Digital Transformation (DT) is coming of age. In the recent Digital Change Survey commissioned by IFS covering 750 professionals across a range of industries, 80 percent saw themselves as “enabled,” “enhanced,” or “optimized” to leverage DT.

Even more impressively, 89 percent said they had “advantageous” or “adequate” funding in place for digital projects—a clear acknowledgment that the time of disruptive technologies is here, and that the vast majority of firms are realizing that they need to invest.

Why are businesses investing? Where do they see the big profits? And how successfully are they selling digital change throughout their organizations?

Companies need to look beyond quick efficiency gains
The survey found that over a quarter (27 percent) of companies say digital transformation “makes them more competitive,” giving them a vital differentiating edge. Twenty-nine percent see the main benefit as “accelerating innovation” and 28 percent “growth opportunities in new markets.” All these are inspiring.

Companies using digital transformation to ask far-reaching strategic questions—like “can I use DT to get myself a bigger share on the market, or increase my product portfolio?”—are making the most of the long-term, strategic opportunities of the technology. They’re sensing how it can transform even seemingly small tactical decisions—“how often do I service my equipment and how does this impact my competitiveness?”—into key strategic differentiators.

But these companies are in the minority. The largest group in the survey, 47 percent, still see the main benefits of DT as “improving internal process efficiencies”, which makes me wonder: Do companies really see the full potential of what disruptive technologies can achieve? Innovation can make or break a company and study after study foregrounds it as a C-level priority. So why doesn’t it appear to be a driver for digital transformation?

Considering technology investments, this could mean that the majority of funds are invested in making internal processes more effective and thereby failing to enable innovation. Seeing “improved internal efficiency” as the key reason to explore DT is, in my view, too short sighted. It fails to exploit the strategic benefits and makes it more difficult to win the understanding and commitment of the staff.

Winning hearts and minds—overcoming fear of change
Despite plenty of good news, the survey still reveals that 42 percent of respondents view “aversion to change” as the main barrier to digital transformation. Companies need to think carefully about how they position iot and other disruptive technologies, how they tell the story of why they are using them, and how they communicate the benefits to their entire workforce—transforming staff from “data-phobes” to data fans.

The most successful technology shifts are embraced from the bottom up, as well as the top down—they’re driven by people. The buy-in from staff is mission-critical. The opportunities for growth and improvement for all need to be communicated clearly and openly.

Imagine a service engineer hearing predictive maintenance is to be deployed. “That’s going to put me out of a job” would be a common reaction—even if closer questioning found them in need of new inspiration and working methods and open to new opportunities! In this scenario, stressing the big-picture, long-term strategy (“We’re going to be more competitive / accelerate innovation / win growth opportunities in new markets”) would be more inspiring than the short-term tactical benefits (“We’re improving internal efficiencies”).

Digital transformation is like many other big change projects all about winning the hearts and minds of the people who are actually going to enter the data or use the system hands on. It needs to be managed on a human scale. We all understand that no amount of short-term savings will make our jobs, or businesses, more secure if the firm isn’t staying competitive in the long-term. Painting the big picture, positioning digital change as strategic not tactical, as inspiring not invasive, is vital.

Upskilling and reskilling key to leverage new technology
One in three companies in the survey are “unprepared to deal with the digital skills gap.” Smart businesses are already spotting potential data candidates like our service engineer above, who have the appetite and skills to expand their role. How can companies bridge the skills gap affordably, sustainably and creatively?

Consider how your organizational structure needs to be developed to foster digital development. For large companies, there is the option of creating new departments dedicated to digital initiatives—hothousing analytic skills and nurturing them in-house.

Conduct digital competence inventory. There is a huge need for training staff in managing and analyzing data, this must be met for companies to succeed with digital initiatives. Establish what technology in your company is key for development. As part of this digital inventory start earmarking individual staff members who have the drive to upskill.

Developing skills properly is paramount. HR teams need to decide what current roles need to be developed and where new talent is needed. Bring in external trainers to provide new perspectives.

Work together with local universities, both to attract talent and to influence the schools to focus their education programs in the right areas. Placement schemes offer undergraduates real-life programming experience, growing the firm and the student. Apprenticeship schemes discover local talent and give them support and a place to grow

Three pillars for success—where do you need to focus?
There are three pillars to succeed with digital transformation—technology, investment, and people. The technology aspect is often mastered most successfully, as it is driven by technology experts with clearly dedicated areas of responsibility. The main question is whether you are focusing on the right technology to drive transformation at the right time. Do you want to be the pioneer taking risks or jump on the bandwagon when the technology is more mature?

Regarding investments, as we saw in this survey, companies think that they are investing enough in digital transformation; but are they focusing on the right areas? The results indicate that there is a heavy focus on process efficiencies, so there could be a need to steer the focus towards more innovation-focused investments.

Finally, the people factor is most often forgotten in the digital transformation process. This is important from both a talent and communications perspective. If over 40 percent view “aversion to change” as the main barrier, employee communications is of utmost importance to make sure that your staff knows the purpose of change and how they are affected.

So it’s high time to ask: Where do you need to focus to build these pillars and be successful in your digital transformation?

Antony Bourne is vice president for global industry solutions at IFS.