Digital Transformation Process Accelerates Due to COVID-19

IBM's new research, conducted with senior executives from different countries worldwide, shows that more than half of organizations are accelerating their digital transformation processes due to COVID-19; during this process, barriers such as insufficiently advanced technology and employee resistance to change are gradually diminishing. ARMONK, New York, 15 October 2020 / The "COVID-19 and the Future of Business" research, conducted by the IBM Institute for Business Value (IBV) with more than 3,800 senior executives from 20 countries and 22 sectors, has produced striking results. The research shows that nearly six out of every ten organizations have accelerated their digital transformation processes due to COVID-19, and also points out that traditional and perceived barriers to transformation, such as insufficiently advanced technology and employee resistance to change, are gradually disappearing. 66% of senior executives stated that during the COVID-19 period, they successfully completed previously resisted initiatives. The organizations participating in the research demonstrated that they saw more clearly the critical role played by the human factor in implementing digital transformation. Leaders identified organizational complexity, insufficient skills, and employee burnout as the greatest obstacles to be overcome over the coming two years. The research also revealed a notable disagreement between leaders and employees on how effectively organizations are closing these gaps. 74% of senior executives believe they are helping their employees learn the skills needed for a new way of working. Only 38% of employees agree. Additionally, while 80% of senior executives say they support their employees' physical and mental health, only 46% of participating employees report feeling this support.

The research shows that senior executives need to take initiatives on different issues because of COVID-19 and are struggling to focus. Nevertheless, they state that they plan to prioritize internal and operational capabilities such as workforce skills and flexibility in areas where measures need to be taken to make progress.

Mark Foster, Senior Vice President of IBM Services, comments on the matter: "I believe COVID-19 has broken down the barriers standing in the way of digital transformation. As transformation accelerates, leaders are increasingly relying on technology for the critical points of their operations. But looking to the future, leaders need to focus twice as much on both their employees and the technology infrastructure that secures their business plans. We cannot overlook the power of empathetic leadership in increasing employee trust, productivity, and wellbeing amid the crisis we are experiencing." According to the COVID-19 and the Future of Business research, leaders are taking three proactive steps to maintain their positions and advance in their fields:

Increasing operational scalability and flexibility

The ongoing crisis related to COVID-19 has demonstrated how important it can be for businesses to be built in a way that is open to change. During this period, many senior executives have faced demand fluctuations, new challenges in supporting remote workers, and requirements to reduce costs. This research also shows that most organizations are making permanent changes to their organizational strategies. For example, 94% of senior executives plan to adopt platform-based business models by 2022. Many senior executives also state that they will increase their participation in ecosystems and partner networks. Implementing these new strategies requires a more scalable and flexible IT infrastructure. For top executives, this is actually not a surprising result. Another point highlighted by the research is that participants plan a 20% increase in prioritizing cloud technology over the coming two years. Additionally, senior executives state that they plan to move more business functions to the cloud over the next two years, with customer loyalty and marketing identified as the first two functions to be moved to the cloud.

Implementing artificial intelligence, automation, and other rapidly growing technologies to help make business processes smarter

COVID-19 disrupted critical business processes and workflows that are at the center of many organizations' core operations. Among the managers participating in the research, there is an increase in priority given to technologies such as artificial intelligence, automation, and cybersecurity that could help make business processes smarter, more responsive, and secure.

Therefore, expectations are also changing for the coming two years. Priority given to artificial intelligence technology is expected to increase by 20%. 60% of senior executives say they have accelerated the process, and many senior executives say they will implement increasingly more automation across all business functions. 76% of senior executives participating in the research plan to prioritize cybersecurity. This rate is equivalent to twice the number of organizations currently deploying this technology.

While senior executives are investing in cloud, artificial intelligence, automation, and other rapidly growing technologies, IBM advises leaders not to forget the users of these technologies—the organization's employees. These digital tools must, by their design, enable a positive employee experience, support people's innovation, and enhance their productivity.

Employee expectations from employers are also changing

IBM's new research shows how important it can be to focus on people in a new way during the COVID-19 pandemic, as employees continue their work outside traditional office environments and struggle with increasing personal stress and uncertainty. An ongoing IBV consumer study shows that employee expectations from employers have changed during the pandemic. Employees now expect employers to actively support both their physical and emotional health and the skills they need for new ways of working. To close this gap, IBM advises senior executives to focus on employees more comprehensively by putting employee wellbeing first in every respect. During this period, leaders who encourage employees to take personal responsibility; apply design-thinking principles, agility principles, DevOps tools and techniques; support work in self-managing teams; and practice empathetic leadership will be one step ahead. Furthermore, organizations need to help employees develop the behavioral and technical skills they need in the new normal. Beyond this, adopting a holistic and multimodal skills development model to promote a continuous learning culture is among the main tasks incumbent on organizations.