Croatian Directors Believe Digitalization Will Change Business

The consulting firm A. T. Kearney, in collaboration with the Croatian Employers’ Association (HUP), conducted a study titled “Digital Index of the Croatian Economy” which showed that Croatian directors have a positive outlook on digitalization and believe that digitalization will fundamentally change the business operations of companies.

The research was conducted during the summer in over 200 different Croatian companies, and the results showed that more than 70 percent of companies have digital transformation on their agenda, and approximately a quarter of companies have their digital strategy outlined either in a standalone document or as part of the overall strategy.

In 82 percent of the companies that participated in the research, digitalization is currently part of the management’s responsibilities, and it is expected that in the next three years this figure will rise to 85 percent, according to the statement.

Croatian Directors Have a Positive View on Digitalization

Marko Derča, Vice President at A.T. Kearney, emphasized that “Croatian directors have a positive view on digitalization and believe that digitalization will change the fundamental business operations of companies.”

Approximately 60 companies expect up to a 10 percent annual revenue growth, and when it comes to revenues from digital products and services, about 30 percent of companies expect growth of up to 10 percent, which is still not ambitious enough considering the potential, he said.

He noted that direct and significant opportunities lie in internal processes and in achieving collaboration with partners. In these opportunities, it is necessary to leverage digital transformation to build internal competencies, knowledge, and increase the level of agility for breakthroughs on the revenue side.

Only 4 percent of executives in Croatian companies expect their total revenues to fall by up to 10 percent, said Derča, adding that “digitalization is already knocking at the door, and the level of readiness for it can make a big difference in whether a company becomes a victim of digitalization or catches its wind at its back.”

On which end of the continuum a company will find itself depends on the digital strategy, speed, and adaptability, Derča stated.

He also explained that in 40 percent of the companies from the research, more than one-tenth of the budget is allocated to digital initiatives, but the actual effects are not yet visible.

Areas such as advanced analytics, the Internet of Things, and artificial intelligence can have significant transformational potential in Croatian companies. Automation of production with robots or driverless product transportation based on the Internet of Things and artificial intelligence are just some of the ways to improve their value chain, said Derča.

How to Compete Effectively

He also noted that for companies to compete effectively, it is necessary to invest in recruitment activities and talent development.

In Croatian companies, employee involvement in digital initiatives is still at a low level, Derča pointed out, stating that one-fifth of companies are unaware of how many of their employees are involved in digital initiatives, as they are unstructured, disconnected, and lack a clear goal.

On the other hand, for more than 40 percent of Croatian companies, digital knowledge and skills are an important criterion when making decisions about hiring or promoting existing employees.

“Digitalization is primarily a transformation of the company, culture, and the environment in which they operate. Do not underestimate the changes that are coming. The future is not uncertain. It is very clear regarding the changes it brings,” emphasized Derča.