While most industry analysis touts the importance of digital technologies in meeting business goals, has this really been the case? DCAT Value Chain Insights takes an inside look..

A recent analysis by A.T. Kearney shows that European C-Suite executives say digital innovation has not delivered high business impact at their organization. Despite the potential opportunity for digital innovation to drive business growth, integrating new technologies into an established infrastructure and a corporate culture that is not ready to embrace digital technologies are the two biggest barriers to successfully integrating digital innovation in an organization.

Barriers to digital innovation
The survey was conducted by A.T. Kearney at the firm’s Digital Business Forum in London. Respondents consisted of 100 C-Suite business executives in Europe across the chemicals, energy, healthcare, consumer, finance, travel, communications, and automotive sectors. The survey found that a majority (59%) of European C-Suite executives say digital innovation has not delivered high business impact at their organizations. The study found that despite the potential opportunity for digital innovation to drive business growth, integrating new technologies into an established infrastructure (59% of survey respondents reported) and a corporate culture that is not ready to embrace digital technologies (51% of survey respondents) are the two biggest barriers to successfully integrating digital innovation in an organization.

“Companies can no longer ignore the impact digitization can have on all aspects of commerce, including business processes, services, and transactions,” said Ramyani Basu, principal at A.T. Kearney, in commenting on the study. “Our data demonstrates a significant opportunity for organizations to leverage the power of digital innovation both internally and with an external ecosystem of players to build a long-term competitive advantage across business functions. And, while doing that, organizations shouldn’t forget the social responsibility of bringing the whole organization with them in this digital journey.”

The potential to stimulate business growth is the leading driver of digital innovation, according to survey findings, with 36% of respondents stating greater customer acquisition as the most significant business outcome of digital innovation, followed by increased revenue (20%).

Consequently, 68% felt that sales and customer services will benefit the most from digital innovation over the next three years. Operations and logistics were ranked second (37%) when asked what two business functions will benefit most from digitization over the next three years, with marketing and innovation and R&D split for third place at 27% each. Only 20% of respondents said digital innovation will benefit the back-office (finance, human resources, IT) operations of their business and only 17% said it will benefit production.

Although there is potential to create business impact as a result of effective digitization, significant barriers remain. The absence of leadership engagement (41%) as well as overcoming internal “red tape” (25% of respondents) ranked high when asked about the top two obstacles to the integration of digital innovation. Only 12% of respondents believe access to adequate financing and access to external resources (7% of respondents) such as emerging technologies and partnerships, are the primary challenges to overcome. Despite these hurdles, enhanced brand image (19% of respondents), increased collaboration (15%), and increased profits (10%) were considered to be significant business outcomes as a result of digitization.