UK firms get poor returns from digital transformation

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UK organizations are generating less value from their technology investments than those in other countries, according to Deloitte.

A survey of the technology investment strategies of 1,600 global business and technology leaders across six different industries found that three-quarters of UK organizations believe digital transformation is the single most important investment they can make. 

The report concludes that data analytics (90%), cloud data centers (73%), and artificial intelligence, and machine learning (68%) are the technologies that generate the most value back to an organization.

However, UK companies are failing to capitalize on this, with an average eight percentage-point gap in value created by UK organizations using 12 different technologies, compared to the global average. 

"Technology leaders are under pressure to deliver value and growth for their business. However, implementing and creating value from new technologies, whether that's a cloud system or a generative AI tool, can face many potential pitfalls," said Mark Lillie, global technology strategy and transformation leader at Deloitte. 

"While it is acknowledged that these digital capabilities are vital for an organization's long-term strategy, competitiveness, and commercial success, their perceived complexity and costliness means that these projects often fall at the first hurdle."

Part of the reason may be the fact that three in ten UK organizations lack a transformation strategy, while nearly a third say they lack understanding of new technology.

The difficulties vary: 37% cited dependency on legacy systems, a third said they had problems securing funding, and three in ten cited insufficient data and inadequate cross-departmental communication or silos. In every category, UK respondents were more likely than average to see these barriers as significant. 


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"Many UK organizations are now bearing the burden of not updating their tech, with those relying on legacy systems and code struggling to connect old technology with new," said Lillie.

"At the same time, technology leaders are struggling to secure the funding and investment they need from executives and boards to enact the changes they need to make."

In terms of monetization, there are a number of challenges: Nearly four in ten respondents cited disruption of the traditional business model as the biggest problem, followed by the inability to benchmark against peers to know how much to invest, cited by three in ten. 27% per cent cited protecting intellectual property and regulatory barriers.

UK organizations are apparently also showing more short-term thinking than others, with more than three-quarters assessing the value gained from digital transformation after just a year – 12 percentage points higher than the global average. At the same time, the report found, 19% of UK respondents assess the value gained within two to three years, compared to 31% globally. 

"For business leaders to fully realize the return on investment for using innovative technology or implementing a new IT system, they must consider the long-term implications," said Lucinda Clements, Deloitte's UK lead partner for technology strategy and transformation. "The results of true digital transformation are worth the wait." 

Emma Woollacott

Emma Woollacott is a freelance journalist writing for publications including the BBC, Private Eye, Forbes, Raconteur and specialist technology titles.