Digital transformation: from risk to a £39bn opportunity
Many chief executives don’t know where to start on productivity – but if they get it right they could cushion the effects of Brexit
Earlier this year, Forrester released several predictions for 2018 in a report titled “A Year of Reckoning.” As the title suggests, the report contained a number of alarming statistics, including the prediction that 20 per cent of chief executives will put their firms at risk by failing to plan for digital transformation.
But the question boggling many of them is how to do so. According to Google, search interest in ‘digital transformation’ has increased by 100 per cent since 2012 – and now accounts for more than 280,000,000 search results. And no topic with that many search results is simple to unravel.
Digital transformation is particularly difficult to quantify in terms of tangible business value. That’s why Ricoh partnered with Oxford Economics to calculate the potential economic impact of optimising workplaces and implementing effective digital transformation strategies.
Office optimisation – a £38.9bn benefit
Let’s be clear about one thing – the productivity puzzle and potential impact of Brexit continue to influence the UK’s economic performance, and their ultimate impact is yet to be seen. However our productivity model, developed with Oxford Economics, shows that UK business leaders can help the UK pull itself up by its bootstraps.
We started by creating a new productivity benchmark based on the percentage increase executives expect to see if they optimised office elements, such as technologies, culture and physical workspace.
We found that if organisations across the UK and Ireland move to an optimal office setting, the productivity and performance improvements would increase UK and Ireland GDP by 1.8 per cent and 1.0 per cent respectively, equating to £38.9bn in additional GDP.
To put that into context, an Oxford Economics study last year projected that the UK would lose £17bn in EU export revenues in the event of a hard Brexit. So if executives make the right workstyle and digital transformation decisions, it could go a long way to cushioning the effects of Brexit.
Executives (almost) on the same page
Finding the right strategy begins with understanding and believing in the need to invest in the first place. We found that 36 per cent of executives plan to invest between 5-10 per cent of their operating budgets on modernisation initiatives next year, while 8 per cent of executives will allocate 10 per cent or more.
Although investment capacity is quite high, the deployment of this budget is where issues start to occur, especially among the C-suite. Only 67 per cent of CEOs think that their technology infrastructure is effective today. But only 77 per cent believe in the potential impact of investing more in it. This is significantly less than their boardroom colleagues (chief financial officers, 87 per cent; chief information officers, 84 per cent; and chief human resources officers, 86 per cent).
The right digital transformation investment path
Oddly enough, executives do find common ground on facilities management, which includes office sensors, monitoring equipment, temperature control and other non-core technologies that are not necessarily considered hallmarks of good digital transformation strategies. In fact, 93 per cent of the organisations planning to spend more than 10 per cent of their operating budget identified facilities management as having the greatest potential impact.
However, that’s not what employees believe will benefit them most. Employees would much rather see improvements in technology infrastructure, digitisation of information, business applications, productivity tools and remote working. All of them feel that these are at least twice as effective in boosting their productivity than facilities management, which they rate the least important factor.
Consult your employees
Not every investment decision can follow a democratic process, but there’s room for improvement when it comes to considering employee feedback. The majority of employees do not feel that their opinions are considered in workplace decisions. Only 44 per cent of employees at small to medium-sized organisations feel that they are consulted, followed by 38 per cent at large corporations and 19 per cent at public sector organisations.
By finding greater levels of agreement, executives will be more likely to make the right investments – and unlock some of that £39.8bn.
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