Breaking the number one barrier to digital transformation

There was a time when achieving market leader status effectively guaranteed a company’s long-term success in the industry.

However, the introduction of technology has significantly disrupted the status quo, allowing smaller organisations to establish themselves while the big players face mounting challenges to providing improved solutions to meet the dynamic demands of the modern consumer.

This change has sparked fear across markets as shown by our recent Digital Transformation Index survey, which revealed that 85 per cent of businesses believe digital start-ups will pose a threat to their organisation, either now or in the future. This fear is not unfounded though, as the increased agility and flexibility of smaller firms has allowed them to seize more and more business from market leaders who are struggling to implement new technologies.

The survey makes it evident that IT leaders fully appreciate the power and importance of establishing a digital strategy and steadily transitioning to new technologies to improve output and efficiency. But it is also evident that many – especially those in large enterprises – are not actively pursuing digital transformation.

Nearly three quarters of participants in the survey confirmed that more could be done to advance the transformation journey and only a third demonstrated a commitment to the implementation of critical digital business attributes across their companies. Whilst there appear to be a number of different reasons behind this, when asked about why digital transformation was being held up, a third of respondents quoted a lack of budget and resource as the main reason that their organisations were falling behind.

The financial challenge

Technology may be cheaper and therefore more accessible to the wider business sector than ever before, but when looking at adoption rates, it’s important to look at scale to determine why the market is in such a state of flux.

Large organisations such as banks, insurers, government agencies and retailers, who have traditionally benefitted from their size and influence, are now experiencing difficulties as their infrastructure enters the legacy era. The cost of replacing the incumbent technologies is often too high to consider rolling out across the whole organisation, therefore leading to smaller, staggered upgrade projects, which fail to deliver lasting impact.

Whilst the bigger businesses continue to try to catch-up and upgrade owned infrastructure, smaller businesses with a digital-first approach and lower operating costs have been able to launch themselves into the marketplace, enabled by the very latest enterprise grade hardware and software solutions. The growing trend of technology-as-a-service within the start-up community has played a big part in this market re-shuffle, allowing small and medium-sized business owners to minimise the up-front infrastructure costs, which historically prevented them from challenging the established market leaders.

Regardless of the expense, it’s clear that large organisations need to change their minds about investing in technology and there are plenty of justifications for finding those extra pennies. The threat from new competition is rapidly growing and according to our survey data 45 per cent of businesses around the world have serious concerns that they may become obsolete within three to five years, elevating IT from a cost centre to a business enabler and indeed a competitive USP in the marketplace.

The bottleneck

Though low budgets may feature as a prominent barrier to investment in new technology, our survey revealed that most businesses are in fact not strapped for cash. The survey also highlights that only 4 per cent of the many businesses surveyed in the UAE and Saudi Arabia are capable of acting digitally, which begs the question: why isn’t there greater investment in technology?

The data offers its own explanation – of the participants, only 30 per cent of organisations credit the board with having driven digital transformation, potentially signalling a lack of commitment from business leaders themselves. This is largely unsurprising, as the C-suite has traditionally resisted any large-scale investments that could affect revenue and profit figures – particularly around assets that are viewed as cost centres rather than profit generators.

In today’s market, business leaders cannot afford to think this way and should instead be looking for more efficient ways to upgrade infrastructure and enhance the capabilities of the business.

Smart-financing

With flexible consumption models, businesses can accelerate the transformation of their IT infrastructure to include modern capabilities and enable a new level of performance across the company, without the considerable up-front price tag. Often these solutions offer trial periods and scaling options to provide additional confidence to decision makers and IT leaders as they explore innovative new technologies and capabilities.

Where smaller companies appear to have an advantage in terms of lower operational costs and increased agility, it’s up to technology partners to assist in the education process and to help businesses choose the solution that works best for them. According to the survey data, there’s a lot of work to do to make sure that the C-suite makes the right choices regarding investment in technology. To this end, we feel that it’s important for influential partners to work with IT leaders to deliver a strong message that resonates more clearly with decision makers.

Beating the budget barrier

We’ve established that long-running businesses of all shapes and sizes have serious concerns about competition from small, agile, digital start-ups, but the evidence suggests that many are sabotaging their own chances of survival by delaying digital transformation within their own organisations. With flexible consumption models and technology-as-a-service solutions it’s possible to leverage all of the benefits made available by innovative enterprise technologies, at a lower up-front cost with options to scale with demand.

It’s clear however, that a barrier still exists in the minds of the financial decision makers and the conflict between the C-suite and the wider business regarding digital transformation must be overcome to progress and adapt to meet future needs.

By demonstrating the core business benefits of modern digital strategies and infrastructure to business leaders, we hope to be able to help businesses all over the world transform their services to better serve customers and help raise performance in the market.

Mohammed Amin is senior vice president for Middle East, Turkey and Africa at Dell EMC