Survey shows growth in digital transformation budgets amid COVID-19
90% of large enterprises are maintaining or increasing digital transformation budgets amid COVID-19.
A survey has found digital investment is on the rise driven by low preparedness that has been exposed over the last year. The research found that while 68% of companies have seen revenue declines amid COVID-19, 90% of organizations have either maintained or increased their digital transformation budget. The analysis estimates that less than one-third of companies are digitally prepared, but those with the most enhanced digital capabilities expect to bounce back faster from pandemic-related declines.
The survey by Tata Consultancy Services’ Global of slightly less than 300 senior business leaders from large enterprises – 97% with revenue above $1 billion and 44% above $10 billion – from different geographies compared organisations that had more advanced digital capabilities in place prior to COVID (“leaders”) with those that had fewer (“followers”). It found that fewer leaders have seen their revenue decline (64% to 73%). Moreover, leaders had better business visibility and a more confident outlook, with 74% of them expecting revenues to bounce back within two years, compared to 54% of followers.
Six digital capabilities were identified as critical factors in companies withstanding the pandemic: End-to-end digital customer experience (CX); AI-based analytics to continually improve customer service; core enterprise systems in the cloud; highly automated core business processes; digital sensors tracking products; and key partnerships in digital ecosystems.
Business initiatives around an end-to-end CX have seen most traction, already deployed at 25% of companies and under development at 44%. Similarly, the use of analytics and AI to improve CX is deployed at 24% and under development at 39% of companies. Higher levels of automation in core business processes is another priority area, already deployed at 23% of companies and under development at 44% of companies.
The survey also showed that prior to the pandemic, the average organization surveyed had only 9% of its workforce working mostly from home. That percentage has increased seven-fold and is expected to remain elevated through 2025, when the average company projects 40% of its employees will work largely from home.
"Before the pandemic, companies' digital capabilities were rapidly becoming central to their success and business transformation initiatives. However, our study revealed how several enterprises were not as far along in developing a digital backbone as they hoped," said Rajashree R, Chief Marketing Officer at TCS. "Companies that had embraced digital transformation more whole-heartedly performed better during the pandemic and expect a faster rebound, whereas others are now focused on making necessary investments and racing to catch up."