European companies have reported a 5% increase in revenue thanks to digital tools and technologies, equivalent to $150 billion in the last year alone
- European executives expect the total potential revenue impact of next-generation IT, such as artificial intelligence, Big Data, and blockchain, to grow by 8.4% over the next two years
- Companies set to lose $808 billion by 2018 if they do not apply digital tools and technologies systematically across processes
- Managers believe there is a lack of effective executive leadership, leading to a lack of clarity (37%) and urgency (35%) in driving digital transformation
- Digital economy will be powered by data, algorithms, software robots and connected things
A study by Cognizant, in conjunction with Roubini Global Economics, indicates that European businesses could unlock huge waves of digital value. Surveyed companies indicate that revenue could dramatically increase by up to $578 billion by 2018 through the application of digital tools and technologies across their processes.
The research, The Work Ahead – Europe’s Digital Imperative, surveyed 800 senior executives across the region. This was part of a larger, global study into understanding the changing nature of work in the digital age. The results reveal that if companies are to unlock the huge revenue potential and establish the Europe as a digital powerhouse on the global stage, then business leaders need to be more proactive in fusing the physical and virtual worlds.
Unlocking the revenue opportunity
Executives clearly recognise that next-generation IT, including AI, Big Data and blockchain, will drive new business models, new revenue streams, new types of customer relationships, and lower cost structures. In fact, respondents report a 5% increase in revenue from their digital investments so far (equating to an additional $150 billion in the last year alone). Those surveyed also expect the total potential revenue impact of digital technologies in Europe to grow to 8.4% by 2018.
Digital can deliver cost efficiencies as well as capturing revenue. For example, by applying intelligent process automation (IPA) – software robots undertaking certain routine tasks – businesses can reduce costs in the middle and back office. The analysis reveals that the total impact of digital transformation on revenue generated and costs saved across the surveyed industries (retail, financial services, insurance, manufacturing and life sciences) comes in at $930 million by 2018.
The case for digital is loud and clear but laggards still remain
European leaders see a digital economy powered by a combination of data, algorithms, software robots and connected devices. When asked which technology will most influence their working lives by 2020, unsurprisingly the business benefits afforded by Big Data are perceived to be as strong as ever, ranked by 99% of respondents. Interestingly, artificial intelligence (AI) ranks a close second (97%), as respondents believe AI is more than just hype. It is, in fact, becoming a central plank of the work ahead in Europe.
Conversely, any late adopters of digital technologies can expect to lose $808 billion by 2018, the analysis reveals.
However, one third of respondents do not believe they have the right executive leadership in place to deliver digital strategies, or worse, one that does not know what needs to be done, with 30% of those surveyed claiming that their leadership does not invest enough in new technologies while 29% show reluctance to new ways of working.
The research also uncovered the main obstacles firms face when shifting to digital, including security fears (24%), budget constraints (21%) and talent gaps (14%).
Euan Davis, European Head of the Centre for the Future of Work, Cognizant, explains: “To make the necessary shift to digital, leaders need to be proactive and prime their organisations for the work ahead. Slow innovation cycles and an unwillingness to experiment will kill an organisation’s ability to exploit the digital opportunities around them. Mastering the digital economy is an imperative. However, if deepening, broadening, strengthening, extending or improving your digital presence is not the number one priority on your agenda then you are playing by yesterday’s rules.”