As companies look to pivot their business models to become more resilient ahead of a global recession, digitisation is high on boardroom agendas in 2023. Six-in-ten executives of large companies therefore expect to increase spending on digital transformation in spite of economic headwinds.
Despite the deepening downturn, multiple reports point to the confidence of large companies around the world in their ability to succeed. Much of this confidence seems to hinge on firms maintaining their current spending levels on technology and innovation – fronts which leaders believe will open up new opportunities for their companies to win revenue growth.
The latest report to suggest this comes from Boston Consulting Group (BCG). The strategy consulting giant surveyed more than 2,700 executives from around the world, with roughly half the managers surveyed working for companies with more than 5,000 employees. Of that group, two-thirds said they actually intend to spend more on digital initiatives in 2023 than previous years – while just 4% will reduce technology spending.
Diederik Vismans, Managing Director and Partner at BCG X , explained, “To transform quickly and impactfully using technology is one of the biggest challenges companies face today. Digital transformation is crucial for companies that want to win.”
Even as executives way cuts to spending on ESG and sustainability initiatives, the possible yields of digital investment mean that executives are committed to ramping up investment there. In fact, some see such innovation as helping make their business model greener; with building digital capabilities that can help drive sustainability goals proving one of the most popular goals for digital spending, among respondents.
However, when it comes to which kinds of technology specifically are gaining the most attention – not necessarily the most money – some very familiar trends topped the list. BCG found artificial intelligence, blockchain, and Internet of Things (IoT) were of the most interest to executives; as they have been for the bulk of the last decade.
And while technology such as blockchain has actually delivered muted results en masse – at least compared to the levels of hype it has received – many executives remain convinced that this time will be different. Nine-out-of-ten expect to realise a substantial and impactful digital transformation in the coming months – something BCG warns may be easier said than done.
According to Christoph Schweizer, Global CEO of BCG, many CEOs he speaks to “struggle with the challenge of realising their business strategy through major digital transformations,” something the firm’s research backs up. Previous polling by BCG already shows that only one-third of digital transformations actually succeed at present.
Looking to help executives improve those figures, BCG’s latest report also explored how to navigate the many pitfalls of digital transformation. The biggest stumbling blocks it notes are making the right choice in disruptive technologies, successfully scaling up technology within the wider organisation from a pilot and finding/attracting the right tech talent to implement the digital transformation. At the same time, streamlining business ecosystems cannot be underestimated, with 85% admitting they were currently concerned by cumbersome coordination with their suppliers, that could hold back transformation efforts.