Tech laggards leave billions on the table due to bad decisions

Accenture study finds that being bold has a much better ROI than taking a wait-and-see approach to new technology.

Collaboration is the key to making AI and IoT work

Leaders who are brave enough to ditch business as usual will be the only ones to see a lasting ROI on advanced technology investments, according to the new report "Your Legend or Your Legacy?" from Accenture.

Accenture's study included C-level executives at more than 8,300 companies across 20 industries in 20 countries. Half of the respondents were in IT roles, half were not, and 885 were CEOs. Accenture measured the companies on technology adoption, the penetration of those technologies, and related culture changes, such as changes in attitudes about experimentation and collaboration.

Companies received a score on each factor and a spot in one of three categories: Leaders (top 10%), Middlers (companies that fell between 40%-and 60%), and Laggards (bottom 25%). 

Only Leaders are on a profitable path with advanced technologies because they make decisions that create building blocks to make it easier to scale innovations repeatedly across business units. Laggards choose easy fixes or fail to decide at all. The report authors found that the middle-of-the-road approach, which the majority of companies take, is also risky, even if it has good-enough results in the short term.

James Wilson, a co-author of the report and the global managing director of IT and business research at Accenture Research, said executives must change their decision-making strategy now because the pace of change will never be slower than it is today.

"Companies that don't act today may find it twice as difficult to act tomorrow," he said. "Courage comes from seeing the future and course-correcting today, instead of waiting for when you have no other choice."

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Wilson, and the other authors of the report, Paul Daugherty, chief technology and innovation officer; and Bhaskar Ghosh, group chief executive of Accenture Technology Services, identified five key decision points and explained how Leaders build "Future Systems."

Taking a wait-and-see approach is costly

In addition to identifying the best decision-making process, the report authors also calculated the financial hit of taking a conservative approach to technology decisions. Leaders already significantly earn more than Middlers and Laggards, and the gap is only going to grow. Those companies have already missed out on revenue, according to the report, and those losses will only increase. 

According to the report:

"In 2018, for example, Laggards left 15% of their potential annual revenue behind. If both Leaders and Laggards continue their current trajectories, Laggards will leave 46% of their potential annual revenue on the table in 2023.
"...a Middler making $10 billion in annual revenue in 2015 would have lost $2 billion in unrealized value in 2018. In 2023, if it doesn't change its course, it will lose another $13 billion."

What makes you a Leader, Middler, or Laggard?

For the survey, Accenture used a decision-making model called PATHS to highlight choices that increases the chances for a positive ROI from technology investments. The five key questions are:   

  1. Progress: How broadly should we apply new technologies to evolve business processes across the enterprise?
  2. Adaptation: How do we adapt current IT investments to changing business needs?
  3. Timing of tech adoption: How do we properly sequence and map our adoption of new technologies?
  4. Human + machine workforce: How do we activate and enable the workforce to use and be augmented by technology?
  5. Strategy: How can we intentionally manage the intersection of business strategy and technology strategy?

The Accenture authors identify three common answers to each question and assigned a Leader/Middler/Laggard label to each one. Here are the answers to the first question:

  • Option 1: Transform low-hanging business processes
  • Option 2: Build innovation centers/hubs to transform multiple processes
  • Option 3: Reimagine business processes for the future and target multiple processes with the same technologies

The hardest choice is the right one, of course, option 3. Leaders don't rely on pilot projects or low-hanging fruit to deliver a ROI on machine learning, Internet of Things (IoT) projects, and automation. Instead, they make decisions that will make it easy to transfer innovations across the enterprise.

The Accenture survey found that Leaders transform two times as many processes as Middlers and three times as many Laggards. Leaders also think about what other processes might leverage the same technologies to take into account the broader implications of one investment.

Wilson said that now is the time to change how technology decisions are made.

"The pace of change will never be slower than it is today," he said.

Also see

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Accenture found that CEOs must start making bold decisions around technology to see a strong ROI from investments in artificial intelligence and automation.

Image: Accenture