Why CEOs crave digital transformation results – and the greater impact on business growth
Digital transformation fuels upside market opportunities, and related growth goals are now the CEO's top business priority, according to the latest worldwide study by Gartner. Moreover, a growing number of CEOs will focus more on financial priorities - especially profitability improvement.
The annual survey of CEO and senior business executives in the fourth quarter of 2018 examined their business issues, as well as some areas of technology agenda impact. In total, 473 business leaders of companies with $50 million or more - and 60 percent with $1 billion or more - in annual revenue were qualified and surveyed.
Digital business market development
"After a significant fall last year, mentions of growth increased this year to 53 percent, up from 40 percent in 2018," said Mark Raskino, vice president at Gartner. "This suggests that CEOs have switched their focus back to tactical performance as clouds gather on the horizon."
The survey results showed that a popular solution is to look in other geographic locations for growth. Responses mentioned other cities, states, countries and regions, as well as 'new markets' would also include some geographic reach -- although a new market can also be industry-related, or virtual.
Twenty-three percent of CEOs see significant impacts arising from recent developments in tariffs, quotas and other forms of trade controls. Another 58 percent of CEOs have general concerns about this issue, suggesting that more CEOs anticipate it might impact their businesses in the future.
Another way that CEOs seem to be confronting softening growth prospects and weakening margins is to seek diversification -- which increasingly means the application of 'digital business' to offer new products and revenue-producing channels.
Eighty-two percent of Gartner's survey respondents agreed that they had a management initiative or transformation program underway to make their companies more digital -- that's up from 62 percent in 2018.
Cost management has risen in CEO priorities. When asked about their cost-control methods, 27 percent of respondents cited technology enablement, securing the third spot after measures around people and organisation, such as bonuses and expense or budget management.
However, when asked to consider productivity and efficiency actions, CEOs were much more inclined to think of digital business technology as a tool. Forty-seven percent of respondents mentioned technology as one of their top two ways to improve productivity.
According to the Gartner assessment, digital business planning must include the whole executive committee. However, the survey results showed that CEOs are concerned that some of the executive roles do not possess strong or even sufficient digital skills to face the future.
On average, CEOs believe that sales, risk, supply chain and human resource officers are most in need of more digital expertise. And, once all executive leaders are more comfortable with the digital sphere, new capabilities to execute on their business strategies will need to be developed.
Outlook for digital transformation skills development
When asked which organisational competencies their company needs to develop the most, 18 percent of CEOs named talent management, closely followed by technology enablement and digitalisation (17 percent) and data centricity or data management (15 percent).
"Datacentric decision-making is a key culture and capability change in a management system that hopes to thrive in the digital age. Executive leaders must be a role model to encourage and foster data centricity and data literacy in their business units and the organisation as a whole," Mr. Raskino concluded.
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