Digital Transformation » Risk-averse firms could suffer from fear of disruptive tech

Contemplating the concept of digital transformation can be an agonising feat for CIOs. Whilst it’s not a new concept, many companies maintain manual or outdated processes despite widespread innovation offering faster, more cost efficient and secure ways of doing business. Moving away from legacy architectures, on-premises systems and waterfall development can be a daunting process for any business, but they need to recognise the benefits digital transformation has to offer.

From a customer perspective the demand for new and improved product and service offerings is higher than ever. Additionally, demand for service change and digitisation from organisations is increasing rapidly as enterprises seek to expand their ecosystems and share IT services and data quickly and easily to facilitate trade and service delivery. All this demand is driving a need for strategic change at a higher level. Practical concerns aside, CIOs and senior IT leaders of large organisations are finding that it’s getting harder and harder to deliver that strategic change at the levels demanded by both internal and external customers.

While evolving IT strategy in concurrence with the evolution of technology is crucial to protect and improve revenue, and to reduce or control costs, it requires a level of cooperation between senior business leadership and IT teams that is often lacking.

This slow response to change can lead to missed opportunities to increase, or simply preserve, revenue and increased costs against faster-moving competitors. It’s important for financiers to realise that there is more to technology adoption than investing in data and analytics. There are three main reasons organisations seem slow to respond to new technological innovation, but these must be overcome given the increasing threat of disruption.

Realising the benefits

Many organisations are struggling to both agree, and realise, the benefits expected from IT change, with just over 70% of UK CIOs and senior IT leaders (surveyed by Coeus Consulting) admitting one of: business plans changing, senior management not buying into the change, or not taking enough risks as a reason for failure. This suggests that businesses are often far from aligned with their IT departments.

These same IT leaders said that the main drivers for change when adopting disruptive technology were, increasing operational efficiency (49%), increasing, customer satisfaction (32%) and increasing revenue (31%). From these results it is clear that IT success is inextricably linked to achieving business objectives. If organisations hope to experience these benefits then they must be committed to a strategy of adopting disruptive technology.

Risk-averse corporate fears

Almost three in ten respondents stated that they did not take enough risk, and two thirds only adopt technology when it has been tested in the marketplace. For many organisations this reluctance comes from leadership not being fully aligned with the IT strategy. Seventy one percent of CIO and senior IT leaders cited issues with the business strategy changing, and senior management not being bought into change due to fear of risk, leading ultimately to failure.

There are myriad technologies which could make significant impacts on efficiency and customer perception (such as AI and customer experience personalisation), which are currently seeing far lower than expected adoption rates in respondents’ organisations. It is imperative that organisations wake up to the possibilities afforded by embracing disruptive tech and invest in its adoption.

Risk-averse strategies, paradoxically, often leave organisations vulnerable to risk – including losing competitive edge or by even leaving themselves open to sophisticated cyber-attacks. This is why it’s important for organisations to review their approaches to risk, allowing opportunities to be explored easily, mitigated by methodologies supporting a ‘fail fast’ approach – one which favours embracing new technologies and strategies, and learning from any mistakes along the way.

Lack of competitor monitoring

Our aforementioned research also found that only three in ten organisations say they keep an eye on what their competitors are doing when it comes to keeping up with new and disruptive technologies.

Maintaining an awareness of both new and upcoming technological advances, as well as competitor activity will make sure you’re on the front foot when it comes to strategic planning for digital disruption. This can be done through leveraging relationships with existing suppliers and committing to internal horizon scanning. Either way, it’s important to keep ahead of the game when it comes to customer satisfaction and maintaining a competitive edge.

These issues caused by risk-averse strategies will need to be addressed sooner rather than later by organisations, big and small, or they seriously risk missing out on valuable business opportunities to those who have a different mind-set, appreciation of IT and attitude to risk. Businesses need to recognise the consequences that slowing IT spend, and ultimately, stagnating progress, could have on their business prospects. Taking unnecessary risks could lead to the downfall of an organisation, but in reality, spending on technology and taking a fail-fast, calculated approach to IT risk is now a necessity.