People and partnerships key to digital evolution

Every business knows that technology is evolving at a fast pace, driving the need for continual transformation. While most businesses understand the impact this digital transformation is having on their traditional ways of working and the consequent need to adapt, only a small number have been successful at reaping the benefits of making the transition, raising questions over what factors determine the success of a digital transformation.

Telstra recently surveyed 3800 decision-makers leading digital transformation projects across 14 markets and 12 industries globally to shed light on these questions. In the research, titled Disruptive Decision-Making, we found a sizeable gap between priorities and desired outcomes, and what was achieved.

Here in Australia, one of the key findings was that although respondents identified “agility” as a leading digital transformation priority, company performance in this area was ranked lowest of all priorities listed.

Performance on “protecting digital assets from cyber threats” — the highest priority for businesses — also ranked second-last. Australian businesses are also finding it particularly hard to link digital transformation projects back to hard financial measures.

This helps explain the overall lack of success in digital transformation projects worldwide. A recent McKinsey survey found 80 per cent of organisations had undertaken large digital transformation efforts in the past five years.

Of these, less than 30 per cent were considered successful. That’s a low rate of success for what we know can be a large investment in organisational change, especially when you consider more than a quarter of Australian enterprises have invested upwards of $1.4 million in digital transformation during the past year and 12 per cent spent in excess of $7m.

We also wanted to know the ingredients of successful digital transformations and how organisations could get there. By zeroing in on four pillars of success — people, processes, technology and partnerships — we were able to estimate the contribution of each to digital transformation.

We found Australian organisations were leaning too heavily on the technology pillar. Asked to rate their capabilities across the four variables, understanding of technology rated highest by a significant margin. People and partnerships came third and fourth respectively.

While it’s heartening to see decision-makers expressing confidence in their organisation’s technical ability, the overall outcomes — millions of dollars spent but continued de-prioritisation of processes and people and a gap between digital priorities and performance — suggests we’re missing a trick or two.

Successful organisations know employees are a big reason for their success. It’s why there is such a fierce fight for good talent globally. Our research found organisations that were most digitally advanced showed a much greater focus on their people than technology as an enabler.

Successful digital transformation relies on much more than the right technology. It requires the right culture, the right people, the right partnerships and processes to support them.

It’s a whole-of-company approach that involves upskilling and changing employee mindsets. It’s about adapting structures and ways of working and creating teams that can maximise new technologies — this is a big part of our own transformation under our T22 strategy.

Australian organisations are also underestimating the value of finding the right partners in their digital journey. Partnerships not only fill gaps in expertise, they can bring long-term value. In today’s economy, many businesses are finding success in migrating from a purely transactional model to values-based partnerships.

Our research also found that more than 40 per cent of organisations cite protecting assets from cyber threats as their top digital transformation concern. And 35 per cent want to deliver consistently high-quality customer experiences. These are critical priorities, and priorities that technology alone cannot solve.

We’re being misguided by a misnomer. Effective digital transformation is really about business transformation. While technological change may be inevitable, success is not and getting digital transformation projects to deliver depends on recognising the power of people.

Michael Ebeid is Telstra Enterprise group executive.