Many large businesses are lumbering giants when it comes to digital transformation, and risk being left behind by more agile - and smaller - firms, despite claims that swifter adoption of technology could unlock productivity and wage growth and add billions to the UK economy. According to the "Bigger, Faster, Stronger" report, published by the CBI and Oracle, more adoption, coupled with better management practices, could add £100 billion to the UK economy and cut income inequality by 5%.
However, only just over half (54%) of UK companies believe disruptive technologies play an important role in their organisation, much lower than in countries such as France, Germany, India and Russia. Since the 2008 financial crisis, UK productivity growth has slowed compared to many G7 competitors, with key sectors such as financial services and construction experiencing negative growth. At the same time, a productivity and prosperity gap is opening up between companies willing to invest in the latest technologies and those that are not. The research highlights that larger companies – which account for 48% of UK turnover and employ 40% of the country’s workforce – are especially struggling to digitally transform. They face a range of issues, including skills scarcity, complex legacy systems and a 25% greater threat from cyberattacks compared to other companies. By contrast, smaller start-ups are more likely to adopt new technologies, while firms aged over 15 years are the least likely. CBI director of digital and innovation Felicity Burch said: "No business can rest on its laurels when it comes to technology. Big firms must be doing all they can to stay ahead of international competitors and adopt new technologies that will boost productivity and efficiency. Burch said that the assumption is that, with the resources at their disposal, it is easy for large firms to adopt new technology. But a host of challenges, from ageing legacy systems, cyber security threats and agile new challenger firms can make successful innovation feel like hitting a moving target, she added. Burch continued: "For the UK’s big hitters to secure their position as world leaders over the next 10 years, senior business leaders must be prepared to challenge their established ways of operating and cultivate an environment that encourages employees to seek innovative solutions to company-wide issues or these companies risk extinction. "If larger businesses don’t want to become dinosaurs, they need a long-term plan for adoption of new technologies. But they cannot do this alone." Oracle vice-president of digital innovation Neil Sholay said that in any digital transformation project, culture is crucial and knowledge is power. Both the latest technologies and connected thinking are needed to ensure the benefits of innovation are felt at all levels of the organisation. Digital innovation is everyone’s job, and everyone should be willing to learn from exemplars in other companies and sectors, Sholay insisted. He cited West Midlands Police as a great example of using technology to its fullest. By adopting a shared services model in its back-office based on a standardised Oracle software-as-a-service module, the force was able to achieve £36 million in savings and streamline processes for officers. This not only cut resolution time to 24 hours for 80% of operations, it doubled reported satisfaction. Sholay added: "At the same time, innovation isn’t an endgame, it’s a constant process of transformation. The only constant today is disruption, so businesses need to evolve ruthlessly fast to keep up with it. That means providing employees with the tools they need to be creative, collaborative and agile at all times." The four fuels of innovation The joint report also sets out new guidelines from CBI and Oracle to help large businesses ease their digital transformation journeys and become more competitive. Recommendations to improve productivity and employee engagement include: - Bring digital transformation to the boardroom. Senior business leaders must commit to addressing risks, sharing learnings across departments, and being strong advocates for change - Digitally empower your workforce. Make growing digital skills a company-wide initiative and focus on building trust and fostering communication to drive further innovation - Maximise and connect your silos. Silos are a reality within any large business, but when connected to an overarching strategy they can act as useful testing grounds for innovation - Automatically upgrade. Invest in systems and software that constantly update and self-optimise to help the business keep pace with disruption.