Research reveals major differences in digital maturity across industries

IFS has released the findings of its Digital Change Survey, which polled 750 decision-makers in 16 countries — with 52 respondents in Australia — to assess maturity of digital transformation in sectors such as manufacturing, oil and gas, aviation, construction and contracting, and service.

Nearly 90% of firms surveyed (96% in Australia) have ‘adequate’ or ‘advantageous’ funding for digital transformation, indicating a strong willingness to invest and an appetite to evolve their business in order to stay competitive and grow. When asked about prioritised investment areas, the top three choices globally were big data and analytics, ERP and Internet of Things (IoT). In Australia the top three were big data and analytics, ERP and software as a service.

“It is apparent that companies today understand the urgency of focusing on digital transformation,” IFS VP of global industry solutions Antony Bourne said. “Technologies such as big data and analytics, enterprise resource planning and Internet of things are paramount to transforming a business. Companies need to apply innovative technologies hand in hand with their relevant industry expertise to succeed and gain a competitive edge. It is this combination that makes digital transformation both meaningful and powerful.”

“Australian organisations are more likely to take a conservative approach to digital transformation than their international peers,” said Rob Strummer, managing director for IFS in Australia and New Zealand. “Australian funding levels for digital transformation are more likely to be adequate but less likely to be advantageous. The driver for investment is more likely to be increased competitive pressure than accelerating innovation. And while Australian firms rated their digital transformation maturity more highly, a lack of talent is a bigger issue in Australia, particularly in key technical areas such as AI, robotics and the Internet of Things.”

Lack of talented employees

Alarmingly, more than a third of companies (34% globally and 40% in Australia) feel either slightly or totally unprepared to deal with digital transformation due to talent deficiency. When asked to name the areas that will experience the greatest deficit in talented staff, 39% (38% in Australia) cited ‘cyber security’ and 40% (29% in Australia) ‘business intelligence’. Other areas of concern are ‘AI and robotics’ (30% globally, 33% in Australia), ‘big data/analytics’ (24% globally, 25% in Australia), ‘cloud’ (21% globally, 21% in Australia) and ‘IoT’ (20% globally, 31% in Australia).

Bourne added, “Although new technology is key to digital transformation, it is clear that change communications and access to the right talent are principal catalysts to succeed. It is alarming that more than one in three companies are not staffed to manage digital transformation. These organisations need to focus on concrete talent investment plans to make sure that they establish what roles are critical to success in their industries. After that, the key is both to find and attract new talent as well as training and re-skilling existing staff.”

Major differences across industries

When asked about the digital transformation maturity level of their organisations, meaning actual progress, 31% of respondents (38% in Australia) consider their business to be in the two highest levels of maturity on a five-graded scale. The aviation industry is the most progressive, with 44% of global respondents considering themselves advanced in their ability to leverage digital transformation. Runner-up is the construction and contracting industry, with 39% of respondents identifying themselves as mature. At the other end of the spectrum is the oil and gas sector, where only 19% of the respondents consider themselves able to benefit from digital transformation.

“The differences in digital maturity levels across industries are notable. The highly competitive nature of the aviation industry, together with its rapid adoption rate of new technologies such as predictive maintenance and 3D printing for spare part manufacturing, are key drivers of its successful digitalisation,” Bourne said.

Drivers and investment focus

43% of respondents (40% in Australia) identified ‘internal process efficiency’ as the number one driving force behind digital transformation. ‘Accelerating innovation’ (29%) and ‘growth opportunity in new markets’ (28%) were recognised as the second and third most significant drivers globally. In Australia, ‘increased competitive pressure’ (40%) tied with ‘internal process efficiency’ for first place, and ‘productivity gains’ (35%) was the third most significant driver.

Obstacles to digital transformation

Despite the practical and technical complexities of digital transformation, the number one barrier to change globally is on the human side: ‘aversion to change’ (42%). The second and third largest barriers are the more concrete ‘security threats/concerns’ (39%) and ‘absence of the right organisational and governance model’ (38%). In Australia, the ‘absence of the right organisational and governance model’ (36%) and ‘lack of standard processes and training for implementing new technology’ (36%) are the biggest barriers, with ‘aversion to change’ (35%) a close third.

Which will be the most disruptive technologies?

When asked what technologies will be the most disruptive, big data tops the list with a score of 7.2 out of 10 (7.4 in Australia). Second is automation (7 globally, 7.2 in Australia) and third is IoT (6.6 globally, 6.1 in Australia). Although big data is ranked the highest overall, there is a significant minority globally who feel that automation will have the most dramatic impact. Over 40% (42% in Australia) rated the level of disruption by automation as 8 or more out of 10, while 32% gave such high ratings to big data (44% in Australia). In the construction, aviation and manufacturing industries globally, 48%, 48% and 50% respectively consider the automation disruption score >8/10, which makes it the highest rated technology for those industries.

About the survey

The survey was commissioned by IFS to assess the maturity of digital transformation across industries on a global scale. It was conducted as in-depth interviews by research and content agency Raconteur Custom Publishing, who took in the views of 750 decision-makers in 16 countries in the oil and gas, aviation, construction and contracting, manufacturing, and service industries. Countries surveyed were the USA, Canada, the UK, Sweden, Germany, France, China, Japan, Australia, Norway, Denmark, the Netherlands, Spain, Poland, the Middle East and India.