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

According to Kavanaugh, technology and business changes are continuing to accelerate, and large businesses can’t keep up if they rely on traditional (long, linear) development models. "The goals set 6 months ago at the start of a transformation process aren’t likely to remain static during that development process," he said.  "Switching to quick development cycles and applying a broader mindset with a focus on employee, customer and user experience are the things that distinguish the top performers from the middle of the pack."

Breaking through the digital ceiling

The Infosys research found that top performers break through the digital ceiling because they think differently.

First, successful companies focus strongly on people, using digital transformation to make improvements centered on customers and employees. Most companies (68%) across the spectrum stated operational efficiency and increased productivity as a main transformation objective. But successful companies in the Visionary cluster are particularly motivated to make improvements for their employees. Nearly half of Visionaries describe "empowering employees" as a major business objective for transformation, compared with less than one third of Explorers and less than one fifth of Watchers.

Similarly, Visionaries have an increased focus on customer centered initiatives, being significantly more likely than other clusters to undertake transformation to improve customer experiences and engagement and in order to respond more quickly to customer needs.

Second, successful companies have a different mindset when it comes to transformation processes. Traditional linear transformations result in long transformation timelines, meaning a company's improvements are out of date by the time the process is complete. Instead, top performers demonstrate a cyclical mindset, implementing recurring rapid feedback loops to accelerate transformation and keep updates relevant. The Visionary cluster is far ahead of others in digital initiatives tied to quick cycles: 75% operate at scale in Agile and DevOps, compared with an overall average of 34% for the entire survey group.

Tech barriers are overestimated

According to the research, businesses overestimate tech barriers and underestimate the importance of a company's mindset. The importance of culture and a cyclical transformation mindset to breaking through the digital ceiling were underestimated by businesses last year.

In the 2019 Digital Radar report, companies were asked to predict the biggest barriers to their transformation progress for the following year. This year's Infosys Digital Radar 2020 compares these predictions to the actual challenges businesses faced in 2019.

Businesses reported dramatic declines in the impact that technological barriers have on their transformation progress, including inability to experiment quickly (down 49%); insufficient budget (down 40%); and cybersecurity challenges (down 40%).

However, businesses made much less progress against cultural barriers, including lack of change management capabilities (down 7%) and lack of talent (down 6%).

Industries leading the way

In terms of the industries or verticals that are succeeding more than others, Kavanaugh said technology and telecommunications lead the way overall. But technology, retail, and manufacturing showed the strongest progress toward the digital initiatives that focus on empowering employees and improving customer experiences.

"Companies should focus on technology advances that empower employees and enable them to bring new ideas to the table," said Kavanaugh. "Implementing technology that allows for customization and improved experience for all stakeholders will also help big businesses break through the digital ceiling."

In addition, Kavanaugh noted, "Companies that put systems in place that allow them to behave like living enterprises (sense and respond, learn and adjust) will have the best change of staying current, and perhaps even anticipating these changes."

A full copy of Infosys Digital Radar 2020, is available at www.infosys.com/navigate-your-next/research/digital-radar-report.html.