Telstra: Why are UK Businesses Struggling with DX?
Telstra MD gives his thoughts on why the UK is struggling with Digital Transformation and how this can change
Digital transformation is an ongoing hot topic. It won’t die down. No business will fully transform digitally until… well ever. Telstra recognises that UK businesses are struggling with even the first step of digital transformation. I spoke to Tom Homer, Managing Director for EMEA at Telstra, who shared some of Telstra’s own findings and gave me some context to how digital transformation can be bumped along in the UK.
Organisation vs departmental digital transformation
Telstra found that most businesses allow individual departments to drive digital transformation projects, whereas success comes when the whole organisation has a unified approach.
I asked with each department already driving their own agenda, how does an organisation enforce one change without losing buy-in and respect at department level? For example, one team uses Slack and the other a native UC app then the CEO says we only use the UC app from now on.
Tom said the research found that while a company-wide approach to digital transformation is significantly more likely to deliver business success, more than half of UK organisations are taking a fragmented, business unit led approach.
“For the 53% of British businesses who said they take an incremental approach, how do they change? What our research shows is that change must be led by the C-suite and company boards at the outset. It is the role of the company’s most senior team members, and not just the CIO, to set a clear company-wide vision, strategy and roadmap for digital transformation.
Not having a clear, big-picture vision means there is no foundation for transformation teams to guide execution plans and determine success. Teams need this direction and will thrive in an environment where the importance of their world is guided, driven and acknowledged by their company’s most senior leaders”.
Constant struggle to deliver
I asked Tom why businesses are struggling to deliver digital transformation and what is the key to successful digital transformation, beyond technology?
Tom said that organisations are too focused on the role of technology, whereas a successful digital transformation is one that balances people, culture, process and technology.
“Digital transformation should be a company journey that involves upskilling and changing employee mindsets, adapting structures and ways of working, creating teams that can maximise the new technologies being introduced”
Getting it right
I asked Tom what advantages are businesses that get digital transformation right, enjoying?
Telstra’s research tells us that the benefits of a successful whole-of-company, leadership-led approach to digital transformation cannot be understated.
“The impact is not only digital, but also on the bottom line. Globally, digitally mature companies are significantly more likely to achieve successful revenue growth (39%) against businesses that haven’t started their transformation journey (13%). This trend is consistent across all business outcomes, including increasing profit margins (39% vs 12%). For business leaders, making the right digital decisions provides enormous rewards”.
Processes and people, not technology
Telstra found that business leaders are leaning too heavily on technology (rather than people and processes), to deliver digital transformation, and this is reducing their chances of success.
I asked Tom the killer question: how do business leaders change the habit of a lifetime and entrust people and processes to deliver digital transformation?
“About three quarters of UK businesses are undergoing a digital transformation in some form, but many are hindering success by placing too much focus on technology and too little on people and processes. To combat this, organisations must stop being attracted by ‘shiny’ new innovations and understand that successful digital transformation sits with those that use and understand it.
I strongly believe that digital transformation is technology-enabled, but people-led. And that requires a skilled and empowered workforce.
Having employees who can use existing digital technologies and easily adapt to emerging trends is vital for companies to stay at the forefront of digital transformation. Without skilled employees, there can be no digital transformation.”
ROI on digital transformation
Telstra research shows it is very difficult for firms to demonstrate the financial returns of a digital transformation. Naturally, I asked Tom how can Telstra help in this scenario?
“Telstra’s research found that in measuring digital transformation programs, UK companies are finding it particularly tough to show financial outcomes. In fact, of all the business outcomes surveyed, increasing profit margins scored the second lowest, while the softer qualitative measure of increased customer experience ranked first.
To understand this, we looked further into which companies are seeing financial outcomes, and why. What we found is that the benefits of a successful company-wide, C-suite led approach to digital transformation cannot be understated.
The impact manifests on the bottom line. We found that companies which are highly digitally mature are much more likely to achieve increased profit margins and revenue growth than organisations that haven’t started their digital transformation journey. These companies are clear on what digital transformation means for their organisation and their digital strategy is a company-wide approach.
They have one set of measures which all parts of the business align to and are measured against. And they also acknowledge that transformation is a journey and set different metrics for different stages of the journey. Each organisation has its own stages to consider, depending on its industry, standing and transformation journey, and must be tailored to their strategy”.
Plugging the digital transformation gap
Telstra’s final finding is that there is a big gap between what UK businesses rank as their highest priorities and how they perform in these areas. For example, cyber security is widely identified as a focus area, yet most firms struggle to deliver on it.
I asked whether Tom could see this chasm closing soon.
“One of the most interesting findings in our report was a substantial gap between digital transformation priorities and performance.
Cyber security came through as the critical top priority across all 14 markets we surveyed. Three priorities were all listed in the top five priorities of global companies”.
- Protecting digital assets from cyber threats
- Optimising security investments
- Protecting, detecting and responding in real time to events
Tom said that what raises a red flag is that these top priorities were ranked poorly in terms of performance.
“It’s not surprising to see cyber security as a key focus area. Major companies are receiving hundreds of cyber threats each day, and cyber criminals are more organised and better resourced than ever.”
“The threats are persistent. It’s not enough for businesses to secure their own systems – they need to coordinate with supply chains too”
“But how to companies successfully address cyber security? Our research gave us some key insights into understanding this better. We found UK businesses are over-emphasising the importance of technology as a differentiator for digital transformation decisions – and are not focused enough on people, processes and partnerships.
About half of all of data breaches are caused inadvertently by staff – more than 10 times as many as by staff acting maliciously. We also know that the right processes through appropriate governance can help prevent security breaches – and that the right partners bring incredibly expertise to this area. So, by focusing less on tech solutions, and more on holistic solutions, there’s an opportunity for businesses to make a difference here”.