Business leaders cite digital preparedness as key to their ability to adapt to the changes brought about by the Covid-19 pandemic.
A new study looks at how the relationship between technology, business and people evolved during the Covid-19 pandemic. The Economist Intelligence Unit (EIU) heard from business leaders across eight industries about the challenges and opportunities the disruption created for organizations and how digital initiatives shifted to confront a new reality.
Commissioned by Microsoft, the EIU research sought to glean insights from the past year and focus on the way forward. The study looked specifically at supply chains, remote work, predictive analytics, decision-making, and employee safety and well-being.
Digitization = adaptability
Researchers connected the dots between organizations’ digital maturity and their ability to weather the unprecedented disruption. They found a strong correlation: The more focused companies were on digital transformation, the faster they were able to recover operations and empower people to move forward.
“The Covid-19 pandemic showed how digital tools are critical in allowing businesses to create agility and respond to major disruption,” said Michael Gold, managing editor at the EIU. “But this study shows that it’s not just about business. Companies overwhelmingly see digital transformation as crucial in overcoming skills gaps, engaging employees and delivering broader benefits to society.”
Digital tools became indispensable infrastructure across industries. Those with robust digital footprints reported more agility in facilitating remote work, supporting distributed roles, recovering disrupted supply chains and transacting with customers in new ways. But although digital transformation enabled business continuity, the study also revealed gaps in skills, privacy, security and compliance as organizations apply new technologies.
Prepared or not, organizations across industries accelerated their transformation initiatives and began to rely more heavily on digital tools. Here, cloud technology led the way, with 50 percent of organizations saying it played a critical role in their Covid-era operations. That was followed by technologies to enable remote work (40 percent), artificial intelligence and machine learning (33 percent), and the Internet of Things (31 percent).
In the manufacturing sector, the study found that operational efficiency has been the primary driver of digital transformation. Key goals for the sector are to reduce the cost and waste associated with the use of materials and energy; streamline supply chains; comply with higher standards of regulatory oversight; and meet the new expectations of customers, investors and local communities.
Pre-pandemic, manufacturing was already working to address a skills gap. The sector also cited diversity and inclusion, skill-building and climate change among their top concerns that digital transformation can help address.
However, manufacturing respondents also said the speed of technological change is a barrier to its adoption, with 27 percent citing it as a barrier to digital transformation, compared with a survey average of 19 percent. And in three years’ time, they expect to a higher extent than the survey average that these blocks will persist when it comes to addressing the skills and talent gap that the industry faces and integrating new technology with legacy systems.
Still, manufacturing respondents were most likely to say the pandemic has made securing budget for digital transformation easier than it was previously. Respondents were also optimistic that funding will continue. Budgetary constraints are expected to drop dramatically down the list of barriers to digital transformation in manufacturing over the next three years – the biggest drop seen in the survey.
Covid-19 hit the automotive industry hard with supply chain disruptions, factory closures and an early slump in sales. “These challenges call for accelerated digital transformation in a sector that has already done much to optimize supply chains, operate smarter factories and deliver better customer experiences based on a stream of data from connected cars,” the report noted.
But automotive executives surveyed by the EIU were the most likely to report that their organization’s financial situation has gotten worse since the pandemic began, along with the lowest level of technology uptake. “Out of all industries surveyed, automotive respondents reported the lowest levels of preparedness in their firms’ technology infrastructure across every pandemic-related resilience measure,” the report said.
Now, the industry is looking to automation to help speed up recovery, with a view to “addressing the workforce and skills gaps it faces, while pursuing broader efficiency goals,” the report concluded.
The study spanned 15 countries in the Americas, Asia-Pacific and Europe, surveying 800 senior executives, 100 from each of eight industries: automotive, consumer goods and retail, education, financial services, government, healthcare, manufacturing, and media and communications.