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New research published by Econsultancy this week examines how companies are managing the type of organisational change which is becoming essential because of fast-evolving digital technology and its effect on customer and employee behaviour. 

The report, produced in association with digital business and marketing consultancy Blue Latitude, is entitled The Impact of Digital Beyond Sales and Marketing: How Digital is Transforming Organisations.

The research is based on a survey of more than 100 companies, and in-depth interviews with 15 senior executives at a range of businesses.

Broadly speaking, while organisations are getting to grips with digital marketing and e-commerce, they have been less able to harness digital effectively to improve other areas of their business such as HR, customer service and product development.

This is despite the fact that the majority of responding companies recognise that the impact of digital on these business functions has been massive. 

While senior executives typically understand the need to take action, more than a third (36%) of companies have neglected to put in place a formal strategic plan or roadmap for digital change. 

Pressure to hit short-term revenue and profit targets (36%), organisational structure (32%), lack of clear understanding of return on investment (30%), company culture (28%) and lack of budget (also 28%) were the five most frequently cited barriers to digital change. 

What are the biggest barriers faced by your organisation in attempting to exploit the potential of digital

Note: survey respondents could check up to three options

The report includes case studies of companies trying to embrace digital (with varying levels of success). Beyond the financial and structural challenges, people-related issues, including cultural resistance, fear of change and recruitment of digitally-skilled staff are hugely significant.  

For the largest organisations operating in an increasingly multichannel business environment, these challenges are enormous but there is a growing feeling that they need to be overcome if long-term business success is to be safeguarded.

The momentum for change is coming both from the top of the organisation and also from those lower down the hierarchy, often working on the customer-facing front-line.

The chart below is an interesting outtake from the report. Nearly three quarters (71%) of responding companies say that the impetus is coming (at least in part) from the top of the organisation.

Typically, board directors are sold on the need to become more digital but the difficulty is creating and adhering to a programme of change in the face of the not inconsiderable harder financial and softer human-related challenges.  

Is the impetus for digital being driven from the very top of the organisation or is it coming from lower down the hierarchy?

The research found that recruitment of digitally-savvy staff is an on-going problem. More than two thirds of companies surveyed (68%) have difficulty recruiting staff who are sufficiently skilled and knowledgeable about digital technology and communications.

The report also looks at the impact of social media. While this topical area is only one aspect of digital change, the way that companies embrace (or fail to embrace) social media is often an indication of how geared up for digital more generally they are.

Those companies trying to harness social media typically recognise how the impact transcends marketing and is being felt across other areas of the business such as customer service, PR & communications, product development and HR. As with digital more broadly, a joined-up approach is required and activity shouldn't just sit within one business function. 

Linus Gregoriadis

Published 8 October, 2010 by Linus Gregoriadis

Linus Gregoriadis is Research Director at Econsultancy. Follow him on Twitter or connect via LinkedIn or Google+.

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