New Research: Businesses face a 'digital ceiling' in their transformation progress

Businesses globally face a "digital ceiling" when it comes to digital transformation, according to new research from Infosys Knowledge Institute (IKI), the thought leadership and research arm of Infosys, a global leader in next-generation digital services and consulting. The study reveals that businesses must change their mindsets to achieve sophisticated levels of digital maturity.

Infosys Digital Radar 2020 assessed the digital transformation efforts of companies on a Digital Maturity Index and found year-over-year progress in basic areas, such as digital initiatives to improve a company's efficiency. However, most companies come up against a "digital ceiling" when trying to achieve the most advanced levels of maturity.

The report, which surveyed over 1,000 executives globally, ranked the most digitally advanced companies as "Visionaries," followed by "Explorers," and then "Watchers."

"Transformation really connotes specific projects—we’re measuring digital maturity in a more broad fashion," said Jeff Kavanaugh, Infosys vice president and global head of the Infosys Knowledge Institute.  "The survey assesses how companies have progressed in terms of 22 specific initiatives. These are the same initiatives we looked at one year ago in the initial Digital Radar 2019 report. On a year-over-year basis, companies made good progress from basic to intermediate levels of digital maturity, and then they hit a ceiling, which we call the 'digital ceiling.'"

The goal with this research was to gauge how large enterprises are advancing in terms of digital maturity, said Kavanaugh, explaining that the company wanted to address the question of how large organizations are keeping pace with accelerating changes in business and technology. "The survey showed that companies have a difficult challenge breaking through to the most advanced levels of digital maturity. This 'digital ceiling' is the level where companies see smaller benefits from technology transformation initiatives."

Hitting the digital ceiling

According to the research, companies know how to achieve moderate transformation success, with an 18% increase in companies progressing this year from the lowest tier of Watchers to the middle Explorer tier. However, Explorers struggled to move into the top Visionary cluster, with the top tier remaining the same, indicating a "digital ceiling" to transformation efforts. 

The Visionary cluster remains unchanged despite companies reporting fewer barriers to digital transformation than last year. Human, rather than technological, barriers are now the most persistent, with the two of the top hurdles being the lack of talent or skills (34%) and a risk-averse corporate culture (35%).

"Companies hit the digital ceiling once they’ve mastered basic levels of digital competency," said Kavanaugh. "Imagine moving from paper records to spreadsheets. Large companies have made that change. Now imagine shifting from the spreadsheet residing on one bookkeeper’s computer to a world where data is constantly updated and made available in a usable format to all relevant users. That’s a different and much tougher challenge, and it’s where companies bump up against this digital ceiling."

The need to empower employees

Kavanaugh said the 2020 research shows that companies using a traditional efficiency plus customer mindset will not break the digital ceiling even if they do progress on digital initiatives. New programs will have diminishing returns unless companies keep the human element at the core of the enterprise strategy and operating model. The research found the most successful companies are motivated by truly empowering employees, in addition to the customer centricity that the majority of companies are now pursuing, he explained. "Further, top performers view change in a recurring loop rather than a linear process. This broader and circular mindset across talent, products, and data enables a virtuous cycle in the company. The aspirational result is a more flexible, responsive—even living—enterprise that is constantly sensing and responding, learning and improving."