Digital transformation investment accounts for the majority of businesses' profitability, according to a DXC Technology report.
The majority of organizations (83%) plan to increase tech investments in 2019, according to a DXC Technology report released on Tuesday. Investing in digital technology will drive future digital transformation efforts, ultimately leading to cost savings and higher profitability. More than 40% of respondents expect their businesses to increase investments by at least 11% this year, the report found.
The report, conducted by the Economist Intelligence Unit, surveyed more than 600 senior executives to assess where their organizations are in their digital transformation efforts. Within the next three years, respondents said they believe their businesses will significantly increase transformation efforts, with more than half of respondents (58%) expecting every business unit to become digitally enabled by 2021, the report found.
SEE: Digital transformation: A guide for CXOs (Tech Pro Research)
For companies struggling with digital transformation projects, 35% cited high costs or lack of funding as the biggest obstacle, with 40% reporting security concerns. However, most companies (76%) said they expect the money saved from modernizing IT services will help fund their digital strategies, the report added.
Digital transformation has proven to bring overwhelmingly positive results to companies, according to the report. More than two-thirds (68%) said their organizations' annual profits increased over the past three years because of new digital strategies. Additionally, 75% of respondents reported digital transformation leading to greater agility.
"Our research indicates that digital strategy will continue to be a major area of investment - amounting to a dramatic effort at corporate reinvention. But getting it right will be a continuing challenge," Gilda Stahl, managing editor of the Economist Intelligence Unit, said in a press release. "Defining your digital strategy clearly, ensuring digital literacy in every relevant role and recruiting digital-savvy employees are all essential to guaranteeing that digital investment yields positive business outcomes."
Company culture is integral to the success of digital transformation efforts, the report found. Some 72% of companies agreed that a culture change is necessary to digitally transform any company. This number increases in companies that have only used digital strategies within the past two years, the report said.
The big takeaways for tech leaders:
- 83% of companies plan on increasing tech investments this year to improve profitability and cost savings. — DXC Technology, 2019
- Most organizations (76%) said they believe the profit made from digital transformation efforts will ultimately cover the cost of conducting them. — DXC Technology, 2019
- Digital transformation: A cheat sheet (TechRepublic)
- Digital transformation: An IT pro's guide (TechRepublic download)
- What is digital transformation? Everything you need to know about how technology is reshaping business (ZDNet)
- 5 best standing desk converters for 2018 (CNET)
- Best to-do list apps for managing tasks on any platform (Download.com)
- Digital transformation: More must-read coverage (TechRepublic on Flipboard)