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ME organisations face tough digital transformation challenges

Dubai - Migrating to modular technology architecture and decommissioning legacy infrastructure will result in dynamic market adaptability, newfound agility, and faster go-to-market timeframes, experts said

The impact of the ongoing Covid-19 pandemic on businesses has been felt across every sector and the majority of companies are experiencing difficulties as they attempt to regain control of their top and bottom lines, according to a new report by Boston Consulting Group (BCG).

The report, titled ‘The Five Imperatives of a Successful Digital Transformation’, stresses that while recent events have propelled the urgency to transition to digital, they have also exacerbated the risks and challenges already facing organisations the outbreak. Approximately 70 per cent of organisations globally have failed or are falling short in their digital transformation attempts, and Middle Eastern organisations are also facing similar challenges.

“Many organisations have identified the need to react to the changing business landscape but have struggled to implement and advance their respective transformation agendas,” said David Panhans, MD and partner at BCG. “Insufficient funding, inadequate guidance and direction, unempowered business units, legacy infrastructure, inconsistent working processes and practices, and issues acquiring the right talent are all primary reasons for the widespread shortcomings we are witnessing. It is also important to acknowledge that the pre-pandemic business-as-usual environment will not be resuming, and obstacles to overcome have multiplied in terms of difficulty.”

Shoaib Yousuf, partner at BCG, noted that despite the pandemic’s repercussions, companies making sustained progress on their digital transformation journeys have demonstrated more operational resilience due to their ability to serve customers digitally. “Because digital is here to stay and is the way forward, it is imperative that company heads act now, implements these steps, and proactively set a long-term agenda, so they can fulfill every requirement of a complex digital transformation journey.”

BCG has identified several imperatives for digital transformation success, such as businesses executing transformation initiatives by identifying specific KPIs, developing a business-led portfolio, and revamping corporate processes. In addition, BCG recommends adopting new ways of working which will streamline customer, employee, and partner experiences and rapidly launch products and services.

New research by IDC has shown that while 76 per cent of manufacturers in the Middle East, Turkey, and Africa (Meta) region are currently engaged in, or about to start, a formal digital transformation (DX) program, a significant proportion risk limiting their efforts by failing to connect key elements including DX initiatives, data, and technology environments.

In total, 44 per cent of organisations said their DX initiatives are not integrated, undermining the perception of DX as being everyone’s responsibility, and that their digital roadmap focuses on the short term and fails to factor in the long-term transformation of their industry. In addition, 51 per cent of organisations pointed to siloed data as a challenge, driven by limited understanding of existing data assets, and a lack of enterprise-wide data management. This is often exacerbated by unintegrated decision-making based on small subsets of data using rudimentary analytic models. Lastly, 62 per cent of organisations worry about siloed technology environments, saying that multiple digital technology environments exist separately from core IT.

BCG has noted that migrating to modular technology architecture and decommissioning legacy infrastructure will result in dynamic market adaptability, newfound agility, and faster go-to-market timeframes. In addition, promoting a unified digital mindset internally will infuse innovation in company DNA and build digital capabilities. Lastly, creating an analytics monetisation strategy and aligning analytics operating models with clear roles and responsibilities will build the required capabilities to utilise data and analytics.

Romil Radia, Middle East Regional Deals Markets leader at PwC Middle East, pointed out that we are living in a new normal where businesses are having to rethink their strategies and navigate the uncertainty. “It is important that they remain agile and re-evaluate their strategy since deals can no longer be put on hold. The Covid-19 pandemic will continue to force businesses across many sectors to restructure and transform their operations in the years to come.”

“Going forward, expected consolidation across a range of sectors including those hit hardest by Covid-19, reallocation of capital across both public and private sectors, restructuring and/or digital transformation of certain businesses which has become critical in the wake of Covid-19 are what we see as some of the key themes that will shape the Middle East,” said Ovais Chhotani, Deals partner at PwC Middle East.

rohma@khaleejtimes.com