Edna Eason | Lead | Technology | Accenture Africa | mail me |
Two years ago, we warned that organisations failing to embrace data, artificial intelligence (AI), and technology would risk being left behind by their competitors.
A year later this prediction came true as organisations ranked technology as the most disruptive force in organisations in 2023 and rocketed to the top of the corporate agenda. This means that if you are not thinking about how your organisation should shift with the rapidly evolving world of technology you are already behind.
The digital core
A sense of urgency is paramount, particularly as South Africa falls behind its global counterparts. But what drives this transformation? It begins with constructing a solid technological foundation on which all technological advancements are built – the digital core.
We define a digital core as the driving force underpinning an organisation’s unique reinvention ambitions. It is composed of distinct yet continuously interacting technologies, including digital platforms, data, and AI. This core is supported by a digital foundation that features composable integration – systems that can be easily connected and customised for flexibility – a cloud-first infrastructure that uses online storage and processing over external servers, a continuum control plane that provides operations visibility across the digital landscape and security by design.
Security is a critical component, safeguarding data and systems from threats and unauthorised access to maintain trust and functionality. Powered by Generative AI, these technologies – digital platforms, data, AI, etc. – link systems and automate data maintenance, breaking down silos and facilitating interoperability with minimal human involvement. These separate elements must connect and interact seamlessly to create a holistic digital ecosystem that enables dynamic, efficient, and scalable operations.
The reinventors
Organisations that are miles ahead on their transformation journeys are called reinventors. In 2023, these technological trailblazers made up 8% of companies surveyed, investing heavily in their technological capabilities. They embrace a new way of working, breaking down organisational silos and using data and AI to their full advantage – an attitude we call “reinvention readiness.”
Today, 83% of organisations are following their lead and are speeding up their reinvention efforts. These organisations are reaping the benefits and growing at a rapid rate and reinvention strategies have one thing in common: a strong digital core.
So how can organisations embrace “reinvention readiness”? It hinges on mastering a trio of critical tenets. Only 3% of companies surveyed have cracked this code and, as a result, have experienced significantly higher performance, with a 60% boost in revenue growth and a 40% increase in profitability.
The first tenet, which we have already explored in depth, is the establishment of a robust digital core. Organisations must customise their digital core to fit their unique requirements and adhere to industry-leading standards, ensuring it includes all the crucial elements discussed above and facilitates seamless integration.
The second tenet involves maximising the impact of technological investments by increasing annual spending on innovation by 6% or more. These investments must go beyond maintenance and toward innovation. High “flip size,” or the rate at which IT spending shifts towards innovation, correlates with better performance. By cutting inefficiencies, optimising cloud costs, and automating operations, companies can redirect savings into redesigning processes, launching new products, and exploring new markets.
Proactively managing technical debt, the third tenet of reinvention readiness, is also crucial. Companies should allocate around 15% of their IT budgets to address technical debt, ensuring their systems remain current and effective. While AI and generative AI are an essential part of a strong digital core, they can introduce further technical debt if not properly overseen leading to issues like poor interoperability and inaccurate responses. Balancing the remediation of technical debt with forward-looking investments allows companies to keep their tech systems up to date while fostering continuous improvement.
In conclusion
The importance of a strong digital core cannot be overstated. However, only 13% of executives surveyed are “extremely confident” that they have the right data strategies and the core digital capabilities in place to effectively leverage generative AI.
Confidence in embracing this new way of working can only come from forging the right partnerships and seeking expert advice. Becoming “reinvention ready” involves a complete shift in mindset and embracing new ways of working. It is time for South African organisations to take the plunge.
Related FAQs: Digital core resilience
Q: What is digital transformation readiness and why is it important for an organisation?
A: Digital transformation readiness refers to an organisation’s preparedness to adopt and implement digital technologies and processes. It is crucial because it determines how effectively an organisation can transform its business processes, products and services to meet the demands of the digital age.
Q: How can an organisation assess its digital core readiness?
A: An organisation can assess its digital core readiness through a digital readiness assessment, which evaluates various factors such as current technology usage, employee skills, organisational structure and existing business processes. This assessment helps identify gaps and areas for improvement.
Q: What role does a digital core readiness model play in digital transformation initiatives?
A: A readiness model provides a framework for evaluating an organisation’s current state and its capacity to undergo digital transformation. This model helps guide organisations in developing a roadmap for their transformation initiative, ensuring they are prepared for digital change.
Q: What is a digital transformation readiness assessment?
A: A digital transformation readiness assessment is a comprehensive evaluation of an organisation’s ability to implement digital technologies and practices. It examines factors such as digital maturity, agility and the alignment of the digital strategy with business goals.
Q: How does generative AI contribute to an organisation’s digital transformation readiness?
A: Generative AI enhances an organisation’s digital transformation readiness by automating processes, improving decision-making and enabling the development of innovative products and services. Its integration can significantly boost an organisation’s agility and efficiency.
Q: What are the key components of a successful digital transformation strategy?
A: Key components of a successful digital transformation strategy include a clear vision, alignment of digital initiatives with business objectives, investment in digital technologies, ongoing employee training and a commitment to fostering a culture of innovation and adaptability.
Q: How can organisations ensure they are prepared for digital transformation?
A: Organisations can ensure they are prepared for digital transformation by conducting a thorough readiness assessment, investing in employee development, establishing a robust digital strategy and continuously monitoring progress to adapt to changes in the digital landscape.
Q: What is the significance of organisational structure in digital transformation readiness?
A: The organisational structure is significant in digital transformation readiness as it influences communication, decision-making and the ability to respond to change. A flexible structure can enhance agility and facilitate the adoption of new digital technologies and practices.
Q: How does digital maturity affect an organisation’s readiness for digital transformation?
A: Digital maturity affects an organisation’s readiness for digital transformation by indicating how well it has integrated digital technologies into its operations. Higher digital maturity often correlates with greater readiness to embrace change and implement successful digital transformation efforts.
