Professor Peppard: Only 23 Percent of Companies Have Achieved Full Digital Transformation

From Brussels, via video link, Roberto Viola, Director of the Directorate-General for Communications Networks, addressed the participants of the Lider Conference on the 4th Industrial Revolution, currently taking place at the Westin. He briefly outlined the measures taken in the fight against Covid-19. Specifically, he presented the role that modern technologies played in this battle, such as robots, supercomputers, and telecommunications. He stated that much may not have been clear at the beginning of the epidemic, but it was clear how important digitalization would be during the epidemic.

Thus, artificial intelligence was used in hospitals for analyzing hospital images, robots for taking tests and cleaning hospitals, with the challenge being to integrate robots into the normal functioning of hospitals. Additionally, supercomputers were used for analysis of the virus and searching for effective treatments. All these computers, he noted, are interconnected and working to combat the epidemic. He also mentioned, as expected, mobile applications for contact tracing, which faced a number of implementation issues due to privacy concerns, although the Commission has since developed a framework for their application at the European Union level. The fund aimed at Europe’s recovery from the epidemic, worth 750 billion euros, emphasizes digital and green initiatives, he concluded, and every sector, not just healthcare, can benefit from automation and digitalization.  

After Viola, the main speaker of the conference, Professor Joe Peppard from MIT, explained to the participants the four ways organizations typically reach the highest stage of digital readiness for the future. As he stated, research has shown that companies usually seek digital transformation in two main areas: better customer experience and greater operational efficiency, with the goal of achieving optimal digital transformation of the business along both axes. The first way is to improve operational efficiency, then customer experience (a good example is BBVA bank), the second way involves improving customer experience, and then operational efficiency, while the third simultaneously digitally transforms both axes (DBS bank). The fourth way is particularly interesting as it skips gradual improvements along the axes in favor of creating a completely new entity that combines a high level of business transformation in terms of both operational efficiency and customer experience.

By analyzing around a thousand different companies, his team concluded that 23 percent of them are in that most desirable fourth quadrant. Peppard noted that it is not actually important how one gets there, but only that one gets there, as success is worthwhile in any case. Regarding typical problems on these paths to complete digital transformation, there are four key sources of problems. The first is determining who decides and what the rules are (the right people for the right things), the second is introducing a new way of working (changing culture), the third is implementing organizational changes (reducing complexity), and achieving a platform mindset (connecting organizational silos).

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