How digital transformation has fast-tracked in two years

01 February 2021 4 min. read
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The number of organisations with the capabilities to implement digital transformation has doubled in just two years – spurred on by the pandemic and its repercussions. A Capgemini report maps out the rapid progress in the digital scene.

Capgemini surveyed 1,000 executives from organisations with revenues over $1 billion – spanning ten key sectors – aiming to gauge digital maturity in the business environment. The study ran in the middle of last year, marking a status update on a similar Capgemini survey from 2018.

And a lot has changed – most notably the share of organisations that claim to have digital and leadership capabilities to drive a successful transformation. Nearly two-thirds of businesses are now ready, which is roughly twice the number from 2018. Several factors are at play here, although the global pandemic is not surprisingly the most impactful one.

Growth in digital capabilities: 2018 to 2020

The transition to virtual working under lockdown has been the immediate driving force, posing a basic need for business continuity. Enabling this transition in a safe and efficient manner already accelerated the digital journey for many. Then there is the cut-throat competitiveness of a post-pandemic market, where the more advanced, agile and digitalised business is likely to win out.

“There is no doubt that the pandemic has been a major catalyst for organisations to pay more attention to their digital transformations. In fact, it has forced many companies to reinvent themselves and accelerate their transformation,” noted Claudia Crummenerl, Managing Director, People & Organisation at Capgemini Invent.

Per the report, nearly 70% of organisations confirm that Covid-19 boosted their transformation journey. Momentum has spread through all sectors, albeit some more than others. Retail and telecom lead the way, with over 70% of organisations reporting digital readiness.

Sector-wise distribution of digital capabilities

Automotive and banking are not far behind – the latter being pushed as a result of dwindling profitability. Insurance, utilities and consumer products have all seen a spike in readiness, but not nearly as significant as other industries.

The talent gap?

And its not just quantitative progress. Businesses are improving the quality of their transformation as well. Back in 2018, many organisations were investing in the right technology, but their talent and culture was lacking digital readiness. Indeed, a digital-first culture is a core strategy for successful transformation, as is including employees in the growth journey. 

Come 2020, many have acknowledged this gap. Nearly 70% of organisations now focus on building a digital culture, while over 60% make employees partners in their transformation journey. Talent management is also growing in importance, with a similar share now enjoying the capacity to make the most of digital talent.

Talent & culture initiatives take precedent

The only gap remains in building this talent. Faced with a digital skills deficit, businesses have two options: recruit or train. With current market conditions, recruitment is a less desirable option, and there is a deficit of digital talent in the labour market anyway. Upskilling is a good alternative, although most businesses still lack the capacity for this.

Less than half of all organisations have the learning infrastructure for upskilling. And while these hard digital skills suffer a lack of capacity, key soft skills such as emotional intelligence, adaptability and collaboration – essential for an innovative environment – suffer a lack of intent. Less than half of businesses claim to focus on building soft skills.

According to the researchers, this extra mile is what separates leaders in digital transformation from other businesses. As agility, flexibility and customer focus become cornerstones of the new normal, this gap is likely to come into full focus. While the progress is phenomenal, the way forward is to take a more integral approach to digital transformation.

“By reinventing the employee experience and ways of working, embedding purpose into the operating model, truly becoming a data-powered enterprise, and scaling new business models beyond the pilot stage, organisations can attain digital maturity and demonstrate the resilience required to adapt to future uncertainties,” concluded Crummenerl.