Research from Infosys Knowledge Institute suggests digital adoption alone is no longer enough to meet business objectives and drive profits. The Infosys Knowledge Institute is the thought leadership and research arm of Infosys The study reveals companies must now use digital to differentiate beyond traditional IT metrics, reaffirming the importance of people-focused transformation. 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. The research found that companies have progressively adopted technology year-over-year. The report surveyed nearly 2,700 digital transformation leaders in the US, Europe, Asia and Australia. It ranked the most digitally advanced companies as ‘Visionaries’, followed by ‘Explorers’ and then ‘Watchers’. From 2018 to 2020, many businesses lagged far behind, watching the technology journeys of others before starting their own.
This year’s findings, shows that all respondents graduated from the ‘Watchers’ category and are now either ‘Visionaries’ or ‘Explorers’. Infosys 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. This indicates companies have broken through the ‘digital ceiling.’ Being a top adopter is no longer an operational or financial differentiator.
Companies rush 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 modernisation (69% and 68%, respectively). This suggests that once emerging technologies now show real promise, and enterprises are moving quickly and aggressively to implement them.
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%. 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, generated slightly less profit growth than those with lower adoption. 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. However, that was no longer the case in 2021, as more companies approached digital maturity. The survey found companies are more effective when they use digital to positively impact stakeholders. Through environmental and social responsibility and initiatives like career paths for women and minorities, data privacy, and AI ethics.
According to Salil Parekh, CEO, Infosys, “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. Some enterprises have seen this as an opportunity to move beyond the questions of whether and how far to digitise. Others still haven’t realised the need to use these digital tools to engage their stakeholders more purposefully. Or 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 Environment Societal Governance (ESG) commitment 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. Infoysys suggests this indicates that ESG commitment now drives value.
Enterprise Times: What this means for business.
Research has shown that young people, particularly Gen-Z are looking for more than just transactional relationships with the businesses they work for and use. They want to know that the businesses they are involved with are supporting the struggle over climate change. There already is an avalanche of evidence that indicate the world is demanding more sustainable business practices. Infosys’s research suggests companies who understand the link between tech effectiveness and ESG are in the best position to succeed. Not only for today, but in the decade ahead. They are more likely to realise business value and proactively anticipate regulatory requirements and societal pressures.
The Report finds companies can gain $357 billion in annual profits globally through people-focused transformation efforts and a commitment to ESG. This may appear a bit finger in the wind, however the report is spot-on in recognizing the current business trend. The need for businesses to truly embrace ESG principles. The companies best prepared to enter the post-pandemic era have already realised that technology itself isn’t a differentiator. But the commitment to people and purpose.
