Companies that amplified their technology investments during the COVID-19 pandemic have extended their growth advantage over competitors, according to new research from Accenture, a global professional services company based in Dublin with offices in Detroit, Livonia, Troy, and Ann Arbor.
The research shows that technology has become indispensable to business success and enables companies to thrive during disruptive times.
The new report, titled “Make the Leap, Take the Lead,” shows that by stepping up investments in cloud, artificial intelligence, and other technologies, “leaders” are growing revenue at five times the rate of “laggards,” higher than the doubled growth rate leaders reported a few years ago. In contrast, many laggard companies recently invested in new technologies for the first time, largely to maintain business and technology operations during the pandemic. This puts laggards even further behind and in the position of playing catch-up.
“This report shows that leaders are adopting innovative technology earlier and investing more frequently than their peers,” says Annette Rippert, group chief executive of strategy and consulting at Accenture. “These leaders focus not only on the implementation of new technology, but the critical steps needed to ensure successful scaling across the enterprise, including new agile ways of working, making important changes to reinforce an innovation-led culture, and upskilling their workforce. Each of these actions result in creating new sustainable value for their stakeholders.”
A new category of companies has emerged: leapfroggers, which make up 18 percent of the entire sample. This group was able to quickly master the balance between systems strength and increased innovation. They compressed their digital transformations into a shorter time frame through an aggressive and progressive technology strategy that converted the challenges of the past year into business opportunities and advantage.
“Our research scored companies on their ‘systems strength’ — a measure of technology adoption, application of technologies at scale, and organizational and cultural readiness for tech-enabled innovation,” says Ramnath Venkataraman, global lead of integrated global services for Accenture Technology. “Strong Systems Strength, combined with a ‘flip size’ that substantially pivots IT budgets towards innovation enables leaders to greatly extend their growth over laggards. Meanwhile, leapfroggers also show tremendous progress by maintaining systems strength and infusing innovation across the enterprise. In fact, leapfroggers are now growing their revenue at four times the rate of laggards.”
The report surveyed 4,300 respondents and assigned a score based on systems strength and flip size. The study determined which companies were leaders (the top 10 percent), leapfroggers, and laggards (the bottom 25 percent) and looked at the financial performance of each group.
The results also show that evolving technology strategies deliver greater success when companies master the following:
- Replatform to the cloud to build systems strength, reducing redundant technologies and disconnected data across the IT stack, while gaining computing power and flexibility. For instance, 80 percent of leapfroggers had adopted some form of cloud technology by 2017, but that figure rose to 98 percent by 2020.
- Reframe to an innovation-first technology strategy. Leapfroggers excel at shifting their mindset and viewing potential downturns as opportunities to innovate with new technology. Scaling new innovations became the top priority for leapfroggers during the pandemic, and 67 percent seek to increase revenue from non-core business lines.
- Reach by expanding access to technology across internal business functions and embracing a broader value agenda by addressing personalized employee upskilling, well-being, and mental health. About 65 percent of leaders prioritize employee happiness by providing digital-based flexible work arrangements, compared to just 43 percent of laggards.
More than 70 percent of leaders increased investments in cloud security and 68 percent in hybrid cloud. Leaders also dug deeper into internet of things technology (70 percent), and artificial intelligence and machine learning (59 percent). Building a foundational cloud platform delivers the costs savings to help flip IT budgets from maintenance to innovation.
Leapfroggers transformed their technology strategies and priorities in a short time frame, using the crisis to increase the use of advanced and emerging technologies by 17 percent and scaling technology across their enterprises. This group also fostered change to take further advantage of these technologies and compressed their transformations from years to months.
More information on the study is available here. It was based on survey responses from 4,300 business and IT professionals across 25 countries and 20 industries.