Digital strategy was noticeably absent three years ago, but is now an integral part of everyday boardroom discussions in New Zealand, notes Greg Doone, digital strategy and data leader at PwC New Zealand.
“It is now very common for a board or an executive team member to mention a recent trip to Silicon Valley or another technology hotspot to expand their digital outlook,” says Doone.
“Overall, there is a renewed focus by New Zealand businesses on digital strategy and those investments are starting to pay dividends,” says Doone as he focuses on the New Zealand results of PwC’s annual Digital IQ Survey.
The study, now on its seventh year, assesses how well organisations understand the value of technology and weave it into the business.
This year’s the survey interviewed nearly 2000 business and IT executives across 51 countries. New Zealand, which had 50 respondents, was included in the survey for the first time this year.
“Most New Zealand businesses are in a transition phase,” reports PwC. “They have produced digital strategies over the past seven years with varying success. The most successful ones tend towards action and ownership at a senior level, or have a strong digital maverick who can lead change.”
Greg Doone, PwC: While virtually all companies say they are investing more in digital technology, the top-performing organisations understand how to best apply the technology so that it becomes a mindset
“New Zealand organisations have had a late start compared to global leaders but they are catching up quickly,” notes Doone.
“There is a desire and a drive to embrace digital thinking, as well as a recognition that New Zealand companies need to invest more in this thinking to keep up with organisations around the world – and customer expectations here at home.
“While virtually all companies say they are investing more in digital technology, the top-performing organisations understand how to best apply the technology so that it becomes a mindset,” says Doone.
“Increasingly, the leaders are recognising that digital is far more than technology. It is driving fundamental change in consumer and staff behaviour and this, in turn, has cultural and work practice implications beyond the technology itself.”
Companies that effectively use business data, investments are made for competitive advantage, and that have a multi-year digital roadmap, for example, are the ones who are maximising their investments, says Doone.
The survey finds that companies with the highest scores across the following 10 areas are 50 per cent more likely to achieve rapid revenue growth and twice as likely to achieve rapid profit growth when compared to the remaining Digital IQ respondents:
1. Executives responsible for digital are involved in setting high-level business strategy.
2. Business-aligned digital strategy is agreed upon and shared at the C-level.
3. Organisation actively engages with external sources to gather new ideas for applying emerging technologies.
4. Digital enterprise investments are made primarily for competitive advantage.
5. Organisation effectively utilise all the data we capture to drive business value.
6. Organisation has a single, multi-year digital enterprise roadmap that includes business capabilities and processes as well as digital and IT components.
7. The CEO is a champion for digital.
8. Business and digital strategy are well communicated enterprise-wide.
9. The organisation proactively evaluates and plans for security and privacy risks in digital enterprise projects.
10. The organisation consistently measures outcomes from our digital technology investments.
Towards a digital mindset
PwC says there is “aggressive investment” across the globe on digital technologies.
Nearly one-third of global respondents (31 per cent) say their companies are investing more than 15 per cent of revenue into technology investments that span all areas of the business, not just IT.
This is considerably higher than the single-digit spending forecasts that technology analysts typically make.
In New Zealand, 34 per cent of organisations say they are investing 11 to 15 per cent of revenue into technology investments. However, the biggest group (44 per cent) of New Zealand organisations is spending 10 per cent of revenue or less.
Two-thirds of respondents globally rate their companies as having a strong Digital IQ, slightly up from 64 per cent last year.
Executives in Asia (64 per cent), Scandinavia (59 per cent), and Western Europe (54 per cent) are less confident. In New Zealand, the verdict is also mixed with only 54 per cent rating their Digital IQ as strong, at a 70 or above.
“Collectively, these signals tell us that businesses have raised the stakes when it comes to digital. There’s plenty of talk about disruption, and what it takes to challenge the status quo. But, in fact, that’s not where companies have put their time or money,” according to report.
Just 1 per cent of executives globally said their number-one expectation for digital was to disrupt their own or other industries, while no respondents in New Zealand said they expect digital investments to enable disruption.
Instead, global respondents are seeking more immediate returns: 45 per cent say the top priority is growing revenue; 25 per cent are expecting better customer experiences; and 12 per cent expect to see an increase in profits. “In short, digital is a way to grow today’s business, not necessarily prepare for tomorrow,” says PwC.
Locally, PwC says it has taken some time for organisations to make digital a priority.
“But there have been some meaningful advances over the past couple of years. How well digital thinking is integrated into business strategy is critical for the success of New Zealand organisations, and top executives are now realising this. There are encouraging signs that organisations are investing more, and becoming smarter, in digital. These organisations now want to see a strong connection between digital investments and business objectives.”
PwC’s 5 steps to building your organisation’s Digital IQ
Assess your strategy and roadmap. Start by asking yourself how you and your executive team define your organisation in the digital age. Is it truly transformational? Is it consumer centred? Will it enable the agility you need to adapt? Will you be able to move at the speed of your new, digitally native competitors? Will it help you win?
Understand where disruption and future competitors will emerge. Understand the key areas where disruption will come from, such as dis-intermediation. Then, try game storming. It is a simple, but insightful, exercise where you set up teams to disrupt and defend your business. What would you do if you were given $100 million to disrupt your industry? You will be surprised by the outcome.
Start by starting. Find a problem, rapidly prototype and test with customers. Next week do it all again. Changed behaviour starts with action and digital action is a lot easier than most fear.
Put the customer, not cost savings, at the heart of your strategy. World-class organisations don’t compete on price, products, or features. They compete on experience. Great experiences are the ultimate drivers of preference, loyalty, advocacy and – ultimately – your future business.
Expand your ecosystems. You can’t excel at digital growth, disrupt markets, or keep up with tech talent alone. Digital innovation is emerging from places your organisation doesn’t likely frequent, such as startup incubators, university labs and open source projects.
Source: 2015 Global Digital IQ Survey
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