Legacy technology and a risk-averse mindset are amongst the leading barriers to digital transformation for Australian organizations, according to new global research from Workday. The study, “Organizational Agility at Scale: The Key to Driving Digital Growth,” conducted by Longitude, surveyed almost 1,000 business leaders across Asia, Europe, and North America. It found that just over half of all Australian respondents had made “significant progress” transforming their business model to create a portfolio of digital products and services.
The research focused on how organizations can translate their digital transformation investments into the right business outcomes. The findings highlight a strong correlation between digital revenue growth and organizational agility—a set of behaviors that help “leaders” drive digital revenue growth and shift digital transformation from a one-time event to an ongoing, new way of operating.
In the survey, Workday identified a group of leading organizations whose characteristics indicate they have embraced agility as part of their day-to-day operations in order to successfully transform their business for digital revenue growth. This group, the “leaders,” make up 15 percent of the global survey sample.
By contrast, those that show significantly slower progress or are yet to begin their agile transformation “laggards,” make up just over half of all respondents. The remainder—those that have yet to embrace organization-wide agility, but are on the path to doing so—”aspirers”—make up the final 30 percent of the sample.
According to the research, 44 percent of Australian organizations expect to derive above 50 percent of their revenue from digital by 2022. This compares to respondents in France (57 percent), Germany (55 percent) and the UK (53 percent).
Leading organizations that have adopted organizational agility are two times more likely to derive a significant share of their revenue from new digital propositions and 10 times more likely to react to market shifts with agility and speed, resulting in higher levels of digital revenue growth.
As with most regions, Australian businesses cited “cybersecurity, compliance, or privacy issues” as the primary concern. Followed closely by the “constraints of legacy enterprise IT” (42 percent) and a risk-averse mindset (41 percent) as the main obstacles to their company driving digital growth opportunities.
The research findings identified five characteristics of agile organizations, with varying degrees of uptake and maturity across participating regions. Key responses from Australia for each area are outlined below:
Annual planning cycles are not conducive to the volatile and dynamic market within which businesses now operate. More than ever before, organizations must be equipped with the capability to continuously plan. Just 28 percent—one of the lowest numbers anywhere globally—strongly agree that the organization's approach to strategy and execution enables it to respond to external shifts such as changes in economic climate.
Leaders in Australia named “inflexible legacy technologies” (33 percent), “outdated key performance indicators” (26 percent) and a “lack of relevant employee skills” (25 percent) as the top barriers to embracing continuous planning.
The research looked at the degree to which organizations are capable of reallocating resources to take advantage of new opportunities as they evolve. This is a core capability among leader organizations, which are almost five times more likely than laggards to be able to reallocate people to where their skills are needed. Likewise, leaders are five times more likely than laggards to have a system in place to measure skills and skills gaps.
Australian respondents pointed to a “lack of motivation to move away from legacy processes” (37 percent), “inflexible legacy technologies” (34 percent) and “lack of insightful data and market intelligence” (30 percent) as the top barriers to delivering more fluid structures and processes.
To keep pace with the plans, structures and processes that agility brings, the right skills mix is required. The right combination of hard and soft skills alone is not enough—the cognitive ability to contend with constant change is becoming an increasingly critical success factor for tomorrow’s workforce.
“Competence in using new tools and technologies” (34 percent) and the “ability to identify, anticipate and manage risk” (30 percent) rank highest of the skills perceived to be of most value to the Australian workforce in the years ahead. Australian respondents cited the “ability to interpret or act upon predictions generated by machine learning algorithms” (30 percent) as the other hot skill for the future.
Interestingly, 66 percent of Australian leaders also stated they would need to upskill over half of their workforce to contend with the evolving world of work during the next five years.
With this shift, keeping employees engaged and retaining talent will become a critical challenge for businesses. Notably, three-quarters of respondents admit that their organization’s ability to succeed is tied to keeping employees engaged—with 67 percent stating that their organization needs a more fluid approach to management in order to retain those people.
People need to be given the right information, at the right time, to make the best possible decisions for the business. This is a foundational characteristic of organizational agility, and the leaders in the study have made significant headway in this area.
IT teams—and the wider business—gain when data can be accessed quickly without intervention from the IT department. Leaders know this and are near-unanimous in stressing the role that a free flow of timely information and data plays in facilitating decision-making across their businesses. Notably, four in five leader organizations say there is full access to data across their business, and 99 percent point to the free flow of data and information as an effective driver of delegated decision-making.
72 percent said their teams have “Some accessibility - Data is accessible, but it is largely siloed within functional teams or out-of-date.” Perhaps culture is to blame here—globally, one in five also say that hierarchies hamper their organization from effectively delegating decision-making.
Enabling informed and delegated decision making is about much more than giving leaders access to timely and relevant data. It’s also about ensuring that teams have full access to that data—with no gatekeepers or bottlenecks—and that they are empowered to use it to make decisions in line with businesses best interests.
To ensure innovation delivers the financial performance needed, organizations must unite agility and speed with close monitoring and control of their digital initiatives. The leaders in the study recognize this—they are twice as likely as others to have the tools to measure the performance of new digital products and services.
Despite this, nearly one in five also say they lack the KPIs to measure success in the digital era. Leaders are most likely to admit this is the case. In addition, only one-quarter of organizations have made significant progress in measuring digital revenue growth performance to date. As more revenue comes from digital sources, a new set of KPIs will be needed.
The fail fast mentality is also pervasive among leaders. More than 90 percent of leaders say they are quick to shift course away from failing projects. The same number again say they have a culture in which learning from failure is encouraged. Together, these two factors form key ingredients for agile success as tomorrow’s winners will need to be able to quickly assess the impact of their new digital projects and pivot with them—at speed and scale—to maximize success.
If they are to keep pace with digital-first players and an ever-evolving market, Australian businesses today must deliver on digital transformation and the growth opportunities it brings. The evidence from the research is clear: those leading the race to continuous digital growth are those that have successfully embraced most—if not all—of the capabilities of organizational agility. For those playing catch up: there is still time, but the clock is ticking.
Critically, the move to agility is a continuous one—as organizations shift from silo structures, bureaucratic processes and traditional ways of working to embrace all five capabilities of organizational agility. Those who plan continuously, build adaptable and fluid organizations, upskill, inform and empower their workforces, and put in place the right measurement and guidance, will be best positioned to harness continuous innovation, grow their digital revenue, and future-proof their business.