Prior to COVID-19 it was estimated that businesses in the Middle East and Africa were projected to spend $30 billion in 2020 on digital transformation (International Data Corporation) as they prepared for the Fourth Industrial Revolution
COVID-19 has accelerated the speed of this transition as businesses had to adapt, and consider the link between technology and the way they operate.
The link between a business' technology and its operational resilience was brought into sharp focus by the initial impact of COVID-19. This impact was felt in a multi-faceted way – very few, if any, aspects of internal operations or customer engagement went untouched. The legacy of this initial impact is largely one of disruption from which businesses can ultimately benefit greatly.
Most businesses responded rapidly to the effects of COVID-19 making adjustments necessary to continue to operate and supply their goods and services in a way that would secure their survival. Some were able to innovate to respond to the new ways of doing business such that they saw a very positive impact on their bottom line. Many businesses are now moving from crisis management and immediate response mode to a new phase of 'business as usual' in an entirely new trading environment. Market demands, customer expectations, routes to market, and personnel needs have changed. Businesses are rethinking how they do business, not just to survive, but to recover to pre-pandemic trading positions and beyond.
It is evident that in order to do so in this new trading environment, digital is king.
Investing in a digital future
International Data Corporation (IDC) forecast that digital transformation (DX) is set to gather more pace post pandemic. It's expected that 65% of the worlds GDP will be digitalised by 2020, with direct investment totaling $6.8 trillion globally between 2020 and 2023.
GCC Governments who had their transformation development plans well underway pre-COVID-19, have made great strides in their economic development and diversification away from oil. For example, the UAE 2021 Vision had a strong emphasis on digital transformation, transitioning to a 'digital nation', evidenced by the drive in investment to be at the forefront of innovation and upskilling the talent pipeline to achieve a competitive advantage and a sustainable environment.
Digital transformation as a strategic imperative
Digital transformation is at the heart of this. George Westerman, MIT principal research scientist and author of 'Leading Digital: Turning Technology Into Business Transformation', has described digital transformation as "a radical rethinking of how an organisation uses technology, people and processes to fundamentally change business performance".
Of course, digital transformation is not new. According to economic consultant Roland Berger, spending in the GCC markets was $21 billion in 2019. The biggest spenders are Saudi Arabia, United Arab Emirate and Kuwait, all three combined account for more than 75% of the overall IT spend in the GCC region.
Then came COVID-19, which highlighted weaknesses in business operations in a way that very few other events could have.
In a recent study by IBM with C-suite executives, in 20 countries including the UAE, nearly five in 10 organisation are prioritising digital transformation over the next two years due to the pandemic. Whilst acknowledging the critical role they have to play in driving the transformation, the executives highlighted that organisational complexity is the biggest hurdle to progress, more than double indicating that this is an existing challenge from the past. The other obstacles highlighted were inadequate skills and employee burnout, with 76% of executives are helping support their employees develop new skill and support the mental and physical well-being of their workforce.
Transformation of the business, not just IT
Accordingly, for a programme to be successful, it will need buy-in at all levels, and in all facets, of a business.
Investing in a digital future now is not only seen as a means of future proofing operational resilience, but also presents an opportunity for recovery and ultimately achieving a competitive advantage and future growth
How a business designs a programme for digital transformation will be largely driven by the business' objectives and desired outcomes. These will vary and are likely to be weighted towards revenue generating activities with a focus on developing and delivering customer services digitally. But they should all be aligned with a wider, more holistic goal, and that is to re-organise business operations on a fulsome basis to utilise technology, data as a bed rock for more efficient internal operations. In addition, enabling and upskilling the workforce and putting a structure in place to protect their wellbeing are needed to achieve or maintain a competitive advantage.
Digital transformation, therefore, is not a task that is just for a business' IT function, or limited to buying in new technology to service an existing business model. It is something that permeates an entire business. Its success will depend, therefore, in large part on a business' agility for organisational change.