Thursday, 2 November 2017

40 percent of Irish Businesses Struggle to Deliver on Digital

New research, published today by Fujitsu Ireland, investigating how Irish decision makers within mid-to large sized businesses across public sector, financial services, retail and manufacturing approach digital transformation has shown that there is a broad openness to the adoption of new technology, but identifies skills shortages and the existence of silos within organisations as barriers to success. Of the Irish business leaders surveyed for Fujitsu’s new report, The Digital Transformation PACT, four in ten (40%) have cancelled a project in the last two years at an average cost of €137,625 while one in five (20%) businesses have experienced a failed project costing an average of €831,500. This amounts to a lower failure rate than the global average but incurs a significantly higher individual cost per failed project than the global average of €555,000. 70 percent of Irish businesses surveyed say that their customers expect them to be more digital, while 80 percent believe that they are behind their competitors in this regard.

Realising digital transformation is about much more than technology alone and for the majority of Irish businesses, actions, including strategy, along with skills are the most important factors in driving digital transformation. The research commissioned by Fujitsu examines how businesses are performing against the four strategic elements required to digitally transform: People, Actions, Collaboration and Technology (PACT). Organisations recognise the importance of digital transformation with half of Irish businesses (50%) having already implemented transformation projects, while a further 30% are at testing stage in terms of digital projects. However, businesses continue to face challenges across the four pillars of PACT. Of the Irish business leaders surveyed 60% stated that customers are most influential in driving their digital transformation followed by competitors (30%).

“Technology can be truly transformative, but making the most of digital requires more than the latest tools,” said Tony O’Malley, CEO Fujitsu Ireland. “While Irish businesses recognise the need to adopt new technologies, there are still significant issues including costs and skills deficits, to be overcome by organisations as they seek to adapt to this changing environment. Many Irish organisations are now incorporating digital strategies into their overarching business strategies; however to realise their digital vision, it’s crucial that businesses have the right breadth of skills, processes, partnerships and technology in place. As the business landscape continues to evolve, business leaders are aware that failure to adapt will result in being left behind as adaptive competitors reap the rewards of their agility.”

When considering their approach to the people involved in digital transformation, the vast majority of Irish business leaders in this survey (95%) are taking steps to increase their access to digital expertise, with 60 percent admitting there is a clear lack of digital skills within their organization. 95% of Irish organisations surveyed are working to increase the depth of digital skills available within their organisations. Positively for Irish organisations, the primary measure for achieving this, is upskilling existing staff. Looking to the future, skills will continue to be a key business issue; 90 percent say upskilling staff will be vital to their organisation’s success in the next three years, while 85 percent believe artificial intelligence will transform the skills needed by 2020 and with that in mind, 85 percent also have a skills strategy lasting beyond the next twelve months.

Looking at actions, and the processes and behaviours needed to make digital transformation work, three-quarters (75%) of Irish business leaders say their organisation has a clearly defined digital strategy, while 45 percent of Irish businesses are not confident that the rest of the business knows what it is. However, three quarters globally (74%) say that projects are often undertaken that aren’t linked to the overarching business strategy, while just 40 percent say shadow digital projects, so projects pursued without explicit organisational approval, are a serious problem. In an Irish context, actions are seen as being more important factors than people in PACT, however, in spite of this, this isn’t holding organisations back from increasing the breadth of their digital skillsets.

Business leaders in Ireland are taking positive steps in collaboration, with most businesses undertaking or planning to undertake co-creation projects (65%), with partners including technology experts (62%). This is followed with start-ups (31%) and other organisations from within their sectors (31%). Surprisingly, 75 percent would even be willing to share sensitive information as part of these co-creation projects; however, 55 percent say that a lack of success within a quick timeframe would quickly put an end to their strategic partnerships.

When it comes to technology, Irish business leaders are planning to implement a wide range of systems; in the next 12 months, a vast majority are planning to introduce artificial intelligence systems (70%), with cyber security solutions (40%) and cloud computing (40%) on a par at 40 percent. Irish business leaders are aware of the disruptive impact of technological change, as 65 percent say the ability to change will be crucial to their survival in the next five years. However, 65 percent are concerned about their organisation’s capacity to adapt to technologies like artificial intelligence. Despite all of this, only 45 percent believe that digital transformation in their sector will cause their organisation to lose customers relative to competitors; however, 70 percent admit that it is impossible to guess who their organisation will compete with in ten years.

O’Malley continued, “Adapting to changed business environments requires a balanced approach. Simply adopting a strategy and implementing a process, is not enough without the requisite skillset and buy-in from within your organisation. It is no longer enough just to have the best applications and devices; without talented and capable people to use them, they are meaningless. You may have the brightest and most progressive people, but they will flounder in a culture that stifles innovation. No business – no matter how big, how influential or powerful – can hope to stand alone and succeed in the world of tomorrow. Only by bringing equilibrium to those four vital ingredients - People, Actions, Collaboration and Technology - can organisations thrive in this digital era.”