of the modern systems now being put in place.
With highly skilled labor in increasingly short supply, the issue of recruiting and retaining the right people takes on central significance as companies attempt to advance their IT capabilities. However, as the study points out, who the right people are will depend on the company's current IT set-up, what industry the firm operates in and what it hopes to achieve from technologies such as cloud technology, data analytics, automation, virtual and augmented reality (VR and AR) and artificial intelligence (AI).
The study thus stakes out the modern IT capabilities already possessed by companies across different industries and traces how these capabilities are being ramped up (see figure above). It discusses the reasons why frontrunning industries are taking on fewer new hires, whereas traditional followers in less high-tech sectors are moving fast to enlarge their IT footprint in specific areas. The changing significance of best-cost countries is explained in light of the possibilities opened up by remote working. Also, potentially critical divergence is identified in North American versus European companies' view of the importance of artificial intelligence.
Building an agile organizational framework
Companies hiring new recruits, strengthening their IT units and nurturing cutting-edge skills also need a conducive environment: They need to establish structures that will maximize the benefit to themselves and the wider organization.
There are a number of crucial developments in the management and organization of IT that the study picks up on. As corporate IT evolves from an operations-focused entity to a tool of strategic transformation, companies are, for example, discovering the need to anchor IT at board level (see figure above). The study also finds evidence of a convergence of previously separate digital mandates to create the new role of Chief Digital Transformation Officer (CDTO). Empowered to drive systematic and enterprise-wide digital transformation, this role carries wide-ranging responsibilities and demands a unique professional profile that is spelled out in the unabridged study.
Another key development, already addressed in our Digital dilemma publication, is the need to integrate modern IT in every aspect of a company's business. Market players can no longer afford to see IT as an add-on whose only purpose is to cut costs and make everything at the other departments run smoothly and efficiently. To quote the study: "The company's C-level management must understand IT as an enabler, a challenger, an implementation partner that is closely intertwined with every aspect of the business." From standardization to automation and from innovation to complete transformation, the five practical recommendations that conclude the study highlight the importance of this statement: Only if IT and business become integral parts of a functioning whole can companies unleash the full potential of advanced IT and bring it to fruition.
To learn more about how your company can begin building the skills, strengths and structures it will need to lead the way in digital transformation – or simply to be a smart follower and not squander the potential of new technologies – download the full study below. We welcome your comments, feedback and suggestions and would be happy to talk to you about any of the issues raised in the study.
We would like to thank Noel Gonseth, Jonas Adams and Andreas Ruppen for their contribution to this study.
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