Approximately 70 percent of organizations are faced with challenges in their digital transformation journey

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Middle Eastern companies must adopt and oversee five key imperatives for a successful digital transformation

David Panhans, Managing Director and Partner at BCG

Middle East: Over the last decade, the evolution of high-speed connectivity and the pace of changing preferences across demographics have driven the demand for services and solutions that are delivered faster and easy to access. However, the impact of the ongoing pandemic on businesses has been felt across every sector and the majority of companies are experiencing difficulties as they attempt to regain control of their top and bottom lines, according to a new report by Boston Consulting Group (BCG). The report, titled ‘The Five Imperatives of a Successful Digital Transformation’, stresses that while recent events have propelled the urgency to transition to digital, they have also exacerbated the risks and challenges already facing organizations the outbreak. 

As per BCG research, approximately 70 percent of organizations globally have failed or are falling short in their digital transformation attempts, and Middle Eastern organizations are also facing similar challenges. Companies are unprepared for the complexities that accompany such a journey. Questions concerning how to set up governance, infrastructure, and technology frequently arise, while adopting new ways of working and different organizational cultures are, more often than not, proving complicated to navigate. 

“Many organizations have identified the need to react to the changing business landscape but have struggled to implement and advance their respective transformation agendas,” said David Panhans, Managing Director and Partner at BCG. “Insufficient funding, inadequate guidance and direction, unempowered business units, legacy infrastructure, inconsistent working processes and practices, and issues acquiring the right talent are all primary reasons for the widespread shortcomings we are witnessing. It is also important to acknowledge that the pre-pandemic business-as-usual environment will not be resuming, and obstacles to overcome have multiplied in terms of difficulty.”

As 2020 unfolded and the business climate experienced unprecedented turbulence, the digital transformation challenges companies were facing grew from a problematic standpoint. Customer expectations in a digitally connected world increased with ubiquitous connectivity and smartphone adoption, while competitors more digitally advanced scaled across geographies at a rapid pace. At the same time, more competitive and innovative offerings led regulators to reconsider economic development frameworks – pressuring companies to evolve to remain competitive – and remote working has presented a pressing need to change organizational cultures and work practices to attract and retain talent. 

“For company executives and decision-makers, these challenges shed light on the necessity to double down on digital transformation by making it a top corporate priority – to stay relevant and to survive,” said Kaustubh Wagle, Managing Director and Partner at BCG. “Although success in this direction is no easy feat, it is certainly achievable. In every sector, digitally-savvy players have moved ahead of their competition by accelerating digital transformation and embracing new ways of working.”

There is no shortage of use cases to substantiate that digitally prepared companies perform better and, in addition to examples from which companies can take inspiration and learnings, BCG has identified five imperatives for digital transformation success:

  • Institutionalized digital governance: Businesses can become empowered to execute transformation initiatives by identifying specific KPIs, developing a business-led portfolio, and revamping corporate processes.
  • Reimagined journeys: Adopting new ways of working will streamline customer, employee, and partner experiences and rapidly launch products and services. 
  • Next-generation technology and delivery: Migrating to modular technology architecture and decommissioning legacy infrastructure will result in dynamic market adaptability, newfound agility, and faster go-to-market timeframes. 
  • Digital talent and culture: Promoting a unified digital mindset internally will infuse innovation in company DNA and build digital capabilities. 
  • Unlocked data and analytics potential: Creating an analytics monetization strategy and aligning analytics operating models with clear roles and responsibilities will build the required capabilities to utilize data and analytics. 

“Despite the pandemic’s repercussions, companies making sustained progress on their digital transformation journeys have demonstrated more operational resilience due to their ability to serve customers digitally,” said Shoaib Yousuf, Partner at BCG. “Because digital is here to stay and is the way forward, it is imperative that company heads act now, implements these steps, and proactively set a long-term agenda, so they can fulfill every requirement of a complex digital transformation journey.”

About Boston Consulting Group:

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation—inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures—and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.