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7 Findings and 4 Lessons From The Economist Intelligence Unit Study: Benchmarking Competencies for Digital Performance

Unok Rast
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The Economist Intelligence Unit (EIU) just released a new study commissioned by Riverbed that explores nine digital competencies that help organizations improve their digital performance and, ultimately, achieve their objectives. In the global study Benchmarking Competencies for Digital Performance, EIU contends that every organization in every industry is becoming a digital organization. Now, what sets organizations apart are digital competencies and how effectively they develop the right behaviors, skills, and abilities to maximize digital performance and achieve strategic objectives.

This comprehensive research report, which also contains insights from thought leaders at The Permanente Federation, Harvard Business School, International Data Corporation (IDC), Microsoft, and CommonSpirit Health is a must-read for business and government leaders who are driving and/or supporting digital transformation initiatives for their organizations. Accompanying the study is a first-of-its-kind online benchmarking tool that enables users to assess how their organization’s digital competencies compare to peers, all survey respondents, and high performers.

Here’s a brief summary of 7 key research findings you’ll find covered in detail in the report:

1. Digital competencies matter; they directly impact business outcomes.

Eight in ten respondents say digital competencies are either very or extremely important to achieving strategic goals such as revenue growth, service quality, mission delivery, profit growth/cost reduction, and customer satisfaction. This is relatively consistent across segments, although more pronounced in the retail, media and technology industries, where a majority of respondents described digital competencies in the strongest way, as extremely important for growth.

2. Some competencies are perceived to be more important to meeting goals.

Digital competencies high performers say are important to achieving objectives

Figure 1

While all nine competencies are important, survey respondents believe the top five for meeting organizational goals are:

  • data analytics,
  • workplace transformation,
  • product and service innovation,
  • digital experience management, and
  • IT infrastructure modernization.

Unlike other respondents, high performers say their number one competency is IT infrastructure modernization, cited by nearly 78%. In addition, high performers actually place less emphasis on data analytics (eighth place) compared with other respondents (first place), perhaps because they already leverage analytics on a regular basis. See Figure 1.

3. Digital-competency gaps exist, limiting benefits and causing poor user experience.

More than half (54%) of respondents say they’re unsatisfied with their organizations’ progress on developing digital competencies. Even more (57%) say their organizations are struggling to achieve important goals because they lack key digital competencies. Consequentially, one-third of surveyed organizations report only neutral or no measurable benefits from their digital strategies.

In addition, nearly two-thirds (65%) of respondents say their digital-competency gaps have negatively affected user experience. This may explain why nearly half (48%) of respondents indicated they need to significantly improve digital experience management, the competency most relevant to monitoring application, network, infrastructure and device performance to measure and improve user experience. See Figure 2.

Progress on developing digital competencies has not been fast enough

Figure 2

4. High performers are significantly ahead, but not complacent.

High performers, as would be expected, more frequently say their organizations are ahead of the competition. Eight in ten (81%) on average say their progress is running ahead of peers and are more than twice as likely to say they are significantly ahead of rivals in three competencies: IT infrastructure modernization, automation of business processes, and development approaches such as Agile and DevOps.

However, high performers understand that both digital transformation and improving digital competencies require continual focus. For this reason, 57% of high performers on average see a need to improve across all digital competencies, compared with 46% of others. What are the top five competencies they want to improve? Product and service innovation, business process automation, workplace transformation, talent recruitment, and digital experience management.

5. Expectations for IT and digital performance are rising; most are not ready for the challenge.

When asked who is mandated with developing and delivering their organisation’s digital competencies, 51% of respondents say their IT departments have a leadership role. The critical question is whether IT departments are prepared to take on a leadership role in which collaborating with other functions and disseminating knowledge and digital performance data are requirements.

Poor communication between IT and other departments limits digital competencies

Figure 3

The research suggests that only a minority may actually be ready for a shift of focus. More than two-thirds (68%) of respondents say their IT departments, instead of leading digital competency in other departments, limit themselves to technology implementation and management. Furthermore, nearly two-thirds (63%) of respondents say that poor communication between IT and other departments limits their organisations’ digital competencies. See Figure 3.

6. IT and non-IT functions have conflicting perspectives on their digital competencies.

IT professionals actually overestimate the level of digital competencies in non-IT functions. For example, 61% of IT respondents describe their organization’s non-IT staff as advanced at digital experience management. However, only 45% of non-IT respondents rate themselves that high.

Conversely, non-IT respondents generally have a lower estimation of their IT department’s competencies than IT professionals themselves across several competencies including digital transformation strategy, workplace transformation, IT infrastructure modernization, digital experience management, and the use of data analytics.

These gaps reflect communication challenges between functions and raise questions about how much collaboration is really taking place, how organizations measure their own competencies and, ultimately, whose responsibility is it to ensure an organization’s digital competencies are driving performance.

 7. Developing digital competencies isn’t easy; high performers point the way forward.

The top challenge to developing digital competencies is the complexity of change itself, cited by 43% of respondents. Other significant challenges include legal or security concerns (37%); rigid systems, networks and infrastructure (32%); lack of digital understanding, talent and skills (30%); and insufficient funding (29%).

Approaches used to develop digital competencies

Figure 4

However, more than half (52%) of high performers say they are extremely confident about overcoming challenges, compared with 22% of others. They adopt concurrent and a wider variety of approaches to digital competency development. More than half (53%) have appointed Chief Digital Officers (CDOs) compared with a third (36%) of other respondents. Similarly, 53% of high performers establish a digital department or competency center, compared to 39% of everyone else.

In addition, for high performers the importance of transforming the IT department to meet the needs of the digitization is a recurring theme of this report. For high performers, not only are IT teams seen as having a leading role on developing and delivering the right competencies for organizations, IT transformation itself is actually their top competency for meeting objectives.

This is one of several differences between high performers and other respondents that draw four important lessons for all organizations to consider:

  1. When it comes to digital competencies, there are no limits on improvement.
  2. Extraordinary digital performance requires IT transformation and modernization of legacy systems to support digital strategies.
  3. The sooner an organization develops its digital competencies, the sooner it can deliver exceptional digital experiences.
  4. Varied and concurrent methods of developing digital competencies are necessary to get and stay ahead of your peers.

About the Study

The Economist Intelligence Unit in January-February 2019 surveyed 512 senior-level leaders in North America, Europe, the Middle East and Africa and Asia Pacific who work at 1,000+ employee global, multinational companies or government institutions. The study focused on eight industries (industrials, energy & materials, financial services, retail, media/entertainment/publishing, technology/telecommunications, healthcare, professional services, and government) and nine digital competencies:

  1. analytics using customer and/or operational data from digital systems;
  2. ability to manage and measure the user and/ or employee digital experience;
  3. digital product and service innovation;
  4. digital talent recruitment, retention and management;
  5. IT infrastructure modernization/ transformation;
  6. automation of business processes with digital technology;
  7. digital development techniques (e.g., Agile, design thinking);
  8. organization-wide digital transformation strategy; and
  9. workplace transformation with digital technologies.

About The Economist Intelligence Unit

The EIU is the thought leadership, research and analysis division of The Economist Group and the world leader in global business intelligence for executives. They uncover novel and forward-looking perspectives with access to over 650 expert analysts and editors across 200 countries worldwide. More information can be found on www.eiuperspectives.economist.com. Follow them on Twitter, LinkedIn, and Facebook.

 

 

 

 

 

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