The Dilemma of Digitalization of Large Group Enterprises
- Current situation/situation: Digital development momentum, building digital competitiveness, and realizing agile operations, governance, decision-making, and experience
- The general trend of digital transformation
Global geopolitical tensions, supply chains, inflation, labor shortages and the global pandemic of the new crown epidemic have increased people's general concerns about the global economic situation. At the same time, the deepening of the international division of labor continues to promote the deepening of the interdependence of countries in economic and trade exchanges and industrial chains. However, in the context of the epidemic, problems such as lack of transparency in the supply chain, drastic changes in demand, and increasing transportation costs have been infinitely magnified. As the future economic development pattern becomes more and more uncertain, enterprises can quickly adapt to business interruptions with the help of digital capabilities, not only to restore business operations, but also to find new opportunities from changes and enhance the digital resilience of enterprises.
Under the complex international situation, China's economy is changing from high-speed growth to high-quality development. Actively participating in the development of the digital economy will not only create more strategic opportunities for enterprises, but also bring new changes to the industry structure.
According to IDC's analysis of global GDP, the total GDP brought by digital services and products accounted for 17% of the global GDP in 2018; by 2023, IDC predicts that more than 50% of the global economy will be driven by the digital economy. Innovation ability has become the core competitiveness. IDC's survey in 2021 shows that due to digital transformation investment, 85% of Chinese companies' financial income has improved by more than 5%, and the number of companies that have improved by more than 10% accounts for 48%.
- The digital transformation of large-scale enterprises is more necessary
. Large-scale enterprises occupy an important position in China's economic development. They actively promote the digital transformation of enterprises at the national, regional and industry levels, and use digital technology to build international digital competitiveness and achieve high-quality sustainable development. The essential. The data shows that in 2021, the top 500 Chinese enterprises will realize an operating income of 89.83 trillion yuan, accounting for 78% of the total annual GDP. On the one hand, large enterprises shoulder China's economic, political, and social responsibilities. The growth rate of corporate revenue is strong, but its profit level is still lower than the global average1 . In particular, it is necessary to use digital transformation to achieve cornering overtaking, reduce costs and increase efficiency, and build digital competitiveness. The sensitive development of business requires enterprises to build their own agile capabilities in various aspects such as operations, IT governance, intelligent decision-making, and customer experience, so as to improve the response speed to the market and optimize customer experience. According to IDC's survey on the digital transformation of large enterprises, improving market response speed and improving enterprise operation and decision-making efficiency occupy the top two driving factors of large enterprises' digital transformation, and they lead by a large margin.
The sensitive development of business requires enterprises to build their own agile capabilities in various aspects such as operations, IT governance, intelligent decision-making, and customer experience, so as to improve the response speed to the market and optimize customer experience. According to IDC's survey on the digital transformation of large enterprises2 , improving market response speed and improving enterprise operation and decision-making efficiency occupy the top two driving factors of large enterprises' digital transformation, and they lead by a large margin .
2. Challenges: deep-water transformation, complex processes, isolated data islands, and connecting internal and external data
According to the IDC digital transformation maturity survey, more than half of Chinese enterprises have reached the third and above stages of digital transformation in 2021, and have established basic information It has established a unified digital strategy and has relatively complete basic digital capabilities.
Through IDC's continuous tracking and comparison of enterprise digital transformation, we found that compared with 2019, the number of enterprises in stage three has decreased significantly, while the number of enterprises in stage four and five has increased significantly, indicating that the leaders of digital transformation are continuing to promote digital transformation and expand their leadership Advantage.
Large enterprises generally invest in information systems earlier, and are in a relatively leading position in digital transformation. However, this also makes their internal data and technical assets more complex, which virtually increases the opportunity cost of digital transformation. In addition, organizational structure and business The process is complex and the integration of technology and business is limited, making it relatively early to enter the deep water of transformation.
At present, large enterprises are generally in the stage of integrated management and digitalization of digital transformation. IDC believes that the next stage of digital transformation will focus on investing in digital technology at the strategic level, establishing a digital-first enterprise strategy, and deepening the integration of digital technology and business. To achieve this, the key to large-scale enterprise technology investment is to establish a digital platform, open up data and technology silos within the enterprise, realize digital functions in an agile and large-scale manner, and then link the industrial chain to promote collaborative innovation in the industry.
- Direction: digital priority, deep integration of IT and business, and technology empowerment
IDC predicts that by 2023, the funds from business departments in global IT spending will reach 50.3%, surpassing the IT department for the first time.
Digital transformation not only means the innovation of technology application, its more important purpose is to bring innovation to enterprise business, help users create a digital transformation roadmap based on application scenarios, and meet the business needs of long-term strategy and short-term coordinated development of industry users. successful digital transformation.
In the future, all enterprises should give priority to achieve business goals through the deployment and application of digital technologies, form a unified digital priority strategy covering all aspects of organization, process, product, service and experience, and move towards continuous, contextualized, With agile and large-scale digital innovation, this future-oriented digital business model will bring significant economic benefits to enterprises. After long-term operation, large enterprises have relatively mature business models and operating processes, and also have systematic advantages such as change management. With the rational use of digital technology, it is easier to generate large-scale benefits.
According to IDC research, the most important aspect of adopting a digital-first strategy lies in software innovation, which is also in line with IDC's understanding that digital transformation takes business scenarios as the entry point—to better adapt to sensitive business needs through rapid software innovation, and to quickly realize Digital scenarios, combined with enterprise platform-based digital infrastructure, can quickly realize large-scale innovation. IDC predicts that globally, by 2024, the development of the digital economy will give birth to more than 500 million new applications/services, which is equivalent to the sum of the number of applications that have appeared in the past 40 years.
The average profit of China's 145 companies on the list is about US$4.1 billion. Although it has improved compared with itself, the average profit of the world's top 500 companies has risen to US$6.2 billion over the same period. In 2022, the average profit of 124 American companies on the Fortune Global 500 will be as high as US$10.05 billion, almost 2.5 times that of Chinese companies on the list. The profits and growth rates of Chinese companies on the list are far lower than the average level of the United States and the world. ↩︎
1DC’s survey of large enterprises: 97% of enterprises have 1,000 or more employees, 60% have annual turnover of 10 billion or more, and the remaining 40% have less than less than 5 billion. ↩︎