Report finds companies can gain $357
billion in annual profits globally through people-focused
transformation efforts and a commitment to ESG
BENGALURU, India, Feb. 8, 2022 /PRNewswire/ -- Digital adoption
alone is no longer enough to meet business objectives and drive
profits, according to new research from Infosys Knowledge Institute
(IKI), the thought leadership and research arm of Infosys (NSE,
BSE, NYSE: INFY). The study reveals that companies must now use
digital to differentiate beyond traditional IT metrics, reaffirming
the importance of people-focused transformation and ESG in
achieving business success. While businesses once faced a 'digital
ceiling', unable to reach the most advanced levels of tech
adoption, these adoption thresholds have become the minimum
standard.
Infosys Digital Radar 2022 assessed the digital
transformation efforts of companies on a Digital Maturity Index and
found that companies have progressively adopted technology
year-over-year. The report, which surveyed nearly 2,700 digital
transformation leaders from the U.S., Europe, Asia
and Australia, ranked the most
digitally advanced companies as 'Visionaries', followed by
'Explorers' and then 'Watchers'. From 2018 to 2020, a meaningful
portion of businesses lagged far behind, watching the technology
journeys of others before starting their own. This year's findings,
however, show that all respondents have graduated from the
'Watchers' category and are now all either 'Visionaries' or
'Explorers'. Infosys has found that each industry has reached an
age of digital maturity never seen before. The percentage of
companies achieving moderate transformation success, the 'Explorer'
tier, rose minimally. However, the 'Visionary' cluster grew from
22% in 2020 to 30% in 2021, the largest year-over-year increase for
this cohort in the survey's history, indicating that companies have
broken through the 'digital ceiling' and being a top adopter is no
longer an operational or financial differentiator.
Companies across all industries have rushed to broadly
implement technology
Companies are significantly increasing adoption of emerging
technologies. More respondents reported implementing artificial
intelligence (AI) and blockchain (73% and 71%, respectively) than
mature and foundational cloud and legacy modernization (69% and
68%, respectively), suggesting that once emerging technologies
(like AI) now show real promise, and enterprises are moving quickly
and aggressively to implement them than in earlier times.
More than 90% of companies indicated they had at least started
to adopt the 19 digital initiatives surveyed. Technology adoption
in the healthcare industry, for example, increased from 60% to 98%
since 2019. The adoption rate for the manufacturing sector
increased from 81% to 97%, and the rate for the financial services
sector grew from 59% to 94% in the same period.
As adoption rates soared during the pandemic, the study also
indicated a point of diminishing returns for companies with high
levels of adoption. Companies with above-average adoption rates, in
fact, generated slightly less profit growth than those with lower
adoption, while those with average rates generated the most. The
study data suggests that mere adoption is not enough, what matters
most is the effectiveness with which companies use their
technology.
Previous surveys found adopting Agile, cloud, and other
technologies led to better operational and financial benefits, but
that was no longer the case in 2021, as more companies approached
digital maturity. Further, the survey found companies are more
effective when they use digital to positively impact stakeholders,
including through environmental and social responsibility and
initiatives like career paths for women and minorities, data
privacy, and AI ethics.
Salil Parekh, CEO,
Infosys, commented: "Enterprises are at an inflection
point post-pandemic. COVID-19's widespread disruption and the
subsequent digital acceleration have permanently altered how the
world views technology. While some enterprises have seen this as an
opportunity to move beyond the questions of whether and how far to
digitize, some still haven't realized the need to use these digital
tools to engage their stakeholders more purposefully and respond to
calls to serve people, planet, and community."
ESG provides direction, clarity — and profits
When companies have high levels of tech adoption and strong ESG
commitment, four out of five times (81%), they also use technology
most effectively. ESG and technology effectiveness are connected
because ESG informs company culture, shapes mindset, and provides a
purpose that guides decision-making up and down the line. Improving
ESG leads to higher effectiveness than simply adopting more
technology. While adoption is necessary and positive, ESG focus
further doubled tech effectiveness, indicating that ESG commitment
now drives value in its own right.
"Focused initiatives in sustainability almost unfailingly
reflect in a marked increase in revenue growth, accelerated
transformation effectiveness, boosts in profits and shareholder
value. ESG measures will increasingly grow to influence and
eventually change the metrics that measure transformation success,
especially when consistently demonstrated through engagements with
stakeholders across the board," said R "Ray" Wang, Principal
Analyst & Founder, Constellation Research.
As the world demands more sustainable business practices, this
research signals that companies who capitalize on the link between
tech effectiveness and ESG are best placed to succeed in the decade
ahead. They are more likely to realize business value and
proactively anticipate regulatory requirements and societal
pressures.
Unify ESG with digital transformation
Improving average transformation effectiveness has the
potential to unlock $357 billion in
incremental profits globally, based on data from the top survey
respondents. While digital adoption and ESG orientation
individually drive profits, they are more effective together. The
research identified four approaches to amplify purpose and increase
transformation effectiveness:
- Integrate experience into the operating model. Digital
Radar 2022 found that people-focused experience goals such as
improved customer engagement, building a data-driven culture and
increasing employee engagement are distinguishing top performers
than tech-driven efficiency.
- Elevate the human element across the life cycle.
Companies can emphasize the human element by utilizing Agile to
coordinate small behavioral nudges and include a diverse ecosystem
to better manage project delivery. Companies that rapidly
implemented Agile, and in more than half (60%) their teams, were
more likely to grow faster than peers (64% vs. 54% average).
- Build diverse, dedicated teams so that tech solutions meet
the needs of all. Purpose-driven culture is created through
teams that are intellectually diverse and have a shared, dedicated
purpose. Digital Radar 2022 concluded companies with greater
diversity use technology more effectively.
- Measure initiatives using ESG target. Human-centered
approach to solutions and ESG are becoming more quantitative and
metrics-driven. Companies today can chase loftier goals
practically, armed with technologies to help them set and meet
important climate and people goals.
Jeff Kavanaugh, VP and Global
Head at Infosys Knowledge Institute, commented: "This
year's Digital Radar research revealed a significant shift – no
longer are enterprises sitting, waiting, and watching from the
outside as others embrace digital. The most successful businesses
are no longer early digital adopters, nor those that invested the
most in AI, blockchain, and IoT. Those most successful firms now
see value in the relationship between digital technologies and the
people they serve. The companies best prepared to enter the
post-pandemic era have already realized that technology itself
isn't a differentiator, but a commitment to people and
purpose."
For a full copy of the Infosys Digital Radar 2022, please
visit: https://www.infosys.com/navigate-your-next/research/digital-radar-report.html
Note to Editor:
Methodology
In the latter half of 2021, Infosys used a blind format to
conduct an online survey that attracted responses from nearly 2,700
CXO, senior-level, and mid-level respondents from companies with
revenues upwards of US$1 Billion.
Respondents represented multiple industries and hailed from
Australia, China, France, Germany, India, New
Zealand, U.K., and the U.S. To gain additional qualitative
insights, phone interviews were also conducted with a few
practitioners and subject matter experts.
About Infosys
Infosys is a global leader in next-generation digital services
and consulting. We enable clients in more than 50 countries to
navigate their digital transformation. With over four decades of
experience in managing the systems and workings of global
enterprises, we expertly steer our clients through their digital
journey. We do it by enabling the enterprise with an AI-powered
core that helps prioritize the execution of change. We also empower
the business with agile digital at scale to deliver unprecedented
levels of performance and customer delight. Our always-on learning
agenda drives their continuous improvement through building and
transferring digital skills, expertise, and ideas from our
innovation ecosystem.
Visit www.infosys.com to see how Infosys (NSE, BSE, NYSE:
INFY) can help your enterprise navigate your next.
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