by Divina Paredes

NZ firms have less than two years to adopt digital before disruption hits

May 21, 2019

New research highlights the urgency of digital transformation in New Zealand, with four in 10 organisations fearful that their enterprises may be materially disrupted.

The study, Beyond Disruption: New Zealand organisations race to digital transformation success, provides new insights into the digital challenges and opportunities for 158 New Zealand organisations.

The research, prepared by DXC Technology and technology analyst firm Telsyte, found that digital disruption is already impacting two-thirds of New Zealand organisations that participated in the survey mdash; and three quarters of all respondents currently have a digital strategy in place, indicating that awareness of disruption is high.

“New Zealand businesses leaders have a sense of urgency around digital transformation, with 60 per cent understanding they have less than two years to integrate a digital initiative before the full impact of digital disruption hits. This sense of urgency is translating into action as New Zealand organisations take a proactive approach to disruption,” says John Mazenier, country leader for New Zealand, DXC Technology.

The fear of “Uberisation” – or disruption by a new digital player – is widespread, as almost two in five (39 per cent) respondents believe their organisation has the potential to be adversely affected.

The study found New Zealand organisations highly value having a competitive digital strategy, with 41 per cent of respondents placing importance on ‘leapfrogging’ their competitors. The term refers to producing radical innovations that allow an organisation to overtake competitors.

As a result of digital disruption and transformation, as many as 20 per cent of staff roles will be retrained and a further 13 per cent will be newly created to meet the changing demand.

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New Zealand business culture needs to be more accepting of the benefits of ‘fast failure’ and use it as part of an overall digital strategyJohn Mazenier, DXC Technology

“It is pleasing to see that more jobs will be created in New Zealand to meet the growth of digital transformation, with over a fifth (22 per cent) of organisations creating artificial intelligence (AI) and technology-related roles in the next 12 months,” says Mazenier.

“Importantly, the majority (88 per cent) of New Zealand organisations see potential in the collaboration between humans and AI to complete organisational tasks, indicating both a strong understanding and early adoption of this growing technology disruption.”

Larger organisations are also more aware of the impact of digital disruption on their industry, requiring technology recruitment and agile training to be more adaptive to the dynamic digital marketplace.

An organisation-wide approach to digital transformation is high on the agenda for New Zealand organisations with 90 per cent of those currently with business-unit or siloed strategies looking to transition to a holistic strategy.

As businesses transition to an organisation-wide strategy, the CEO becomes critical to effectively driving cultural change, the report states. However, less than half of New Zealand organisations currently have a culture of change or innovation.

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The CIO often remains the lead of digital strategy in New Zealand organisations, which is good for strategy development but this needs to change, the report states.

The survey found one in three CEOs in responding organisations are now involved in leading digital transformation strategy, highlighting the importance of top-level leadership when it comes to driving digital strategy.

The report says this needs to dramatically increase “if organisations are to embrace the future and build businesses that both withstand digital disruption and also develop strategies to become a disrupter.”

Curbing shadow IT

Shadow IT remains highly prevalent in New Zealand organisations, with 80 per cent of respondents’ non-IT business units spending on IT-related products and services.

“It is imperative that businesses shift to an organisation-wide approach to digital,” the report states. “This will alleviate wastage, increase technology consistency and ensure more successful business outcomes.”

The respondents also believe placing IT as the strategic driver of cross-functional collaborative projects with non-IT business units will help counter the challenges brought by shadow IT.

Overall, apprehension towards digital transformation is lifting – yet, cultural concerns about failure remain within the New Zealand business community.

The study revealed that one in six technology and business initiatives end up in failure for New Zealand organisations, with over a third (35 per cent) of these failures related to technical issues.

“This is creating a cautious backdrop for many organisations undergoing or considering digital transformation,” it states.

At the same time, the report notes that if contained within pilot projects, or in models such as agile development, a one-in-six failure rate is not necessarily bad, and can encourage a ‘fast fail’ mentality to avoid costly monolithic projects and unproven experiments.

“New Zealand business culture needs to be more accepting of the benefits of ‘fast failure’ and use it as part of an overall digital strategy,” says Mazenier.

“This translates into the ability to try something quickly and discontinue it if it is not delivering on the promise, and that can mean the difference between its ultimate success and failure.”

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