Managing unprecedented disruption with an eye to the future.
Leaders have doubled down on tech
—and are growing 5x faster than Laggards
Leaders have doubled down on tech—and are growing 5x faster than Laggards
In 2019, our landmark research on enterprise technology strategies and their impact on performance showed that Leaders in tech adoption and innovation were growing revenues at 2x the speed of tech Laggards.
Curious about the effects of the pandemic, we completed a second round of research in early 2021 and discovered the following:
Leaders direct their IT budget toward innovation
Doubling down on enterprise tech adoption
Leaders tend to adopt innovative technology sooner and reinvest more frequently. They make smarter tech investment decisions. And they direct their IT budget toward innovation.
When the pandemic began, Leaders scaled their investments in key technologies such as cloud and AI. This helped them absorb impacts quickly and refocus on growth.
In sharp contrast, many Laggards invested in newer technologies for the first time just to keep their companies operational. As the COO of one large bank explained: “The initial moves to the cloud we made have been about keeping the lights on.”
The pandemic has compressed digital transformation
Emerging Tech: blockchain, extended reality, open source, 3D printing, robotics
IT Infrastructure: DevSecOps, serverless computing, cloud native applications, containers, docker and kubernetes, microservice architectures, distributed logs/event hubs, react/event driven architectures, FaaS.
AI & Automation: deep learning, machine learning
IOT: Internet of Things, edge/fog computing
Cloud: Saas, Iaas, Paas, hybrid cloud
Data: Data lakes/repository, streaming/real-time data, big data analytics
Leaders embrace a broader value agenda and reach beyond traditional business priorities
Leaders focus on innovative outcomes that extend beyond classic economic measures. In less than five years, India’s Jio, a telecommunications subsidiary of Reliance Industries, has grown into a tech Leader on the strength of strategic investments in fixed assets like cell towers, fiber optic cables and cloud data centers. Because of these investments, Jio is in a position today to accelerate the digital transformation of the Indian economy.
Leaders also focus on delivering the best possible user experience to engage with employees and customers more effectively. Almost all industries were required to do business virtually because of the COVID-19 pandemic. Leaders seized this opportunity to create new, meaningful experiences.
Leapfroggers are the ones to watch. They are overtaking peers and catching up with Leaders.
What makes a Leapfrogger?
We see the combinatorial effect of two factors:
Impact of flipping the IT budget spend during the pandemic
If you have high Systems Strength, and a high Flip Size, continue to increase both Systems Strength and Flip Size in steps.
If you have a low Systems Strength, regardless of Flip Size, focus on building Systems Strength.
If you have high Systems Strength, but low Flip Size, focus on flipping the IT budget allocation toward innovation.
Adopting a leapfrogging mindset for success
We found that, like Leaders, Leapfroggers demonstrate three strategic imperatives that are crucial to their success:
They replatform, building Systems Strength by moving to and innovating in the cloud.
Leapfroggers outpace Others in cloud adoption across
types of cloud technologies covered by our study.
They reframe, adopting an innovation-led mindset and tech strategy. They also prioritise collaboration with ecosystem partners and startups in building new IT systems.
of Leapfroggers are building partnerships across their ecosystem.
They extend their reach, by expanding access to technology across functions and embracing a broader value agenda, including employee reskilling, well-being and mental health.
more business processes for digital transformation than Others.
Leapfroggers substantially grow their Systems Strength by moving to the cloud at scale.
They outspend their peers in all cloud technologies covered in our survey and increased their adoption of all technologies by 17%. They also:
Banco Santander SA, the Madrid-based multinational financial services firm, shows replatforming at work. In 2019, Santander consolidated all of its digital services into a single global unit, removed potential duplication of apps and systems, and ensured that any new platforms are built “only once.”
In replatforming, Santander dismantled internal silos. Systems now clearly map to capabilities. Investments in IT bring together all stakeholders across the organisation, instead of creating shadow IT systems and leaving some groups out in the cold. The bank's app was recognised as the Best Bank for Digital Services in Spain in 2020.
Leapfroggers increased their adoption of all technologies by
Leapfroggers are unafraid to reframe: to change their mindset and adapt as needed.
In flipping their IT budgets, Leapfroggers:
Take Carrefour Group, one of the world’s biggest supermarket chains. Over the past three years, Carrefour has been undergoing a major overhaul to boost sales and profits and transform itself into a digitally savvy food retailer. The company has invested 2.8 billion euros in its digital transformation and has partnered with the likes of Google to create innovation labs and reinvent the customer experience.
The investments in innovation technologies paid off when the pandemic hit. In 2020, globally, Carrefour drove growth of more than 70% in food commerce, reaching 2.3 billion euros and it’s on track to meet its 4.2 billion euros target by 2022.
Driving their strategy? Innovation and collaboration
When Leapfroggers replatform to the cloud and reframe their mindset to innovation they:
Germany’s Deutsche Telekom (DT) embodies what it means to reach. The telecom giant has performed well in a difficult business environment and has been a model of resilience during the pandemic.
Why? Because of a decision by DT in 2016 to modernise its IT estate and invest in cultural and technological innovation. The enterprise-wide transformation initiative was aimed at improving employees’ skills, democratising access to technology and restoring stability and reliability to its IT organisation.
Expand access to technology across functions and embrace new value
While each organisation’s path is unique, evolving tech strategies deliver greater success when companies master these three imperatives.
Start with replatforming to build Systems Strength, primarily by accelerating migration to the cloud. Then reframe by flipping the IT budget toward innovation. And finally, use the combinatorial power of Systems Strength and Flipping to reach beyond traditional business priorities and create multidimensional value.
Start with cloud to advance your business growth objectives.
Thriving companies harness key cloud technologies including AI to outpace peers.
Where to start?
Build Systems Strength.
Migrate and modernise your IT landscape with cloud through careful assessment, disposition and prioritisation.
Rethink IT investments to strengthen your innovation muscle.
The top technology priority for thriving companies during the pandemic has been scaling innovation. If your IT budget is primarily to ‘keep the lights on,’ you’ll continue falling behind peers.
Where to start?
Flip the IT budget allocation.
Prioritise freed-up capital to further invest in new technology innovation.
Expand access to technology across functions, invest in well-being and equality to turbocharge talent and embrace a broader value agenda.
Thriving companies expand access to innovative technology for twice as many enterprise processes and reskill at almost twice the rate (1.7x) of pre-COVID peers.
Where to start?
Reach beyond traditional business priorities. Scale technology and talent based on value to drive exceptional customer experiences and new value propositions.
The profound disruption caused by COVID-19 is accelerating the trend in innovative technology adoption. But the pandemic has also awakened business leaders to embed responsible practices and create value for multiple stakeholders.
As we enter a new era, business leaders are reimagining their company’s purpose by embedding responsible practices and creating multidimensional value at the core of their strategies. As they extend their mission, enterprise technology must move in lock-step, reaching beyond current priorities.
That means tech-enabled innovation that is scaled not just across IT, but across all enterprise processes. It requires innovation designed not just to improve people’s performance, but also their well-being. And it calls for radically human systems that help meet the values of customers, partners and wider society.
Companies looking to succeed can view the Leaders and Leapfroggers as models for innovation and growth.