Companies that are committed to expanding the skills of their workforces and investing more in technology tend to show a higher degree of digital development than those that allocate fewer resources to these priorities. This is demonstrated by a study by the Boston Consulting Group (BCG) which surveyed 1,800 companies in Asia, the EU and the US. Among the companies surveyed, financial institutions and telecommunications companies are the most digitally developed: more than 25% can be considered digital leaders. Public sector entities and energy companies lag behind, with more than 40% belonging to the group of 'digital laggards'.
"Financial institutions are pioneers in digital maturity. Beyond digitising their operations and undertaking new digital initiatives to improve the customer experience, they have fully understood that the digitisation of the organisation must be a priority," he says. Jorge ColadoPartner & Managing Director of BCG in Spain.
"It is clear that prioritising investments correctly is one of the surest ways to develop digitally," says Michael Grebe, Senior Partner and technology expert at BCG. "If they want to remain competitive and not lose ground, laggards need to take a close look at how industry leaders are allocating their investments," says Michael Ruessmann, Senior Partner and digital transformation expert at BCG.
The Digital Acceleration Index measures the degree of digital development.
The study is based on the BCG's Digital Acceleration Index (DAI). Managers and executives assessed the degree of digital development of their companies against a set of criteria using a scale of one to four in 35 categories. These raw scores were then aggregated and responses were assigned values from 0 to 100. Companies with a DAI between 67 and 100 were considered leaders, while those with a DAI of 43 or less were referred to as laggards.
Where are the digital leaders?
The study was conducted across nine sectors and three world regions: Asia, Europe and the US. The best performing sector was the financial services sector in Asia, with a Digital Acceleration Index (DAI) of around 60. In both Europe and the US, the telecommunications sector topped the rankings. It is worth noting that some sectors performed very well in Asia, while they lagged significantly in the other regions. For example, consumer companies in Asia consider their level of digital development to be higher than their counterparts in the US and Europe. "This was the first year we included Asia in the study and Asian companies performed very well. Their level of digital development in all sectors is high compared to similar companies in the rest of the world," says Michael Ruessmann.
Digital leaders achieve great results by leveraging three levers
The study identified three levers that leaders use to develop digitally. First, they invest more than 5% of their OPEX in digital projects. In particular, the percentage of US leaders spending this amount (90%) is much higher than in Asia (75%) and Europe (65%). Leaders around the world also tend to allocate more than 10% of their workforces to digital jobs and projects. In this case, Asian leaders (54%) are slightly ahead of their US counterparts (51%) and clearly ahead of those in Europe (44%). This focus on the workforce allows Asian companies to achieve the highest scores in "new ways of working". Finally, leaders also implement digital solutions on a larger scale than laggards and are less likely to stagnate those solutions by relegating them to a single instance. "After conducting the study for three years, we can say that these digital levers remain in place and allow us to distinguish digital leaders," says Michael Grebe.
Digital leaders have very clear investment priorities
Digital leaders are increasing their digital profiles and investing more than laggards in developing their workforces. The study found that three out of four leaders plan to grow their digital teams by more than 20%. By region, more than 90% of leaders in Asia plan to grow their workforces at this rate, while those in the US and Europe are less ambitious, planning increases of 70% and 65% respectively.
However, digital leaders are not just looking outward, they are concerned about what they already have inside their companies. Half of them plan to develop the digital skills of more than 20% of their staff, which less than a third of laggards will do. Notably, leaders spend 22% of their total digital investment on technology, compared to laggards, who spend 16%. However, as investment increases, the digital acceleration index (DAI) in technology is much higher among leaders than laggards (78 vs. 29) and indicates that the gap between the two groups is likely to grow.
Asian leaders move to the forefront of artificial intelligence (AI)
Approximately 50% of global leaders dedicate more than 10% of their digital profiles to AI projects, while only 29% of laggards are committed to this policy. Asian companies have the most people working on AI solutions. The study found that the number of Asian companies devoting more than 10% of their digital workforce to AI projects is double that of the EU and the US. Asian companies are also ahead in AI adoption: 87% compared to 78% in Europe and 74% in the US.