Large A/NZ businesses struggle in the battle for transformation

Large A/NZ businesses struggle in the battle for transformation

Organisations in healthcare and manufacturing industries struggling to build innovative cultures

Andrew Groth (Infosys)

Andrew Groth (Infosys)

Credit: Infosys

Large businesses in Australia and New Zealand (A/NZ) struggle to build disruptive business models at scale due to a lack of digital maturity, a new study has found.

The major barriers they face are also largely internal rather than in the market.

By industry, healthcare organisations struggled most to build a culture of innovation followed by manufacturing, which was also the sector reporting itself most challenged by digital disruption.

Only 17 per cent of A/NZ businesses with more than 1000 employees and $1 billion in revenue were digitally mature enough to create disruptive plays at scale compared to a global cohort of 22 per cent, according to research undertaken by consulting and technology services company Infosys.

The report classified three clusters based on digital maturity: visionaries, explorers and watchers.

Around 17 per cent of A/NZ respondents were identified as visionaries, indicating that fewer trans-Tasman business leaders have identified digital transformation as a central part of their business strategy.

Visionaries are defined as leaders who "transform to meet business objectives through new business models and an innovative culture" and "understand digital is central to the success of future endeavours".

The majority of A/NZ businesses surveyed (55 per cent) fall into the explorers category, compared with 50 per cent globally, who are focusing on digital transformation for the differentiation value it gives them in either customer experience or an uplift in brand value.

The remaining 28 per cent of are identified as watchers, those that have partially deployed digital initiatives but are focused on efficiency-driven outcomes, on par with global research.

Internal challenges rather than external market forces are cited as a major barrier to change with resourcing and legacy issues preventing organisations from making rapid progress.

Organisational silos (38 per cent) and transforming from a low risk organisation to an organisation that rewards experimentation (37 per cent) are the major challenges cited by A/NZ businesses, as well as hiring digital natives and building digital skillsets (38 per cent).

Senior leadership commitment (52 per cent) and change management (45 per cent) were the most important success factors in transformation - hiring digital natives and building digital skillsets (38 per cent) was also important.

The survey, of senior IT decision-makers also reveals there is an understanding that business agility (85 per cent), enhancing digital culture (82 per cent), and delivering seamless customer experience (78 per cent) are key enablers of their ability to build disruptive business models at scale.

“Digital transformation is a process of constant re-invention, where businesses must implement disruptive models that create agility in constantly driving new experiences for the customers at scale," said Andrew Groth, senior vice president and regional head of Infosys A/NZ.

"What our research uncovers is that a large number of organisations are encumbered by rigid technology, the digital skills gap and more importantly a culture gap that stifles innovation, which is key to achieving a digitisation vision.

"This is ultimately resulting in businesses being unable to create the customer experience and competitive advantage at speed, eventually losing the mindshare with their customers.”

There is a skewed view of digital transformation, Groth said, with 67 per cent of A/NZ respondents having a clear outlook on opportunities, and a considerably lower 50 per cent having a clear understanding on threats.

"Interestingly, as businesses move to becoming digitally mature, there is a correlation between maturity and higher risk awareness, but we have some way to go in this market," Groth added.

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