Over three-quarters of UK CEOs say the pandemic has accelerated the digitisation of operations and the creation of a next-generation operating model. That’s according to the results of our recent CEO Outlook pulse survey. It includes responses from 50 UK CEOs, providing a glimpse of how COVID-19 has changed their priorities.
The findings are in line with recent research we commissioned from Forrester Consulting (the impact of COVID-19 on digital transformation, research conducted by Forrester Consulting and commissioned by KPMG). Responses were gathered from 780 digital transformation strategy leaders across the globe – 113 from the UK. 65% of those UK respondents said they’ve had to accelerate elements of their digital transformation journey and 63% have increased their budgets.
Digital transformation was always high up the corporate agenda. The pandemic has raised it even higher. It has made it an imperative.
Over recent months, CEOs have been battling to handle the immediate impact of COVID-19 on operations. They’re now looking at recovery and what their business will look like in the new reality.
Only one in five (19%) of the UK respondents to our research with Forrester say their organisation has developed a formal strategy to transition its business from the pandemic to recovery. Over 60% of businesses don’t currently have a formal strategy but are working on one. Asked what the timeframe is for the new digital transformation strategy, 57% say it’s six months or less and 32% say they’re working to a timeframe of six months to a year.
This moves the planning horizon for digital transformation to the short- to medium-term. While many businesses moved at tremendous speed to put in place the technology to enable remote working and maintain operations during the lockdown, they’re going to need to further accelerate their pace of innovation. Effectively, we’re looking at businesses doing three years’ worth of investment in a single year – and deploying new tech in a matter of months or even weeks.
That’s a challenging proposition. And CEOs are going to play a key part in helping their businesses achieve it. From our experience, it’s often CEOs – with, of course, key members of IT executive leadership – who are making the big decisions on digital and are personally driving strategy forward.
That’s supported by Forrester Consulting’s findings. 62% of UK respondents identify IT exec leadership (including the CIO and CISO) as primarily driving decisions about digital transformation strategy, 49% identify CEOs and 37% IT. A little under a third (30%) of respondents identified other executive leadership, outside IT and not the CEO or CFO.
In many cases, we’re seeing CEOs taking personal responsibility for the digital transformation agenda. It’s key to the growth prospects of their businesses – often, to business survival. Digital transformation leaders that responded to Forrester Consulting’s survey put it at the top of their organisations’ priorities when they emerge from COVID-19. We’re finding that even CEOs who weren’t convinced of the need for digital transformation, now recognise they need to drive through change at speed – and they’re now embracing the need for new agile ways of working and collaboration. The pandemic has shown what is possible to achieve in compressed timescales.
To drive transformation forward at speed, it’s important CEOs rapidly develop clear view of where to prioritise digital investments. The UK CEOs who responded to our pulse survey say the greatest challenge they face in accelerating digital transformation is working out future operational scenarios – for example, in response to customer behaviour changes. Knowing what to invest in – what’s going to have an impact now and prepare you for future challenges – is key to fast and effective deployment.
Here are three key areas we think you should be focusing on.
During lockdown a growing number of people began interacting with businesses online. And that trend is here to stay. Even people who had avoided shopping online are now ordering their food, and more, via the internet. What that means for businesses is that they need to focus on the digital customer experience. And they need to make sure that online interactions are as simple as possible.
This isn’t just about sharpening up ecommerce sites. It’s about bringing channels together – apps, telephony, digital – to provide a seamless customer experience. Four-fifths (80%) of UK CEOs say the pandemic has accelerated the creation of a seamless digital customer experiences. This requires transformation behind the scenes too. Companies should be looking at how they can improve the employee experience to support a better experience for customers. That means better integration of data. It means putting in place better collaboration tools. And it requires having an agile infrastructure to support all that. No wonder more businesses are asking us about hybrid cloud.
Supply chain resilience
Aside from the pandemic itself, UK CEOs say that supply chain risk poses the greatest threat to growth over the next three years. Organisations are having to rethink their existing models. How do they build in resilience and maintain delivery in the event of another crisis? How do they accurately measure supply and demand in an uncertain economic environment, with Brexit looming? Geopolitical pressures are seeing them pull away from China and seek to build more local supply chains.
Organisations are also realising they need to refocus their supply chains around the customer. In our pulse survey, the top two reasons UK CEOs give for rethinking global supply chain strategies are: “pressure from customers and communities to bring production closer to home” and “changing customer needs”.
Digital technologies have a huge part to play here. Internet of Things (IoT) sensors can provide much greater transparency across your supply chain. Traceability means companies can show the origin of goods, helping them meet tax requirements and demands from customers for more ethically sourced products. Tech can also help manage the health and safety requirements demanded by the pandemic. For example, robotics and automation can take on some of the more manual tasks, improving safety. And advanced analytics give a clearer picture of supply and demand enabling decisions to be made faster.
Automation is key to both improving customer experience and building supply chain resilience. And it’s an area UK CEOs are focusing on. 54% of UK CEOs from our pulse survey say COVID-19 has accelerated the creation of a new workforce model, with human workers augmented by automation and artificial intelligence.
Automation can have an impact across the whole business. Forrester Consulting found that almost half (47%) of its UK respondents are continuing or starting automation of all or parts of their customer service. Over a third (36%), are automating aspects of product design and development. In the middle office, two-thirds (66%) are automating parts of inventory management and distribution, and 59% their supply chain. And in the back-office, three-quarters (74%) are continuing or planning to automate procurement, while almost two-thirds (63%) are doing so for transparency and traceability.
The pandemic has seen many organisations fast-forward their digital transformations. Our CEO pulse survey found that 48% of UK CEOs say the pandemic has “sharply accelerated digitisation of operations, putting us years in advance of where we expected to be”. But there’s still more to do. And businesses need to drive continual product innovation to meet the evolving needs of customers.
Our research with Forrester indicated the growing importance of adding digital services to enhance existing products and to accelerate the evolution of the business towards a more customer-centric digital business model.
What’s apparent from our research with Forrester is that customer-centricity needs to be at the heart of any acceleration in digital transformation. Four-fifths (80%) of UK respondents say their customer-centric strategy was a high or top priority before the pandemic, according to its research. And over two-thirds (68%) say their customer-centric strategy is now a higher priority as a result of COVID-19.
As CEOs seek to accelerate digitisation, they need to be steered by data on what customers need and want. They should look to ensure that the voice of the customer permeates through every layer of their digital blueprints.
Iain Prince and Maureen O’Shea discuss the findings of our recent CEO pulse survey and how businesses can improve supply chain resilience.
Iain Prince and Maureen O’Shea discuss the findings of our recent CEO pulse survey.
Sue Bonney, Head of ESG, asks whether CEOs will remain committed to building responsible businesses.
Sue Bonney asks whether CEOs will remain committed to building responsible businesses.