Cultural and structural challenges are the greatest impediment to digital transformation. These intrinsically linked barriers arethe result of insufficient or ineffective integration, alignment and vision. Gaps in capabilities make up the next three barriers.
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Digital Pulse 2018: Barriers to Transformation
Brief Summary of Respondents
Strategic Impediments to Digital Transformation
Skill & Capability Gaps
Organizations that are able to coordinate crossfunctionally in an effective manner remain in the minority.
Though more than 80% of executives reported that the collection and analysis of customer and operational data are of criticalimportance (and nearly 70% stated that AI is as well), many shared that their organizations are not equipped with the people,capabilities or infrastructure to successfully enable these initiatives. As a result, nearly a quarter of respondents reported thattheir organizations are unable to make use of data as part of their broader digital agenda.
Senior-most leaders consider key barriers less significant than more junior executives do.
Though structural, cultural and capability barriers resonate across industries, individual sectors are reacting to disruption atvaried rates and are faced with unique challenges.
An Absence of Alignment & Coordination
Percentage of respondents who disagree or strongly disagree with thefollowing statements
Percentage of respondents who rate these factors as very or extremely significantbarriers to effective digital business in their organization
Percentage of respondents who rate these as very or extremely significant barriers toeffective digital business
Job title Industry
The View from the C-Suite
Sector-Specific Barriers
The Path Forward
C-Suite
SVP/EVP
VP/Director
Organizational structure andculture are the chicken and eggof business transformation andtherefore need to be considered
with equal priority.
Executives in every industry agreethat CEO, board and C-Suite
buy-in is critical for the successof transformation efforts.
It is important that these leadersare realistic about the challenges
facing their organizations.
As businesses across industriesincreasingly embrace disruption,it is important they react to their
sector’s unique challenges.
Considerations
� Is your organization’s culture conduciveto the agile work environment whichtech enablement both requires anddrives?
� Do you have the leadership you need tocreate the technical infrastructure thatenables change?
� Do you have leaders within individualfunctions who are digitally literate ortechnically savvy? Is necessarycrossfunctional alignment supportedboth culturally and technically?
Considerations Considerations
� How can you break down functional silosto ensure critical collaboration in thedevelopment and execution of the digitalvision and strategy?
� Are your functional leaders aligned alonga unified, forward-looking vision?
� What measures has your organizationtaken to improve the digital and techliteracy of your senior-most leadership?
� Has your organization thought througha CEO/board succession plan thatconsiders the evolving nature of yourindustry and business?
People Technical ExpertiseData
45%
23%
32%C-Suite Executive
Senior Executive(SVP, EVP, etc.)
Junior Executive(VP, Executive Director, etc.)
Company size Location
Consumer
1–249
250–999 1,000–4,999 5,000–10,000 10,000+
Industrial Technology
Financial Healthcare Nonprofit
26%
24%
22% 18%
17% 11% 6%
15%10%
33%
18%11%
Asia Pacific
8%
Latin America& Caribbean
2%
8%34%
Africa &Middle East
Eastern &Northern EuropeWestern
Europe37%
NorthAmerica
55%
52%
47%
51%
45%
44%
42%
37%
35%
35%
31%
27%
23%
48%
49%
Organizational Inertia
Lack of Integrated Digital Expertise/Skills
Lack of Understanding of Emerging Technologies
Ineffective Crossfunctional Collaboration
Insufficient Data Infrastructure
Overall Resistance to Change
Lack of Funding/Budget
Not Seen as Important byLeadership Team
No Single Head of Digital
Information Security Concerns
Regulatory Concerns
CEO Does Not Understand the Barriersto Creating a Digital Business
CEO Does Not Recognize thePotential of Digital
71%of respondents statedthat their organization’sdigital capabilities areonly moderately (or less)aligned.
31%of respondents believetheir organization is structuredeffectively to capitalize on thenew opportunities presented bydigital.
42%of respondents think their organization has the right culture to achieve their digital strategy.
Absence of a Coordinated Digital Strategy
Insufficient Technology Investments
Sufficient Third-Party Data toRealize New Opportunities
Right People toExecute Digital Strategy
Utilize Data toRealize Strategic Capabilities
Utilize Data toRealize Analytical Capabilities
Right People to Define Digital Strategy
Sufficient Proprietary Customer Data
Sufficient Operational/Financial Data
Utilize Data to RealizeTechnology/Systems Capabilities
Sufficient Product Data
29%
28%
23%
23%
22%
22%
21%
20%
15%
IneffectiveCrossfunctional
Collaboration
OverallOrganizationalResistance to
Change
Insufficient DataInfrastructure,Collection and
Analysis
OrganizationalInertia
60%
40%
44%
48%
52%
56%
Percentage of respondents who rate these factorsas very or extremely significant barriers to effective digital business
Financial Services
Global
Technology
Global48%
31%
45%
35%
RegulatoryConcerns
Information Security Concerns
Financial Services: Security Conscious
35%
6%
Percentage of respondents who rate these factorsas very or extremely significant barriers to effective digital business
57%51%
45%52%
IneffectiveCrossfunctional
Collaboration
Lack of IntegratedDigital Expertise
Within Business Units
Nonprofit
Global
Consumer
Global
57%
49% 49%42%
Insufficient Technology Investments
Lack of Funding
Industrial &Natural Resources
Global
Healthcare
Global
34%28% 27%
22% 20%23% 25%29%
Sufficient Proprietary
Customer Data
Sufficient Third-Party
Data
Able to MakeUse of Data for Analysis
Able to Make Use of Data for SystemsCapabilities
46%
55% 55%52% 49%48%
Lack ofIntegrated
Digital Expertise
OrganizationalInertia
Absence of a Coordinated
Digital Strategy
Technology: Isolated Skill Sets
Average percentage of respondents who rate factors as very or extremely significant barriers across all factors
Nonprofit: Optimistic or Unprepared?Percentage of respondents who disagree or strongly disagree that their organization has…
Consumer: Investment Gap
Percentage of respondents who disagree or strongly disagree that their organization has…
Industrial: Missed Data OpportunityPercentage of respondents who rate these factors as very or extremely significant barriers to effectivedigital business
Healthcare: Motivated but Uncoordinated
35%
41%
In the past, digital transformation focused on adding new digital capabilities to help clients capitalize on mobile, social and big data. Today, technology-enabled disruption is compelling companies in all industries to think and act more like technology companies. Incremental, front-end changes are no longer enough—the new business ecosystem demands the rethinking of most companies’ strategies from end to end. A critical factor in tech enablement is a simultaneous emphasis on structure, culture and evolved capabilities. This trifecta requires a fresh look at collaboration, alignment, infrastructure and talent. In the fourth annual Digital Pulse, Russell Reynolds Associates surveyed 1,300+ senior executives to learn how digital is transforming talent and leadership needs in organizations around the world.
Cultural Leadership/Resources Structural External Risk