Supply Chains Struggle to Deliver on Digital Promises, Says Fuijitsu Study

While supply chain managers recognize the importance of digital transformation, organizations worldwide are struggling to balance the elements needed to deliver on digital.

Of 1,625 business leaders surveyed for Fujitsu’s new report, The Digital Transformation PACT, one in three (33 percent) has cancelled a project in the last two years at a cost of $499,000, while one in four (28 percent) has experienced a failed project costing $655,000. 84 percent of businesses say that their customers expect them to be more digital, while 71 percent believe that they are behind their competitors. Ultimately, two in three (66 percent) believe that they will lose customers relative to their competitors as a result of digital transformation.

Realizing digital transformation is about much more than technology alone. The research commissioned by Fujitsu examines how businesses are performing against the four strategic elements required to digitally transform: People, Actions, Collaboration and Technology (PACT). Organizations recognize the importance of digital transformation with the majority of businesses (46 percent) having already implemented transformation projects, while 86 percent say they are planning for the impact of technology on their business beyond the next 12 months. However, businesses continue to face challenges across the four pillars of PACT.

“Technology can be truly transformative, but making the most of digital requires more than the latest tools,” said Duncan Tait, CEO, SEVP and head of Americas and EMEIA at Fujitsu. “While businesses today recognize the need to adopt and adapt to technology, there remain significant issues that are contributing to substantial rates of failure and high associated costs. To realize their digital vision, it’s crucial that businesses have the right skills, processes, partnerships and technology in place. With digital disruption rapidly changing the business landscape, businesses can’t afford to fail in their transformation.”

People

When considering their approach to the people involved in digital transformation, the vast majority of business leaders (90 percent) are taking steps to increase their access to digital expertise, with 70 percent admitting there is a clear lack of digital skills within their organization. For example, 80 percent say that a lack of skills is the biggest hindrance to addressing cyber security. Looking to the future, skills will continue to be a key business issue; 93 percent say upskilling staff will be vital to their organization’s success in the next three years, while 83 percent believe artificial intelligence will transform the skills needed by 2020.

Actions

Looking at actions, meaning the processes and behaviors needed to make digital transformation work, nine in ten business leaders (90 percent) say their organization has a clearly defined digital strategy, while 83 percent are confident that the rest of the business knows what it is. However, three quarters (74 percent) say that projects are often undertaken that aren’t linked to the overarching business strategy, while 72 percent say shadow digital projects are the only way parts of the organization can complete meaningful innovation. Crucially, two in three (66 percent) say the cost of failure has put them off future digital transformation.

Collaboration

Business leaders are taking positive steps in collaboration, with most businesses undertaking or planning to undertake co-creation projects (63 percent), with partners including technology experts (64 percent) and existing customers (42 percent). Surprisingly, 79 percent would even be willing to share sensitive information as part of these co-creation projects; however, 73 percent say that a lack of success within a quick timeframe would quickly put an end to their strategic partnerships.

Technology

And when it comes to technology, business leaders are planning to implement a wide range of systems; in the next 12 months, over half are planning to introduce cyber security solutions (52 percent) or the Internet of Things (51 percent), with cloud computing (47 percent) and artificial intelligence (46 percent) following close behind. Business leaders are aware of the disruptive impact of technological change, as 86 percent say the ability to change will be crucial to their survival in the next five years. However, 71 percent are concerned about their organization’s capacity to adapt to technologies like artificial intelligence.

“The introduction of new technology into a business has always called for balance,” adds Tait. “However, as the pace of technological change continues to gather, balance has never been more important.”

He maintains that It is no longer enough for supply chain managers to just to have the best applications and devices; without talented and capable people to use them, they are meaningless.

“You may have the brightest and most progressive people, but they will flounder in a culture that stifles innovation. And no business – no matter how big, how influential or powerful – can hope to stand alone and succeed in the world of tomorrow. Only by bringing equilibrium to those four vital ingredients - People, Actions, Collaboration and Technology - can organizations thrive in this digital era.”

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