Digital transformation in uncertainty

Emerging technology / disruptive technology has emerged as the top risk and the greatest threat to organisational growth for CEOs in India as well as globally over the next three years. At the same time, pandemic fatigue or continued uncertainty/restrictions, reputational risk – including misalignment with customer/public sentiment, and economic factors like rising interest rates, inflation and anticipated recession – are pressing concerns for organisations in India today.

In the face of these risks and concerns, CEOs in India continue to prioritise digital investment – with 61 per cent CEOs in India compared to 72 per cent CEOs globally agreeing they have an aggressive digital investment strategy, intended to secure first-mover or fast-follower status.

Sterlite Technologies Limited (STL), Managing Director, Ankit Agarwal, believes “Organisations with robust digital infrastructure are better poised to handle near and long-term challenges. This distinction became clear when COVID-19 lockdowns began. Companies like ours were fully ready for remote-working and digitally enabled business continuity. Digital transformation is the greatest leveler for technology, talent, and sustainability for MSMEs and India Inc.”

Furthermore, employee value proposition to attract and retain the necessary talent has emerged as the top operational priority for CEOs in India to achieve growth over the next three years. Inflation proofing capital and input costs and advancing digitalisation and connectivity across the business came in a second and third respectively.

This focus on digital transformation may be driven by increasingly flexible working arrangements and heightened awareness of cyber security threats, exacerbated by geopolitical uncertainty.

The anticipated recession may be pushing businesses to reconsider their strategies. 50 per cent CEOs in India compared to 37 per cent CEOs globally plan to pause or reduce their digital transformation strategy in the next six months to prepare for an anticipated recession. 28 per cent CEOs in India compared to 40 per cent CEOs globally have already paused or reduced their digital transformation strategies. Though a considerably small percentage, 48 per cent CEOs in India compared to a much larger percentage of CEOs globally at 70 per cent say they need to be quicker to shift investment to digital opportunities and divest in those areas where they face digital obsolescence.

Digital transformation has become more expensive in recent years, so more than ever, investment should be prioritised in those areas that help drive growth — and potentially slowed or reconsidered on efforts that may be considered non-critical. In uncertain times, it’s imperative for businesses to focus their digital investments on impactful, and measurable, opportunities most able to support their strategic goals.

For example, 72 per cent CEOs in India compared to 56 per cent CEOs globally are placing more capital investment in buying new technology. This gap has specifically altered from August 2021 for India where 52 per cent CEOs in India prioritised technology investments.

As businesses have implemented their digital tools, their attention has shifted to adoption, engagement and change management in order to support their people working in a very different world. To drive their growth, CEOs in India may be looking to make their existing people more productive through transformation. To this effect, 64 per cent of CEOs in India compared to 72 per cent CEOs globally say they need to address burnout from accelerated digital transformation over the past two years before continuing on their transformation journey.

Few organisations can succeed on their own. Businesses rely on their ecosystems as building successful partnerships can help a company deliver a competitive edge. Increasingly, CEOs in India as well as globally view partnerships as an important means to continue the pace of their digital transformation (58 per cent CEOs in India compared to 50 per cent in February 2022). CEOs in India also see building strategic alliances with third parties as a key strategy to help them realise their growth objectives over the next three years. It has become more important for businesses to partner with companies (e.g. start-ups, fintech and more) that can help them, bringing agility and resilience to growth. To bring everything together, and drive a successful transformation, CEOs in India need the right partners — and the ability to connect it all.

While other risks may now feature as top concerns for CEOs in India as well as globally, the cyber environment is evolving quickly, and 66 per cent CEOs in India compared to 77 per cent CEOs globally see information security as a strategic function and a potential competitive advantage. Geopolitical uncertainty is increasing worries over corporate cyber-attacks for as many as 73 per cent CEOs globally. In comparison only 54 per cent CEOs in India view this as a concern. But that is not to say they are not taking precautions. In fact, 60 per cent CEOs in India compared to 76 per cent CEOs globally say that protecting their partner ecosystem and supply chain is just as important as building their own organisation’s cyber defences. In India, 70 per cent CEOs compared to 78 per cent CEOs globally view cyber strategy as critical to engender trust with their key stakeholders.

Growing experience of the challenges of cyber security is also giving CEOs a clearer picture of how prepared -or underprepared they may be. More CEOs in India recognise they are underprepared for a cyber attack, with 19 per cent admitting so in August 2022, compared to 10 per cent in August 2021. This year, 56 per cent CEOs in India say they are prepared, almost about level with last year. And nearly 54 per cent CEOs in India say their organisation has a plan in place to deal with a ransomware attack, compared to 64 per cent in August 2021.

The difficulty of detecting attacks on time and the increasing cyber security risk we could witness in the coming years, calls for automation and innovation in dealing with cyber incidents.

Akhilesh Tuteja, Global Cyber Security Practice Leader and Head of Technology, Media and Telecommunications, KPMG in India acknowledges that cyber security risks will increase as companies grow their digital capabilities. “While cyber security has remained a key risk area for several years, its relevance in the business world has never been more significant. But, perhaps the most striking outcome of extreme digitalisation is the realisation and acceptance of cyber as a real business issue. In this new world, cyber security becomes more personal. Not just for staff but also for senior executives whose world has changed and who are also perhaps more conscious than ever of the fragility of their digital infrastructure, both from work and personal perspectives.”

• Bring your people and technology together: CEOs in India and their organisations have invested so much in digital transformation that they need to make sure people adopt these technologies and use them to their full potential.
• Work with partners to drive value: With CEOs in India keen on building partnerships,  identifying,  integrating  and  managing  third  parties  effectively can help increase speed to market, reduce costs, mitigate risks and supplement capability gaps in delivering the customer promise.
• Make customers your focus: Orchestrating  compelling  customer  experiences  requires  companies  to  begin  with  the  customer  and  work  backwards,  taking an outside-in perspective to reverse-engineer and shape what the experience should be; then, they should adopt an inside-out view to define how the experience should be delivered.
• View cyber security as a strategic function: Increasingly, cyber is no longer seen as only an IT issue; it’s a fundamental business operation imperative. The exponential increase in cyber attacks, coupled with the difficulty of detecting an attack in a timely manner, calls for CEOs in India to look at automation and innovation in dealing with cyber incidents.