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Digital Enterprise Maturity: Evolving Digital Strategy and Soaring Digital Investments
Digital Enterprise Maturity: Evolving Digital Strategy and Soaring Digital Investments

September 18, 2022

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NASSCOM-Avasant's report titled “DIGITAL ENTERPRISE MATURITY 3.0: Boosting Business Resilience through Technology” published in July’2022, encompasses the Digital Enterprise Maturity Index created on 3 broad themes of digital maturity – Digital Strategy and Investments, Technology Adoption, and Digital Talent – constituting 14 core parameters that can be used to calibrate the overall digital maturity of an organization and assess its performance within the sector, region, as well as broadly at a global scale year-on-year. The five maturity stages namely, Beginners, Followers, Strivers, Accelerators, and Transformers are categorized based on various criteria, scaling up from Beginners (the least mature organizations) to Transformers (most digitally mature organizations).

In this blog, we will cover how NASSCOM and Avasant have jointly evaluated the theme of 'Digital Strategy and Investments' in the Digital Enterprise Maturity Model and some of the key insights derived from the findings of our study.

With the onset of the pandemic (post-March 2020), organizations have witnessed a clear shift in digital focus from pure Customer-centricity (CX) pre-Covid (prior to March 2020), to a strategy that lays additional emphasis on Employee-centricity (EX). Thus, a CX+EX-led strategy is driving the digital transformation agenda at organizations today, while operational efficiency and revenue growth continue to be key imperatives. In a way, Covid has transformed the perspective of organizations towards employee experience, which earlier was seldom personified, differentiated, or configurable and now had to become all of that and more as employee engagement moved from the '3D' workplace world to the '2D' screen-space world. Organizations realized that their most critical wealth ‘human capital’ needed to be protected and invested in abundantly. In fact, as per our survey report, global enterprises indicated employee attrition and employee health and safety as the top two business risks being addressed using digital initiatives.

In the hybrid-work setup which is the prominent work-model at majority of the organizations today, employee engagement initiatives need to be personalized and adaptable, by leveraging data and analytics. For instance, a leading consumer goods firm used Organization Network Analysis (ONA) to explore the existing network of connections and extent of inclusion as perceived by employees, so as to identify key discussion topics, connect like-minded individuals and amplify diversity & inclusion in the enterprise​. In another instance, during the pandemic, the annual rewards and recognition ceremony of a large tech service provider was held on a virtual cruise, where employees and their families could experience a vacation by traveling virtually to different islands in the Mediterranean Sea, as if they were in a 3D game room. While that may not be enough to replace the physical experience, it helped the organization have various touch points to keep the culture and the fabric of the organization intact​.

Another important aspect of employee safety and the safety of humankind at large became the fulcrum of all digital initiatives after Covid. The Aditya Birla Group, for instance, ​developed a Virtual Reality (VR)-based training module to ensure employee safety in its chemicals division. The Group adopted AI-based authorization tools for facial recognition, quality control, and workforce and workplace safety. In a similar vein, Walmart implemented RPA bots for 24/7 monitoring of critical oxygen supply. By diverting 1,500 hours of workforce capacity to value-added activities, the enterprise was able to attain 100% accuracy in data input, eradicating clinical risk.

Globally, FY2022 has witnessed buoyant digital spending by enterprises with increased willingness to enter long-term digital transformation contracts

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In FY2022, a large portion of the enterprises indicated their average IT budget as 4-6% of their overall revenue, with only about 30% of the enterprises earmarking <4% of their revenues for IT budgets​. Further, the digital transformation wave amplified by the sudden shift to remote work combined with the multi-year modernization efforts of legacy systems and the steady shift to cloud-based services, is anticipated to have a prolonged influence on future tech spending, contributing to increased IT budgets and digital spends​.

For majority of the enterprises, their average digital spend was in the range of 20-30% of the total IT budget.​ Moreover, ~60% enterprises dedicated more than 20% of their IT budgets towards digital spends, and a little over half of these enterprises indicated allocating more than 30% of their IT budgets for digital spend​. On average, enterprises earmarked 1-2% of their overall revenues for digital spend.

53% enterprises entered long-term technology contracts in FY2022 vis-a-vis 33% enterprises in FY2020, with focus on foundational technologies​

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Organizations entering long-term technology contracts of 3+ years, with a significant digital transformation component in them, have increased by ~60% between FY2020 and FY2022,​ hinting towards greater willingness of enterprises to commit to digital transformation as a part of their broader business strategy by engaging in long-term trusted partnerships. 

Moreover, in FY2022, 97% enterprises indicated increasing their investments in the three foundational mainstream digital technologies of Cloud, Big Data Analytics (BDA), and Cybersecurity​. Building upon a strong foundational technology base, enterprises are now pivoting to emerging technologies like Web 3.0, Quantum Computing, Metaverse, etc.

Enumerated below are the key characteristics of enterprises classified under distinguished maturity categories, based on the parameters evaluated under the ‘Digital Strategy and Investments’ dimension of the Digital Enterprise Maturity Index formulated by NASSCOM and Avasant:

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In the forthcoming blogs on Digital Enterprise Maturity, we will discuss the other two dimensions of Technology Adoption, and Digital Talent along with their associated parameters. Moreover, we will also explore the state of tech adoption across the globe, detailed characteristics of enterprises classified as ‘Transformers’, sectoral variances, etc.

For more information on Digital Transformation and Digital Enterprise Maturity, please refer to the report downloadable at the following links:

NASSCOM Website: https://nasscom.in/knowledge-center/publications/digital-enterprise-maturity-30-boosting-business-resilience-through

NASSCOM Community: https://community.nasscom.in/communities/digital-transformation/digital-enterprise-maturity-30-boosting-business-resilience

Earlier versions of the report can be downloaded from the following links:

A NEW ORDER OUT OF CHAOS-BUILDING A FUTURE READY ORGANISATION-https://community.nasscom.in/communities/digital-transformation/new-order-out-chaos-building-future-ready-organisation

REIMAGINING INDIAN ENTERPRISES' TECH LANDSCAPE IN A DIGITAL-FIRST WORLD – A NEW ORDER OUT OF CHAOS- https://community.nasscom.in/communities/digital-transformation/reimagining-indian-enterprises-tech-landscape-digital-first

DEFINING THE DIGITAL ENTERPRISE - MAR 2020 -https://community.nasscom.in/communities/digital-transformation/defining-the-digital-enterprise-mar-2020.html

 


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Prerna Buckshee
Manager - Research

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