Data is a major opportunity for organizations in Europe, Middle East and Africa (EMEA). However, data is also one of the largest challenges that business and technology leaders face. The EMEA region is accelerating digitization to meet new revenue, operational and human capital demands, but if the region is to become a digital leader, it will need to transform its approach to data.
A major study of CXOs by technology analyst house IDC revealed that EMEA has strong digital ambitions but faces some of the largest data and technology challenges in the global CXO community.
Across the EMEA region, there is a widespread shift to digital-first business methods. However, 65 percent of CXOs in the region state that utilizing data and software to generate revenue is a major challenge, meaning a little over a quarter of organizations in the region believe they have good data capabilities for revenue generation. This challenge is explained by the low levels of understanding of the power of data within their businesses. IDC learned that only 35 percent of organizations are dependent on data for identifying new revenue opportunities, and just 28 percent state that business planning is highly dependent on data. Under half of the organizations in EMEA indicate that internal and external reporting is highly dependent on data, and therefore, only 37 percent agree that analysis of business productivity and efficiency is data-dependent.
However, CXOs in EMEA are moving forwards and plan to leverage data for new revenue, and business model generation is their number one digital transformation challenge, followed by enabling employees to work in new ways and the sourcing and development of digital skills in both the technology team and wider business functions. The age-old problem of data being locked into silos is a key concern for 60 percent of CXOs IDC spoke to, which will worry CEOs, as just eight percent believe data is vital for identifying and reducing risk across the organization. A situation probably caused by a lack of access to data trapped in silos.
CXOs across the EMEA region are investing and modernizing their way out of the problem. The coronavirus pandemic has accelerated change programs and highlighted the challenges organizations face with their data and enterprise technology stacks to become digital-first. Over 80 percent of technology leaders in EMEA are under pressure to deliver on digital transformation strategies, IDC finds, and 90 percent of organizations recognise that digital-first is a must for business in the 2020s.
Digital strategies are in place at 64 percent of EMEA organizations, but only 3 percent have an enterprise-wide digital strategy, leading to new revenue streams. IDC found a perception problem, too, with 32 percent of business lines stating that they have revenue-generating digital projects at the pilot stage, but only five percent of IT teams believe this to be the case. The challenge is that 70 percent of CEOs in large European organizations surveyed by IDC are set to be incentivized to generate 40 percent of revenues via digital means by 2025, three years time. If achieved, IDC says this will generate over €4 trillion in gross value added across Europe.
Infrastructure investments to enable digital customer engagement, productivity, and business resilience top the priority list for CXOs embracing the digital opportunity. Half of CXOs state that investments into a managed infrastructure will enable the business to deliver more digital value to its stakeholders.
With new infrastructure in place, EMEA organizations are embracing new working methods, with 50 percent of agile organizations in the region incubating and testing new products and services. This is leading to closer collaboration with customers, clients and partners to analyze, brainstorm and iteratively improve services and reduce pain points the IDC survey finds. Over a quarter (30 percent) are co-creating new digital products with customers and partners.
The pandemic levelled the hierarchy of many organizations therefore it is not surprising to see that 35 percent of EMEA respondents to the IDC survey believe equal access to digital tools and information is a challenge of the future workplace. In a post-pandemic economy, staff will need data and tools regardless of location, and if CXOs are to retain and recruit the talent they need to meet the digital challenge, this will become essential. The survey finds that 62 percent of CXOs lack the enterprise cloud skills required to manage the multiple cloud resources needed for digital transformation.
CXOs are still struggling with pre-cloud challenges from the enterprise technology industry. According to 64 percent of respondents, service level agreement (SLA) tracking across multiple suppliers is a major burden. CXOs admit to still struggling with traditional enterprise IT problems; 45 percent cannot connect their legacy systems to cloud applications.
The prevalence of legacy technology across EMEA is exacerbating the data challenge CXOs face; the same 45 percent struggling to connect legacy systems to cloud applications are also unable to provide real-time data on customers, machines and users to the wider business. In addition, there is no scalable data management in place for 53 percent of respondents. The pandemic led to an increase in cybersecurity challenges for CXOs. As the sponsored IDC survey reveals, 60 percent of EMEA organizations state that security is a key issue for their multiple cloud instances, creating a weakness in an organization's security posture and leading to a breach.
New model army
As CXOs drive the EMEA wide digital transformation, their own role is adapting too. The demands of a more digitally-driven organization, as well as the hang-over of the pandemic, is leading to one of the most significant changes in the leadership practices of CXOs. IDC describes leadership as undergoing a modal shift, from command-and-control within hierarchies to orchestration that is fluid. The rise of cross-functional development where business and technology experts swarm together onto a project or outcome has led to this shift.
The evidence for this change is clear too; nearly half of the sign-off responsibility for digital transformation lies outside of technology, with 47 percent of non-IT CXOs rubber-stamping change. Whether technical or not, CXOs are now focused on developing the organizational culture to develop a data and digital internal culture. To do that, CXOs need capabilities in empathy, collaboration and innovation over pure technical ability.
CXOs across EMEA face a major challenge to ensure data-driven methods increase in their organizations, which will enable the digital transformation CEOs and customers demand. As the IDC study reveals, tackling the culture of the business whilst also addressing legacy technology and embracing the enterprise cloud will deliver the future workplace.