Can revenue growth due to digital initiatives outweigh poor digital IQ?

In the last five years since I have tracked PwC's Digital IQ Survey, the term 'digital' has gone from becoming cool to almost abominable.

Almost every conversation today is around digital transformation.

The term 'digital technologies' has become common usage since the term 'SMAC' was concocted in 2012. The SMAC Stack actually played a really important role in transforming your organization's business model. It was not just cloud but a combination of these digital technologies that presented a remarkable opportunity for enterprises and CIOs to latch onto.

Today it is impossible to imagine a smartphone without its apps, disconnected from the Web, the cloud and your personal networks. Today these technologies (read SMAC) are a given if your company is on the digital transformation path.

But there's more.

According to PwC's Digital IQ Survey 2017, executives expect the internet of things (IoT) and artificial intelligence to bring about the biggest change - with 73% say they are investing in IoT and 54% in AI. What is even more interesting is that the executives plan to increase their investments in Robotics (31%), 3-D printing (17%), Augmented reality (24%), Virtual reality (15%), Drones (14%) and Blockchain (11%) in the next three years.

Unfortunately, just 7% of executives say that combating new industry entrants drove their digital investments.

However, the report reassures that "meaningful investments" are flowing to the IoT and AI, and substantial growth is expected across a broader spectrum of technologies during the next three years, in both the enterprise and start-up communities.

While it is clear that there are growing investments in digital technologies, the reason for the surplus in these investments is completely misconstrued. Instead of putting the focus on being disruptive, nearly three-quarters (73%) cite revenue growth as a top benefit of their digital initiatives, followed by increased profits (47%) and reduced costs (40%).

Moreover, the survey indicates that only a few companies today have a team dedicated to exploring emerging technology than in years past. The rest rely on ad hoc teams or outsourcing, and many (49%) still determine their adoption of new technologies by evaluating the latest available tools, rather than proactively exploring new innovations with specific business needs in mind (40%).

One of the main reasons for organizations turning to ad hoc teams or outsourcing is the lack of skills. According to the report, one-quarter (25%) of respondents say they use external resources even when they have skilled workers in-house, because it is too difficult or too slow to work with internal teams; 42% say third parties are less expensive. In summary, the available skills aren't enough to amount to the emerging technologies.

Finally, the report warns that the company leaders today are no better equipped to handle the changes coming their way than they were in 2007. This, keeping in mind, the evolution of the role of the CIO as a strategic leader and the birth of new roles, such as Chief Data Officer and Chief Digital Officer. In fact, only 52% of companies surveyed this year rate their Digital IQ as strong as compared to 67% in 2016.

You can blame it on the ever advancing and rapidly evolving modern technology or the lack of pace-keeping ability of the leaders. Whatever it is, leaders need to work on growing their digital aptitude rather than focusing on simply growing their revenues.

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