Digital adoption alone is no longer enough to meet business objectives and drive profits, a research by Infosys Knowledge Institute (IKI), the thought leadership and research arm of Infosys, has found.
The study, Infosys Digital Radar 2022, revealed that companies must now use digital to differentiate beyond traditional IT metrics, reaffirming the importance of people-focused transformation and ESG (Environmental, Social, and Governance) in achieving business success.
Improving average transformation effectiveness has the potential to unlock $357 billion in incremental profits globally, according to the study. While digital adoption and ESG orientation would individually drive profits, they would be more effective while deployed together, the research identified.
As tech adoption rates soared during the pandemic, the study also indicated a point of diminishing returns for companies with high levels of adoption. Companies with above-average adoption rates, in fact, generated slightly less profit growth than those with lower adoption, while those with average rates generated the most. The study data suggest that mere adoption was not enough, what matters most was the effectiveness with which companies use their technology, it found.
Salil Parekh, CEO, Infosys said, “COVID-19’s widespread disruption and the subsequent digital acceleration have permanently altered how the world views technology. While some enterprises have seen this as an opportunity to move beyond the questions of whether and how far to digitise, some still haven’t realised the need to use these digital tools to engage their stakeholders more purposefully and respond to calls to serve people, planet, and community.”
The survey assessed the digital transformation efforts of various companies on a Digital Maturity Index and found that companies have progressively adopted technology year-over-year. For instance: technology adoption in the healthcare industry increased from 60% to 98% since 2019, the adoption rate for the manufacturing sector rose to 97% from 81%, while for the financial sector it grew from 59% to 94% in the same period.
While businesses once reach a ‘digital ceiling’, unable to reach the most advanced levels of tech adoption, these adoption thresholds would become the minimum standard, it observed.
Some 2,700 digital transformation leaders of digitally advanced companies from multiple geographies including India were part of the study.