Failure to Embrace Digital Tech Can Have Negative Impact on Supply Chains

Despite the potential for transforming supply chains with digital technologies, few multinationals are seeking that advantage.

According to Capgemini Consulting in partnership with the MIT Center for Digital Business, companies are at risk of falling behind if this trend continues.

The study, “Digital Transformation: A Roadmap for Billion-Dollar Organizations,” examines how digital technologies are changing the business of some of the world’s leading firms.

Interviewing over 157 senior executive-level respondents from across 15 countries at global companies with more than $1billion in annual sales, the study highlights the fluctuating pace at which digital transformation is taking place and the varying levels of success experienced.

“Two elements are at the heart of the alchemy of digital transformation,” said MIT’s George Westerman, research scientist and a co-contributor to the report.

“Firms than can identify the ‘what’ and ‘how’ dimensions can drive powerful digital transformation that yields significant business value. These mature few have mastered not only the style of digital transformation but also the substance.”

Westerman said that very mature exponents of digital transformation have a sophisticated grasp of both the what and the how, but overall the study characterizes four levels of maturity:

*Digital Beginners: These companies are doing very little with advanced digital capabilities, although they have more traditional digital capabilities such as internet, e-mail or ERP. Companies may be in this category by choice but many are either unaware of the possibilities of new digital technologies or are starting to invest here without effective transformation management in place.

*Digital Fashionistas: These companies have implemented digital tools, some of which may be creating value, but some may not. These companies are motivated to bring on digitally-powered change, but their digital transformation strategy is not founded on real knowledge of how to proceed. Many of these companies believe they must move fast to keep up with demand for digital capabilities, but do not necessarily have a clear vision of how the elements will collectively create value.

*Digital Conservatives: These companies understand the need for a strong unifying vision and for governance and internal engagement activities to ensure prudent investment management. They understand where the company should be going and how to master digital challenges, but they can’t always build organizational momentum to carry out an ambitious program. As a result, though aiming to spend wisely, their careful approach may cause them to miss out on valuable opportunities.

*Digirati: These companies truly understand how to drive value from digital transformation. They combine a strong shared vision for transformation, careful governance and engagement with sufficient investment in new opportunities. They have developed a digital culture that can envision further changes and have the ability to implement them wisely for competitive advantage.

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