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As EY’s latest report “Digital Transformation 2024” shows, support for digitization is prioritized in most Polish companies. However, its implementation is not producing the expected results in terms of increasing revenues and cutting costs. Why is this happening? One of the main reasons is the lack of or insufficient support from a qualified advisor, as well as the lack of a strategy established before implementation.
“Digital Transformation 2024” is a new iteration of a survey that EY conducted in 2020 (“Digital Transformation”). The survey included nearly 500 representatives of large and medium-sized companies in the finance, logistics, manufacturing and retail industries. It was carried out using CATI and CAWI methods in January and February this year.
Digitization in Polish companies – high importance and investment
Polish companies are aware of the importance of digitalization for their development – as many as 84% of them give it high or very high priority (38% and 46% of indications, respectively). Compared to the 2020 survey, this percentage has more than doubled (from 38%). Nearly two-thirds of respondents (64%) rate the advancement of their company’s digital transformation process as high or very high, and only 4% as low or very low.
What’s more, as many as 80% of respondents believe that the organizational culture at their companies supports or significantly supports the digital transformation process. So, despite the still uncertain economic and geopolitical situation, Polish companies prioritize digitalization and do not regret spending on it. More than half of them (57%) spend between 4 and 10 percent of their revenues on digital transformation initiatives, while nearly one-fifth (18%) between 11 and 20 percent. What would they like to achieve with it?
Cost reduction is becoming less and less important
While a few years earlier digital transformation was seen primarily as a way to reduce costs, it is now increasingly becoming a tool for discovering new growth opportunities. In 2020, cost reduction ranked third among the key goals of digitization in companies, but now, it has dropped to fourth place (with 35% of indications), clearly handing the field over to the search for growth opportunities (41%). Investment in technology (44%) and increasing efficiency (47%) are also ranked higher.
Specific goals and perception of digitization vary by industry. For retail, in the face of increasing competition and consumer expectations, increasing efficiency is most important (58% of indications). This is followed by investing in technology (52%) and looking for growth opportunities (49%), which emphasizes a focus on innovation and a desire to adapt quickly to the changing market, especially in the context of the growing importance of e-commerce
The areas in which Polish companies are most likely to invest as part of their digital transformation are cyber security (49% of indications), cloud solutions (44%) and digital competency training for employees (42%). The other areas indicated by respondents did not exceed 30%.
Investment in technology is just the beginning
However, despite the high priority and significant investment, the results of digital transformation initiatives are not meeting the expectations of entrepreneurs. The data is surprising. As many as 54% of respondents say that assumptions about revenue growth resulting from digital transformation have been met at most by only 35%. What’s more, as many as 65% of representatives of Polish companies admit that the degree of fulfillment of assumptions on the issue of decreasing costs also does not exceed 35%.
One of the main reasons for this is that companies undertake digital transformation activities on their own or with only a small participation of consultants – as many as 67% of the surveyed companies operate in this way. Lack of relevant experience and expertise leads to strategic mistakes, choosing the wrong technologies or using resources inefficiently. And working with outside experts can bring a number of benefits, including:
- reducing the risk of failure and increasing ROI;
- significantly accelerating the transformation process;
- identifying key areas for digitization;
- support in the selection of appropriate technologies;
- assistance in planning and implementing changes in line with the company’s long-term business goals;
- precise definition of goals and objectives;
- aligning strategy with business reality.
The lack of a coherent strategy established from the beginning of the digital transformation implementation (25%) also has an impact on unsatisfactory results. Digitization without a well-thought-out strategy that takes into account business goals, technological capabilities and customer needs carries the risk of inefficient use of resources and failing to achieve the expected benefits.
It is also important to remember that implementing solutions to support digital transformation in an enterprise requires the commitment of many resources. It may be necessary to remodel business processes, adjust organizational strategy, or change company culture.
Investments in IT infrastructure, software and digital tools may not be enough without the proper commitment from the company’s top executives. The board must actively support the transformation process by providing the necessary resources and making key strategic decisions. It is also necessary to continuously develop the competencies of employees so that they can take full advantage of the potential of new solutions.
It is also worth noting that digital transformation is a long-term process, most often not producing immediate results – the benefits of implementing the changes that are a part of it may only appear in the long term.
