BOSTON AND NEW YORK -- Extensive use of digital technologies is expected to support the implementation of advanced shared services models across a broader range of business functions over the next several years, according to new joint research from Accenture and HfS Research.
In their study, “Disrupt or be Disrupted: The Impact of Digital Technologies on Business Services,” the two organizations said that digital technologies, including software-as-a-service (SaaS), big data and analytics, cloud and mobile, are expected to have the largest projected changes in procurement and supply chain management.
Forty five percent of respondents expect digital transformation to “extensively impact” advanced shared services models in procurement over the next three years, compared to 18% who saw such change in the past three years. In supply chain, 49% expect extensive impact compared to 20% who reported it the last three years.
Significant increases are also expected in finance and accounting services (40% in the next three years vs. 23% in the last three); human resources (31% vs. 23%); and engineering (27% vs. 13%).
Nearly all organizations surveyed agree that one of the leading reasons for adopting digital technologies is the need to improve integration of processes and operations across functional boundaries. Other common drivers include improved productivity, cost reduction and improving competitiveness.
Respondents also widely agree that enterprises that fail to embrace the digital transformation will lose ground to competitors who take a more aggressive approach to digital solutions over the next several years. However, despite recognizing its value, just one in five respondents (19%) has a clear strategy in place to manage this digital transformation.
“Forward-thinking organizations are clearly recognizing that digital transformation is not a mere trend or a fad – it represents a critical evolution of new capabilities to boost their competitiveness - and its significance and value cannot be underestimated,” said Phil Fersht, CEO of HfS Research. “The study indicates that many companies that have not yet embraced digital as part of their shared services model are not just failing to keep pace, they are risking being rendered obsolete in the emerging as-a-service economy.
The study found that CFOS, who have long assumed a leadership position with respect to the prioritization, deployment and management of shared services, are currently playing a strong role in determining which processes are most ready and viable for digital transformation, with 37% making the final decision about implementation and another 52% providing major input – second only to the CIO (40% and 47%, respectively).
Among the Findings:
- Digital disruption is very real. Every respondent surveyed agrees that digital technologies are fundamentally changing the way organizations operate. We see a strong appreciation for the utilization of the emerging digital tools across advanced shared services models and outsourcing.
- Adoption is fueled by a need to gain better insight and improve competitiveness as well as lower cost. While cost reduction appears as a leading impetus for digital technology adoption, respondents also list the need to gain better insight into operations and customers, and integrate activities across internal and external services.
- Impact is anticipated to be broad. While investments in digital technologies directed at improving sales and customer experience will continue to lead the way, such activities will broaden to include every area of advanced shared services models, including former laggards such as engineering and HR.
- Enterprises believe they have the talent, if not the technology, to compete. Though enterprises readily admit that their current state of technology adoption falls short, they are reluctant to accept they do not have the right talent pool to implement the changes.
- Enterprises risk wasting investment when they look to do it all themselves. Implementing new digital tools and technologies all by themselves puts enterprises at significant risk. As with any emerging technology, experienced practitioners are in short supply. Utilizing third-party providers and consultants is likely the best way to quickly augment talent at a reasonable cost.
The Work That Remains To Be Done
- Organizations need clarity of leadership across business and technology lines with their digital approach. “Though we see an active involvement of executives across all business units in the digital transformation, this level of direct involvement can actually create confusion and slow things down,” said Accenture. “Organizations will need to look at streamlining decision making without direct involvement by too many functional heads.”
- Operational knowledge should not be ignored. Despite having the leadership and value identified, much of the decision making regarding digital transformation is being done in a vacuum. “For example, more than one in five organizations surveyed indicate that shared services managers had no influence in determining what was ready and viable for change,” Accenture said. “Organizations should look at creating cross-functional teams that branch across titles and roles and involve those who have day-to-day responsibility for the activities undergoing change.”
- Develop investment strategies for digital technologies. When asked about the level of their organization’s current investment in the four digital technologies (analytics, mobile, social and cloud), nearly one in four large organizations indicate they were seeing heavy investments, with the greatest activity in analytics and mobility. However, the survey reveals that investment in cloud technologies is lagging. Organizations should look at cloud-based solutions as they would benefit from shifting resources away from legacy infrastructure.
- Empower creative thinking or enable effective change. “Though organizations have service governance teams that are strong in tactical execution, they do fall short with creative thinking and changing old habits,” Accenture said. “Organizations lack process integration across internal and external providers. By retooling relationships that span internal shared services and business units, in addition to external providers, they can enable smoother digital adoption and increase the benefits.”