COVID-19 has created the need to move to digital maturity faster
Contrary to the impression made by many digitally born Chinese internet giants, many companies in traditional industries are digitally immature, and that immaturity was exposed in the pandemic. Even though many of them were able to quickly “jump” online, thanks to the apps and services provided by the internet giants, they soon realized that being able to work remotely and sell through online channels is far from enough. They realized that, in the core functions like manufacturing, operation, and organization management, they were operating far from the digital frontier.
only 39% of the companies we surveyed were using cloud services to the best efforts they could.
even fewer (28%) were using AI or RPA to improve their operation.
Chinese companies operate far from the digital frontier
Note: % of respondents saying their companies have taken all the necessary actions in the respective areas. Source: Accenture Business Continuity Measures Survey, N=123, April 2020
As companies enter an extended period of uncertainty, the digitally mature ones are going to enjoy many advantages over their less advanced peers. Among the most important are superior operational resilience and innovation agility.
We uncovered a group of digital transformation leaders in China
In 2020, 11% of the firms we surveyed qualified as “Digital Transformation Champions”, up from 9% in 2019. These companies invest decisively in scaling up new tech-enabled businesses while driving continuous transformation of the legacy business and now derive over 50% of their current revenues from new business activities begun in past three years.
The pandemic, in particular, has highlighted how being digitally mature makes companies more agile and better positioned for growth.
of Champions returned to their pre-crisis levels of productivity within three months after the virus struck, compared with 47% of the other firms we surveyed.
nearly three quarters of Champions expect their revenues to still grow in 2020, compared with fewer than half (49%) of other firms.
In the first quarter of 2020, Champions’ EBITDA was 16%, on average, 5% higher than the other companies.
Champions are better positioned for growth
Note: The EBITA refers to a comparison of listed companies in the sample. Data Source: China Industrial Control Systems Cyber Emergency Response Team (CICS-CERT), Capital IQ, Accenture Research
Acceleration to digital maturity
If the benefits of digital maturity are evident, achieving it is less straightforward. By analyzing and synchronizing the Champions’ best practices, we suggest that companies should prioritize six areas for improvement.
The first area requires developing data transparency of all businesses.
The second area involves the need for companies to elevate their omnichannel “games”.
The third area of need involves building resilient digital supply chains.
The fourth area of need involves creating Living Systems to enhance IT adaptability and business flexibility.
The fifth area of need involves nurturing a flexible organization.
The sixth area of need involves growing agile innovation capabilities.