TotalCIO

Sep 27 2015   8:50PM GMT

Digital shift more hype than happening at most companies: McKinsey

Linda Tucci Linda Tucci Profile: Linda Tucci

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McKinsey & Co. published new data this month on how C-suite executives rate their progress on digital initiatives.

Bottom line for CIOs: The shift to digital is a super-high priority for the 987 executives surveyed by McKinsey, but it is still more hope than reality  at most companies — and therefore should represent a significant opportunity for CIOs to take a leadership role. (More on the should-part below.)

Here are some of the McKinsey data points to ponder.

Digital expectations

  • Nearly three-quarters of C-level executives (71%) believe digital initiatives will add top-line revenue to the business.
  • Nearly two-thirds (64%) say digital activities will result in bigger profits.
  • However, less than one-third said their companies’ business activities are digital.
  • Nearly half of respondents said their companies are capturing just 20% or less of the potential value that digital activities could bring to the business

C-level involvement

  • Nearly half (46%) said their CEOs are personally involved in the companies’ digital agendas, up from 23% in 2012.
  • CIOs were ranked as the second-most digitally-involved exec at 35%, compared to 32% of CMOs and 23% of business unit heads. (CIO digital clout slipped from 40% in 2014 as CEO involvement rose.)

Biggest challenges to going digital

  • Lack of internal leadership or talent, both functional and technical, topped the list of the most significant challenges to realizing digital objectives at 31%, followed by:
  • lack of data and understanding of how digital trends affect industry and company competition;
  • inability to keep pace with faster speed of business of under digital;
  • inability to adopt an “experiment mind-set.”

Process automation climbs digital agenda, activities vary by industry

How the push to digital actually plays out at companies is pretty interesting. Most executives said their digital programs are focused on strengthening and growing the existing business, not aimed at new businesses or geographies — in line with what they said a year ago.

However — in a survey result especially germane to CIOs — digital activities within the enterprise are changing.

While “digital engagement with customers” remains the top corporate priority (as it was in the last three surveys), “automation and/or improvement of business process” has climbed the digital agenda: Just over half of respondents cited it as a top-three priority, right after “digital innovation of products, services, business or operating models.”

Priorities differ by industry: “Big data and advanced analytics” is a much bigger digital priority for healthcare than in other sectors, while business process improvement is of most concern to manufacturers. “Digital customer life-cycle management” is of low concern for all industries surveyed, suggesting that this is an area, in addition to business process improvement, where CIOs can step in and take charge.

Inside track from digital high performers

Of the 987 executives surveyed, 71 or a mere 7% identified themselves as high-performing digital companies. Here are the areas where they differed most significantly from their less digitally-enabled peers:

  • Reviewed portfolio more frequently for digital-related opportunities and threats (53% vs. 35%)
  • Made significant changes to risk profile and time horizon of business portfolio (51% vs. 21%)
  • Reallocated of larger share of resources between businesses in the portfolio (46% vs. 29%)

Speed is critical: 43% of high performers say their companies take digital initiatives from idea to implementation in less than six months vs. 17% of all other respondents.

Time to get going!

( Click here for the full report).

Let me know what you think of this story — email me or find me on Twitter @ltucci.

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