2017 Global Digital IQ Survey: Emerging technology insights

May 9, 2017

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When we started measuring the Digital IQ of organizations in 2007, technologies like social, mobile, cloud, and analytics were still entering the mainstream. Today a fresh wave of powerful technologies promises—or threatens—to disrupt industries and remake age-old ways of conducting business. Yet, one decade later, most companies are no better prepared to adopt emerging technologies than they were in 2007.

Our recent global survey of more than 2,200 executives shows that Digital IQ scores—a measure of an organization’s capability to get strategic value from technology investments—have stagnated since we first started tracking them 10 years ago. They have even dropped in recent years. Companies are smarter about technology than they used to be, but the challenges of integrating new tech into the enterprise have gotten more difficult. New tools are continually entering the marketplace, and “digital” has evolved from a synonym for IT to a more expansive approach to technology that is making its mark on customers and culture.

And tech capabilities are expanding exponentially. The next wave of emerging technologies will bring dramatic advances to what computers can do. Such technologies include what we call the “essential eight:” internet of things, artificial intelligence, robotics, 3-D printing, augmented reality, virtual reality, drones, and blockchain.

Companies have great expectations about how these technologies will change their businesses and industries—especially regarding the IoT and AI. And they’re making sizable investments to capitalize—or simply keep up—with rapidly spreading emerging technologies.

What’s driving investment?

Why the excitement over these innovations? Our analysis of the survey data reveals the motivations behind the current trends in emerging tech adoption, along with strategies for deployment and some of the pain points involved. Some takeaways from our research:

  • Strategy determines adoption. Investment levels for various technologies vary greatly by sector and business model (and, to a lesser extent, by region), depending on the needs of different industries and the strategic goals and desired outcomes of individual companies.
  • Disruption and cost-cutting drive investment. Money is flowing to technologies perceived as disruptive to particular industries and business models—as well as those perceived as lowering costs.
  • Training and development lag demand. Skill levels at most companies are insufficient to keep up with the scale of investment required to respond to and incorporate many emerging technologies.

Despite the opportunity at hand—and the risks of falling behind—investment levels in emerging technology as a percentage of overall technology spending are stagnant. In 2007, the average enterprise investment in emerging technology was 17% of the company’s total digital technology budget—a surprisingly healthy amount. But ten years down the road, it is only marginally higher at 18%, despite the radically changed technology landscape and digital’s importance to business success. One reason for this stasis is that the previous wave of technology game-changers (cloud, mobile, analytics), upon which the new generation depends to varying degrees, still commands significant time, talent, and money at many organizations.

But the issues go beyond budget constraints and competing investment priorities. Most organizations have still not dedicated specific groups and senior leaders to focus on creating real business value from their companies’ investments in emerging technologies.

All too often, companies invest in specific technologies without a master plan for follow-through This can leave small teams across an organization to work in relative isolation, making it unlikely that investments will lead to positive results at the enterprise level.

Addressing these limitations requires organizational and cultural changes that formalize company-specific responses to emerging technology capabilities. Doing so requires a systematic approach to analyzing emerging digital developments and assessing the real impact of specific technologies. Also essential is widely sharing results from pilot projects and scaling recommendations based on those results across the enterprise.

Benefiting from emerging technologies also requires building the workforce skills necessary to make the most of new digital tools to justify investing in them. The current skills shortfall indicated in the survey reflects a larger devaluation of the importance of human experiences, inhibiting the success of many digital efforts. Human factors are a major focus in the overview report of our 2017 Global Digital IQ® Survey: 10th anniversary edition, which focuses on technology investment and adoption trends.

Running in place

In 2007, the average enterprise leader likely perceived smartphones as a novelty, the cloud as controversial, and social media as a place for kids to gather. Analytics were understood as important, but they could not analyze much information. In fact, many of the tools that would become the foundational technologies of our time did not even top our 2007 list of innovations most important to transforming business.

At the time, our respondents named data mining/analysis, service-oriented architecture, biometric identity management, wireless, the internet, enterprise resource planning, radio frequency identification (RFID), and voice over internet protocol (VOIP) as the most strategically important to businesses.

A decade of Digital IQ research has indicated increased awareness of the business value of new technology, but companies indicate that they still do not adapt to evolving tech quickly enough to stay ahead of the curve. In some ways, they have regressed since 2007, outsourcing innovation or simply leaving it to chance. About half of the executives surveyed in 2007 told us they had a team dedicated to exploring emerging technology, while just 33% said the same in 2017, the rest relying on ad-hoc teams or working with third parties.

Many companies still take a passive approach to innovation. In 2007, executives said they most often turned to technology vendors and consulting firms to explore how to apply emerging technologies to their business needs. In 2017, despite a profusion of resources (e.g., incubators/startups, crowdsourcing options, makers, open source methods, and university labs), companies still rely on old-school methods such as industry analysts, competitive intelligence, and vendors when seeking to innovate.

Exploring emerging technology ranks low among survey respondents as the most important digital initiative they will employ during the next 12 months—less than one-third of companies rank it as a priority. Yet those that emphasize this type of exploration are ahead of the game. They rate their Digital IQ as higher than their peers, they are more likely to say they make digital technology investments primarily for competitive advantage, and they say they consistently measure the value of their digital innovation efforts. These companies also focus more on the ways new technologies will affect human experiences, including those of employees and customers.



Why the essential eight

When it comes to emerging technology, the field is vast. Our Emerging Tech Lab, for example, regularly analyzes more than 150 discrete technologies. Yet we believe every company should consider our shortlist of the “essential eight” technologies.  They make up the next generation of digital and are disrupting every industry.

One framework for understanding the essential eight is to categorize them by what they do: input, processing, or output. In broad terms, the internet of things and drones are about input; artificial intelligence and blockchain are processing tools; and augmented reality, virtual reality, 3-D printing, and robotics generate output (although robotics may combine all three areas).

We asked survey respondents their plans around these key technologies, including the value they expect to obtain from their investments. We also looked at investment by industry, company size, and other variables. In broad terms, companies interested in disrupting their own or other industries, and those looking for revenue growth, are more focused on emerging technologies. Industries are spending in areas that address their own needs: manufacturers are more interested in robotics, while financial services has its eye on blockchain.

One consistent finding was evident across industries: they generally lack sufficient staff with the skills necessarily to exploit the potential of emerging technologies in their enterprises.



Where will you invest?

Where you place your own bets on emerging tech should depend on a number of factors unique to your industry and individual business. Start developing your company’s emerging tech capabilities now by taking the following actions:

  • Get support from the top. No emerging tech initiative will succeed without support from the highest levels of the organization. The c-suite needs to fully embrace emerging tech as a core competency of the organization if it is to contribute to the enterprise. If emerging technology is considered a side project, it is unlikely to have any lasting impact on the organization as a whole.
  • Select an emerging tech evangelist. While emerging technology needs broad support, it also needs a single individual who has ownership over a company’s emerging tech initiatives. Having a multitude of scouts wastes energy and duplicates efforts, and it slows down what needs to be a very rapid and efficient process. At the same time, any designated tech leader should not go it alone. He or she will need the expertise of other departmental leaders to leverage specialized skills not found across the organization. Determine who in the organization is passionate about which technologies, and recruit them into the scouting effort. Then assign leadership roles based on interests and expertise.
  • Develop a scouting plan. The heart of your emerging tech research should begin with listening to trusted sources to determine which cutting-edge technologies are most relevant to your business. Sure, you can read analyst reports, white papers, and technology publications, but a proper plan needs to delve much deeper, including resources such as:
    • Relevant conferences and trade shows
    • Key venture capital and deep research resources
    • Open-source development projects

    More progressive companies should double down on emerging tech by truly becoming part of the tech community. This includes establishing an outpost in Silicon Valley and other tech hot zones, participating in incubators (perhaps in conjunction with other companies), or sponsoring a university research lab.

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Explore more Digital IQ findings about each emerging technology:

Contacts

Chris Curran

Principal and Chief Technologist, PwC US Tel: +1 (214) 754 5055 Email

Vicki Huff Eckert

Global New Business & Innovation Leader Tel: +1 (650) 387 4956 Email

Pierre-Alain Sur

US Technology Industry Leader Tel: +1 (646) 471 6973 Email