European firms double down on digital transformation during COVID-19

April 7, 2021

4 min read

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Winston Churchill once, maybe apocryphally, noted to ‘never let a good crisis go to waste.’  Twelve months on from the outset of the COVID pandemic, we can see a range of lessons from businesses around the globe that have looked to accelerate their digital transformation efforts, rather than put them on ice.

Take European retail giant Schwarz Group, parent company of grocery chains Lidl and Kaufland. 

Not only has Schwarz been accelerating digital transformation within its own operations to take advantage of the e-commerce boom, it also started offering its own cloud services to businesses.

The move is designed to spark competition with the public cloud giants, a feat only possible with the increased hunger for digital transformation that COVID has spurred.

While European organisations manage a variety of economic, workforce, and competitive pressures, the businesses that end up thriving through uncertainty are likely to be those who continue to invest in digital technologies through the crisis and beyond. 

This was reflected in a recent Telstra study, carried out in partnership with Vanson Bourne of more than 500 senior IT and business decision-makers across Europe, with 65% of respondent indicating that most, or all, of their digital transformation projects are currently active. Further to this, almost all of them (97%) accept that digital investment is crucial to maintaining a competitive advantage.

While organisations faced many challenges in the last 12 months, investments in digital solutions have served as a saving grace for many. In fact, maintaining digital transformation strategies and pivoting towards innovative digital services has been crucial for survival, as businesses become increasingly dispersed – both geographically and physically – and customer demand shifts.

European firms increasing digital spend

According to Microsoft CEO Satya Nadella, COVID-19 initially fuelled two years’ worth of digital transformation in two months, with roadmaps compressed from years to weeks and even days.

Indeed, the rate of investment has been staggering, with new digital services spun up at unprecedented speeds across many verticals and geographies. According to our study, two in five (40%) of business and IT decision-makers say the pandemic has accelerated the need for new projects in their organisation, while 39% say existing projects have accelerated.

While some of this has been focused on network performance and stability (with substantial investment in 5G, IoT and edge computing), the largest area of investment (51%) is in Artificial Intelligence. This is likely so organisations can better understand customers and make informed business decisions that drive value and increase competitiveness. 

It’s also clear that digital transformation is also a job that is never really done in the minds of decision-makers, as only 28% claim to be all the way along the journey when it comes to executing on their digital transformation strategy.

Organisations in Germany were most likely to report they had achieved full or significant execution of their digital transformation strategy, followed by their counterparts in the Nordics and the Netherlands.

Culture is key

Ask just about any ICT leader and they’ll tell you that culture is generally one of the toughest pain points when it comes to digital transformation strategy. Solving the ‘people’ issue is often the most difficult task and prioritising cultural transformation can no longer be ignored.

For example, when McDonalds orchestrated a digital transformation project to establish home delivery and eCommerce capabilities to over 21,000 restaurants, it recognised the enormous cultural change that was involved.

The company had to reiterate at all levels that this effort represented a fundamental change to its values and had to persuade staff to embrace a new mindset for measuring success. To alleviate these barriers, McDonalds adopted a ‘progress over perfection’ mantra, giving staff permission to prioritise speed over elegance to help them adapt more quickly.

Culture isn’t just a blocker to digital transformation, as Telstra’s study found that innovation initiatives also play a critical role in assisting with cultural improvements and enhancements. These key enhancements include an improved culture of productivity, improved relationships with supply chains and improved collaboration.

Importantly, these benefits can only be realised if organisations take the right approach to orchestrating transformations, especially in terms of who is involved in leading them.

When questioned on department influence, more than two in five (43%) respondents believe the IT department does not boast enough influence on the planning and execution of digital transformation projects in their organisation. This theme was consistent across both business and IT decision-maker respondents.

It’s clear that none of these challenges – cultural or otherwise – have inhibited the growth of digital transformation projects in Europe this year. The rapid pace of change could be cause for concern, as organisations might rush technology projects without thinking of the wider ramifications.

If organisations are going to make the most of these projects, they need to maintain agility as a priority. Organisations also need to ensure they’re baking security into every aspect of their stack, as increasingly sophisticated threat actors have pounced on the pandemic as an opportunity to ramp up attacks.

To get the full story of how organisations in Europe are managing digitisation, supply chain management and cybersecurity in 2021, download the Telstra’s report here.