New research from Accenture (NYSE: ACN) shows that Chinese companies have been making steady progress in digital transformation over the past five years, with 17% of them, “Champions,” making decisive investments in adopting and scaling digital technologies to drive continuous business transformation, compared to just 7% in 2018. However, the overall pace of enterprise digital transformation in China in 2022 has eased amid a more complex business landscape.
“Over the past five years, Chinese companies have been successfully using digital technologies to raise competitiveness and create value in new ways,” said Samantha Zhu, chairperson of Accenture Greater China. “In the current environment, as companies manage internal and external challenges including market volatility and supply chain disruptions, maintaining productivity while also upskilling their workforce is key, and it’s critical that they continue to invest in digital technologies to strengthen their core and drive continuous innovation.”
The China Digital Transformation Index research, now in its fifth year, is a cross-industry framework that assesses companies across nine industries on their digital adoption and maturity. In 2022, 574 companies were surveyed. The research shows that there has been a slight increase of 1% point in the number of companies qualifying as Champions since last year, however the average score measuring digital proficiency declined for the first time in five years from 54 to 52 between 2021 to 2022, out of a total achievable score of 100. Champions are also generating more than 50% of their current revenues from business activities that were implemented in the last three years.
All companies were measured on a range of metrics that look at how they are using digital technologies to drive innovation, enhance operations and create new opportunities for growth. The research found that across the board, companies are prioritizing data-driven operations, but are less focused on research & development (R&D), as indicated by a 28% drop in score in providing customized products and services. Champions, in particular, are developing smart products or services 8X more than others score-wise and are driving R&D through collaborative digital platforms more than 2X higher.
The research also found that while most business leaders surveyed said they would increase their digital investments in the following one to two years, they would do so more pragmatically and prudently by paying attention to the immediate financial returns of digital projects.
To help companies successfully translate digital investments into financial performance, Accenture launched a digital enterprise evolution roadmap that enables individual companies to manage their transformation process. As the first such roadmap based on the index, it defines stages from the perspective of purpose, experiences, operations and technology.
“Sustainable, purpose-led, high quality growth companies and the continued modernization of industries is the key to China’s future economic development. During our 35 years in China, we have worked closely with our clients to enable the various stages of their transformation and believe that this new roadmap will help them better track and manage the progress of their digital transformation efforts, unlock the value of digital, and achieve total enterprise reinvention,” added Ms. Zhu.
The report listed six key areas of action that will help Chinese companies strengthen their digital transformation:
- Leverage open innovation for long-term growth: By developing a full suite of innovation capabilities across their ecosystem of customers, partners and suppliers, companies can reshape their competitive advantage – from improving technology, products and services to supporting industrial upgrades and sustainable development.
- Lead with human centricity: Shift the focus from optimizing touch points to offering value by developing products and services that meet customers’ essential needs and providing human-centric experiences with the help of digital technologies.
- Build platforms for a diversified workforce: Lead with the combination of technology adoption and talent to improve workforce resiliency and enable a timely response to evolving business needs. Upskilling people in the digital environment will greatly improve operational efficiency and help drive innovation.
- Enhance data-driven intelligent operations: Accelerate data aggregation to ensure the quality and availability of the data on the cloud and pave the way for seamless data flow to support more frequent and complicated decision-making processes.
- Develop resilience through transparency: Gain full visibility across production lines, customers and suppliers by deploying analytics and artificial intelligence. Secure a resilient supply chain to predict potential risks and act on them in real-time.
- Realize the full potential of tech: As new digital technologies continue to emerge, companies need to leverage them in combination to further accelerate reinvention and achieve synergy in products and services innovation, management and ecosystem development.