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Only one in three Australian companies are fully benefiting from their digital transformation efforts, according to a study by consultancy BCG, with six factors combined identified as the best predictor of success.
A recent study report from global strategy and management firm Boston Consulting Group found that only one-third of local corporate digital transformation programs could be considered successful, with goals met or succeeded and sustainable change created. On the other hand, 20 percent of such projects were considered completely unsuccessful, with less than half of the goals met and no sustainable change. Globally, this figure exceeds more than a quarter.
“Our survey shows that more than 80 percent of companies plan to accelerate their digital transformation plans against the backdrop of the global pandemic, which has accelerated the urgency of digital transformation for businesses,” said DigitalBCG global leader and report co-author Tom Reichert. “However, our research also shows that only 30 percent of digital transformations achieved their goals, meaning they met or exceeded their goal.”
BCG reached its conclusions after surveying 825 executives from around the world, along with analyzing data from 70 projects it has worked on in recent years with the world’s leading companies—and found that those in the top group created 66 percent more value and met 120 percent. more of their goals than those in the bottom layer. After summarizing the results, the consultancy was able to identify six key factors that contribute to success.
Of the approximately 35 factors assessed relating to commitment, strategy, approach, governance and resources, six were briefed; an integrated strategy with clear transformation goals; leadership commitment from the CEO through middle management; deployment of high-quality talent; an agile management style that encourages wider adoption; effective monitoring of progress towards defined outcomes; and investment in enterprise technology and data platform.
According to BCG, it’s key to address all six factors in combination to ensure the best chance of success, with the firm calculating an 80 percent success rate for ticking each of these boxes – 21 points higher than if all five factors were met and almost double the success rate , if only four are in place. The average in his study was only three to four factors, with less than one in five projects succeeding with only half the coverage.
Additionally, the six-factor formula applies to all types of digital transformation projects, as well as across regions and industries. Local report writers and BCG Senior Partners Patrick Forth and Stefan Mohr describe Telstra’s four-year strategic and digital transformation project ‘T22’ as a success, while the telco is also using its own digital experience and expertise to help other Australian companies in their digital transformations.
In an interview with the Australian Financial Review about the project (which was formulated with support from management consulting rival McKinsey), Forth specifically pointed out that Telstra had set clear strategic goals with clear outcomes, and had also received support from middle management. One tactic suggested by BCG to maintain accountability is for companies to publish targets and progress reports, an approach Telstra has adopted.
Of the material advantages of a proper transformation, concludes Forth; “In the short term, digital technologies and ways of working offer improved productivity and a better customer experience. In the medium term, digital technology opens up new opportunities for growth and innovation of business models. Successful transformations also set companies up for sustained success; they won’t need to digitally transform again because they can handle constant innovation.”
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