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BENCHMARKING COMPETENCIES for DIGITAL PERFORMANCE an EIU Study of Digital-Competency Hurdles and Solutions

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BENCHMARKING COMPETENCIES for DIGITAL PERFORMANCE an EIU Study of Digital-Competency Hurdles and Solutions BENCHMARKING COMPETENCIES FOR DIGITAL PERFORMANCE An EIU study of digital-competency hurdles and solutions Commissioned by: Benchmarking competencies for digital performance: 2 An EIU study of digital-competency hurdles and solutions Contents 3 About this report 4 Key findings 6 Chapter 1: Why digital competencies matter 9 Chapter 2: Mind the competency gaps 11 Chapter 3: Rising expectations for IT leaders 14 Chapter 4: The challenge of complexity 16 Chapter 5: Developing digital competencies for the future 19 Appendix © The Economist Intelligence Unit Limited 2019 Benchmarking competencies for digital performance: 3 An EIU study of digital-competency hurdles and solutions About this report Benchmarking competencies for digital performance is an Economist Intelligence Unit report, commissioned by Riverbed Technology. This report draws on an Economist Intelligence Unit survey, conducted in January-February 2019, of 512 senior business and government leaders in North America, Europe, the Middle East and Africa, and Asia-Pacific. The survey aimed to assess the behaviours, skills and abilities that help organisations improve their digital performance and, ultimately, achieve their objectives. We focused on nine digital competencies: • analytics using customer and/or operational data from digital systems; • ability to manage and measure the user and/or employee digital experience; • digital product and service innovation; • digital talent recruitment, retention and management; • IT infrastructure modernisation/transformation; • automation of business processes with digital technology; • digital development techniques (eg, Agile, design thinking); • organisation-wide digital transformation strategy; and • workplace transformation with digital technologies. We also conducted interviews with the following individuals and thank them for their time and insights: • Patricia Conolly, MD, executive vice-president and chief information officer, The Permanente Federation • Sunil Gupta, professor of business administration, Harvard Business School • Shawn Fitzgerald, research director, Insights, worldwide digital transformation strategies, IDC • John Jendrezak, general manager, Core Services Engineering and Operations, Microsoft • Laura Young-Shehata, executive vice-president and interim chief information officer, CommonSpirit Health Finally, accompanying this report is a digital competency assessment tool, which enables users to benchmark their organisation’s competencies against all survey respondents. The tool can be accessed at https://digitalcompetency.economist.com/. © The Economist Intelligence Unit Limited 2019 Benchmarking competencies for digital performance: 4 An EIU study of digital-competency hurdles and solutions Key findings A majority of organisations that we surveyed Many organisations have say digital competencies are strategically digital-competency gaps. significant. However, many respondents remain More than half of respondents are unsatisfied dissatisfied with their digital-competency with their organisations’ progress on developing progress and say that’s why they struggle digital competencies. In addition, nearly two- to achieve key performance goals. High- thirds of all respondents also say their digital- performing organisations drive stronger competency gaps have negatively affected the business performance and user experience. user experience. However, when compared with others, they also see an even greater need for continual High-performing organisations improvement of their competencies. They also continually strive to improve their take unique approaches to developing their competencies. competencies, understanding that excelling as a digital business is an ongoing journey. Eight in ten high performers believe they’re ahead of their peers in all digital The most important takeaways of our competencies, compared with less than research are: two-thirds of others. But high performers also understand that digital transformation Digital competencies are vital to and improving digital competencies are achieving positive organisational an ongoing journey, not a destination. For outcomes. this reason, 57% of high performers on Eight in ten respondents say their organisation’s average want to improve across all digital digital competencies are either very or competencies, compared with 46% of others. extremely important to achieving outcomes The IT department plays a that include revenue growth, service quality, leading role in developing mission delivery, profit growth/cost reduction and customer satisfaction. This is relatively digital competencies, but poor consistent across all industry segments. communication with other parts of their organisation remains a Although all digital competencies stumbling block. are important, five stand out. More than half of respondents say their The competency most frequently cited IT departments have a leadership role by survey respondents for meeting goals in developing their organisation’s digital is data analytics—using customer and/or competencies, and IT transformation is the operational data from digital systems to most frequently cited digital competency measure performance, adoption and the for achieving goals among high performers. quality of new digital services. Rounding out However, more work is needed: nearly the top five competencies are workplace two-thirds of all survey respondents say transformation, product and service poor communication between IT and innovation, digital experience management other departments limits their progress on and IT infrastructure modernisation. developing digital competencies. © The Economist Intelligence Unit Limited 2019 Benchmarking competencies for digital performance: 5 An EIU study of digital-competency hurdles and solutions Organisations are going through High-performing organisations have profound changes in their digital a wider variety of approaches to transformations, and that’s developing their competencies proving to be a major challenge to than other companies. developing the right competencies. High-performing organisations are more Complexity of change was the most frequently likely than others to adopt many concurrent cited challenge in our survey when it comes to approaches, such as Agile development developing digital competencies, along with techniques, appointing a chief digital officer legal or security concerns, and rigid systems, (CDO), establishing a digital competency centre networks and infrastructure. But experience and hiring new executives. Any organisation brings confidence. Of those with digital looking to get ahead of the competition or just strategies in place for three years or more, nearly keep up with the relentless pace of change may three-quarters feel confident about their ability want to consider these approaches too. to overcome these challenges, considerably more than those with less experience. © The Economist Intelligence Unit Limited 2019 Benchmarking competencies for digital performance: 6 An EIU study of digital-competency hurdles and solutions Chapter 1: Why digital competencies matter Digital transformation has gone from novelty where a majority of respondents described to norm, becoming “the single biggest business digital competencies in the strongest way, as shift since the industrial revolution,” according to extremely important for growth. Shawn Fitzgerald, Insights research director for Every company worldwide digital transformation strategies at Digital competencies have become much is worried about IDC. Indeed, as Microsoft’s CEO, Satya Nadella, more than nice-to-haves; they directly impact recently observed, every organisation in every business outcomes. While two-thirds (66%) how digital industry is becoming a digital organisation. of organisations say their digital strategies technologies have delivered measurable benefits, not all transform their Digital transformation offers huge potential, industries are equally satisfied. Among retailers, business...No one but with it come obstacles. “Every company for example, about three-quarters (74%) say wants to become is worried about how digital technologies they’ve enjoyed more benefits from their the next Kodak or transform their business,” says Sunil Gupta, digital strategies, compared with slightly more BlackBerry. professor of business administration at Harvard than half (56%) of respondents in healthcare. Business School. “No one wants to become the Advances in consumer technologies and Sunil Gupta, next Kodak or BlackBerry.” services that we all find in our daily lives, such professor of business as voice-activated assistants, chatbots and administration, Harvard When every organisation is using digital recommendation engines, are probably the Business School. technologies to get ahead, what sets them results of the top competencies among retailers: apart? This report contends that competencies data analytics and product innovation. are now a critical differentiator, and developing the right behaviours, skills and abilities can help Eight in ten organisations improve digital performance and, To what extent have your digital strategies respondents ultimately, achieve such strategic objectives produced measurable business benefits? say that digital as stronger revenue and profits, improved % respondents competencies customer satisfaction and faster time to market. are either very Few benefits More benefits or extremely More than a nice-to-have Neutral important to Chief among our findings: digital competencies achieving
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