Digital ambitions are more restrained than they were a year or two ago, a new report finds.
In 2020, more than one-third of companies (36%) expected digital to account for 75% or more of their revenue within three years, according to the Closing the Acceleration Gap: Toward Sustainable Digital Transformation report by Workday. By 2021, only 13% of organizations said the same — a figure that aligns with pre-pandemic digital aspirations (12% in 2019).
Fewer businesses are adopting a “fail fast” mentality (53% in 2021, 77% in 2020), which suggests the culture of experimentation that gathered during the pandemic has lost momentum.
The report focuses on three critical business functions: Finance, human resources and IT. It examines the impacts of the global pandemic on organizations’ digital transformation efforts and the biggest barriers to success.
The findings reveal that while finance, HR and IT leaders recognize the importance of digital transformation, 55% said their digital strategy is always or often outpaced by the demands of the business. As a result, the digital acceleration gap is widening, where business needs are changing faster than the technology, processes and culture required to keep pace.
In response, leaders are adopting a more sustained approach to transformation by prioritizing access to data and employee experience.
An acceleration gap in the spotlight
As the demands of a business environment in flux continue to evolve, culture, technology, structure and processes are struggling to march to the same beat, the Workday report said. An acceleration gap between the pace of change driven by new opportunity and the ability of an organization to capitalize on it has opened.
Closing it will be imperative to corporate survival. Where the pace of digital transformation is slowing, a key factor is organizational culture — and for some, burnout and the desire for a more sustainable pace. Where it is accelerating, the quality and accessibility of data and workforce skills are critical keys to success.
To help close the acceleration gap:
- Finance leaders are focusing on unified, fast data. More than half of finance leaders (51%) said deploying new technologies that can help integrate data between disparate systems and break down internal data silos is one of the key elements in accelerating planning, execution and analysis cycles. Yet 61% said that technology that unifies financial, people and operational data is their most pressing need, with 64% admitting that it takes weeks — or more — to get results at the end of a reporting period.
- HR leaders are focusing on employee experience and skills development. Amid the Great Resignation, organizations increasingly focused on skills to help improve recruiting, retention and overall employee experiences. According to the survey, 25% of HR leaders ranked resilience and adaptability first among skills that will ensure teams can continuously meet business demands as they evolve. Further, 50% of HR leaders said positive employee experiences are most important to accelerating transformation across the business.
- IT leaders are focusing on breaking down silos to drive automation. While CIOs oversee data-fueled transformation, many are overwhelmed by the pace of change, as legacy constraints and data silos are top barriers to digital transformation. Only 42% of IT leaders are confident in their teams’ ability to adopt cloud technologies without legacy constraints. Additionally, the research found that half of IT leaders are struggling to keep pace with service upgrades as part of legacy technology, with 59% saying it can take weeks or months to change an automated business process.
“Digital transformation is no longer a choice – it’s necessary to keep pace in today’s changing world,” said Pete Schlampp, chief strategy officer at Workday. “Yet, as the study shows, there’s an acceleration gap organizations need to address to help ensure their digital journeys keep pace with the growing and evolving demands of their business. We’re encouraged that global finance, HR and IT leaders are taking a more measured approach to their transformation strategies by leveraging technology.”
Workday said it surveyed 1,150 senior business leaders in North America, Europe and the Asia Pacific region across 13 industries. This research took place between August and November 2021.
The company said it also conducted in-depth qualitative interviews with senior business leaders and transformation experts from the finance, HR and IT functions between September and November 2021, which are included in the report.