Point of View

Add digital fluency to make 2022 the year of business transformation

December 16, 2021

The Bottom Line: Enterprises must develop their people or risk losing the edge their digital transformation foundations offer

“We must overcome the cultural drag that is slowing efforts to reconfigure how—and by whom or what—work gets done. Change management needs to be built in,” asserted HFS Research President, Research & Advisory, Saurabh Gupta, at the HFS Digital Symposium panel on Embracing People & Business Change.

That cultural drag manifests in low levels of digital fluency that enterprises must now tackle.

Eva Sage-Gavin, Senior MD, Talent & Organization Human Potential Practice, Accenture, told our panel her research across 12 geographies found that while most people were learning about digital, only 14% could be categorized as digitally fluent. Our 2021 Pulse Survey of 800 Global 2000 enterprises identified the need to improve the digital fluency of the workforce as the #1 change required in ways of working in this next year.

The rush to build is over – now change to reap the benefits

The rush to implement the building blocks of digital transformation is over. Leading enterprises have made the hard decisions and big technology investments. Now they must prioritize people and process change to make 2022 the year of business transformation.

All too often, people and process change are the elephants in the room, ignored until they are called out as the reason the technology investment has failed. Focusing on core capabilities such as design thinking, change management, skills enablement, and process innovation is essential in driving operations excellence.

These core capabilities make the difference between a technological transformation and a business one. In supporting the development of digitally fluent teams, people and process change delivers the mindset to challenge, improve, and innovate—the keys to better business outcomes through business transformation.

No time to waste—the leaders have made their tech investments

There’s no time to waste. An HFS Research study conducted in partnership with Blue Prism found 73% of those in the vanguard of transformation are rushing ahead to deliver on their plans. Conversely, of those businesses appearing to lag, 39% are pausing to reset before figuring out their way forward (from a 2021 HFS survey of 200 executives across Global 2000 companies).

The leaders have already made their technology investments. For example, our 2021 native automation services Top 10 report found native automation has gone mainstream, putting in place a key change agent in enabling true digital transformation. The 13 global service providers we surveyed reported delivering $22 billion of revenue generated across 14,000 client engagements. Our 2021 data and decisions services Top 10 report found revenues had reached $35 billion, representing between 25% and 35% of all enterprise investments made by the 13 service providers surveyed. It’s a clear indication of enterprises’ increasing understanding of the value of data and the opportunity it offers in accelerating decision making.

Now comes the hard part—the part in which digital fluency is the key

Investments in technology and systems have given enterprise leaders work-from-anywhere capabilities, providing the framework to modernize how they work and deliver value. The leaders can’t afford to rest on their laurels. Now comes the hard part—the part of digital that is more mindset than technology and for which digital fluency is the key.

HFS defines digital fluency as the ability to drive the interplay between business and technology. With it comes the ability to translate the understanding of digital tools to create new ways to serve customers’ needs and drive value, the ability to consider how digital technology will impact every aspect and every functional area of the organization, and “the ability to examine the organization’s business model, strategy, and operations in the context of digital technology” (source Harvard Business Publishing, SNAPSHOT Leadership Capabilities)—all essentials in realizing the business transformation that the building blocks of digital transformation support.

Combining automation, data, and cloud generates new contexts to grapple with

The need for a greater understanding of business in the context of digital technology becomes even more apparent as we realize that the leaders are doing more than applying automation, capturing and using data, and shifting to the cloud; they are combining these three technologies.

HFS Research found that the leading-edge group of enterprises that have prioritized digital transformation with their automation efforts are also those most likely to bring automation together with cloud and data in a nexus vital for success. We found 83% of “automation heroes” have already aligned their plans for automation with their data strategy, and 46% in Exhibit 1 have holistically integrated data, automation, and cloud together with one overall coordinating lead.

Exhibit 1: Leaders organize data, automation, and cloud together

Sample set: 200 executives across Global 2000 enterprises
Source: HFS Research in partnership with Blue Prism, 2021

Combining technologies is a theme seen across all effective transformations. Our native automation services Top 10 analysis found an increasing divergence of technology applied in native automation engagements. Robotic process automation (RPA) (in 61% of engagements) and process intelligence (at 52%) are the most regularly deployed, but the increasing importance of combining technologies to deliver end-to-end cross-silo processes was illustrated by the fact that workflow and process orchestration technologies were deployed in 46% of client engagements. The winners will emerge from those taking that end-to-end view of transformation.

By combining technologies, we enable the broader change agents of business transformation. They emerge from the building blocks of transformation as possibilities—as new ways for organizations to work with new muscles. But it must use these building blocks to become adept with them, which is the challenge of 2022 and beyond that digital fluency is essential in resolving.

Understanding the combinations unlocks new value

Organizations must create intelligent and automated workflows in the cloud, with new “native standards” for consistent cross-functional operations. Having digital capability is pointless unless leaders take the leap with new ways of working and take advantage of what is available. Concurrently, teams must have the fluency credentials to experiment their way to new business value.

For example, automation can mean transactions get faster at a lower cost, improving the speed at which customers get the outcomes they seek. It means the enterprise can deliver reduced costs AND an improved experience. That AND moment changes the mindset, one digital leader in health insurance told us. It is just one example of how understanding digital tools can create new ways to serve customers’ needs while driving value.

Our HFS OneOffice™ Services Top 10: People and Process Change report highlights how the best service providers respond in this drive for digital fluency.

It focuses on how service providers develop and integrate people and process change capabilities across the entire services portfolio, such as design thinking, change management, skills enablement, and process innovation, to cultivate and drive operations excellence.

Find our new report, here.

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