Accenture’s Digital Performance Index makes case for speed in execution

By Karamjit Singh September 25, 2017

Digital strategy has to be one and the same with business strategy, no more separate
Big divide between customer facing products and internal enterprise digitisation

Accenture finds that having a Chief Digital Officer helps speed up the digital agenda in companies, says Lim Yin Sern, Managing Director, Accenture.

THE common belief that the Malaysian market with its 31 million population, is relatively small, offers a blinkered view based on a world of physical borders. Yet, against the backdrop of an increasingly digital and borderless world, those who still subscribe to this blinkered view, are allowing themselves and their companies, to miss a US$1 trillion opportunity.

For that is the projected value that Asean’s digital economy is expected to add to the region’s Gross Domestic Product (GDP) over the next 10 years says the World Economic Forum (WEF).

On a national level the government has set a shorter term goal of growing the digital economy to 20% of GDP by 2020.

But it is the Asean opportunity where the prize lies and that opportunity will not be captured if the government and its leading companies do not themselves accelerate their own digital capabilities and competencies.

Keen to play a role to help accelerate the corporate digital agenda, Accenture conducted an evaluation of top Malaysian public listed companies across nine industries, using a well established tool called Accenture’s Digital Performance Index (DPI) that has already been deployed across 42 countries in the world, but never in Asia till now.

This index measures a company’s digital performance across four key business dimensions: planning, manufacturing, selling and management. The measurements show the extent to which a company plans and executes digital strategies, creates digital products and services, uses digital in marketing, sales and customer service, and fosters a digital innovation culture within the organisation.

The results offer an insightful look to gauge the current level of digital transformation across corporate Malaysia.

“We wanted to know where Malaysian companies are at so that we know how Accenture can help and what we need to do in driving digital transformation for the country,” explains Lim Yin Sern, managing director, Accenture.

With large companies having the biggest impact on a country from an employment and competitiveness aspect, Accenture choose the 28 largest public listed companies with its DPI measuring the digital performance of the companies across four functions, looking at 117 metrics with 42 activities to get a view of how the companies are applying digital to each of the four functions. Over 1,300 companies spread across 42 countries have been measured the same way. “What’s unique is that the data is sourced from publicly available information because we wanted to view it objectively without any private data,” says Lim.

While the results show clearly that the leadership in corporate Malaysia understands and is convinced of the importance of digital, Lim sums up his own view of the results with a Yes/But, “It’s a ‘Yes’, our corporates well recognize the importance of digital to their future”, he says. “But, due to the lack of a follow-up action agenda behind their digital awareness, I have cause for concern,” says the Accenture managing director.

Malaysia’s average corporate score of 1.7 trails the leader, the United States with its 2.5 average and where digital companies in the US such as Google, Facebook and Salesforce averaged 3.5 out of 4. “There are things we can learn from the digital disruptors there and their top companies and these will be useful for us as I believe that the context and reality they are facing will quickly become our reality as well,” he says.

As a result, he believes Malaysian corporates have to learn fast and they have to move fast because speed is of essence to adapt to and benefit from digital.

For instance, looking at the first dimension of plan, 44% of the companies mention digital strategy or being digital. However, there is a yawning gap between awareness and putting the plan to execution because only 7% talk of allocating a dedicated budget for digital. That gap – his Yes/But reading – tells him that corporates need to put their money where their mouth is.

Another instance of this gap is in leadership where even though 44% of the companies have appointed some form of digital leadership, only 19% have a dedicated chief digital officer (CDO).

This is an important role that clearly spells the desire of a company to move quickly in its digital agenda. Accenture finds that having this CDO role with someone whose sole purpose is to look at how they can do things unconventionally without worrying about day to day constraints is helpful to speeding along the digital agenda.

Describing the role as being a “de-bottle necker”, “their role is to do things differently, to change the way things are done, and this helps companies a lot,” notes Lim.

The Yes/But scenario manifests itself again in the second dimension of Make where 52% of companies have digital products but in actual manufacturing with supply chains and operations, only 11% have gone digital. Looking at the Sell dimension, 37% of companies are selling through mobile channels and 52% collect information via SMS but when looked at how they manage this process, only 11% says they review the effectiveness of their online sales approach.

“What this tells us is that there is this divide between the external customer facing products and strategy and their internal enterprise digitization,” says Lim. The gap indicates that the companies have more to do in order to better extract value and efficiencies from their digital journey.

Five priorities in going digital

With so much value to be captured within the region, Accenture has identified five priority areas for companies to embark on.

Put digital at the core of your business strategy
Drive fast, iterative innovation
Be hyper-relevant to the customer
Create flexible structures that cut across silos
Leverage the innovation ecosystem

“Your business and digital strategy has to be one and the same, not separate anymore,” says Lim. In other words, what is the company’s business business strategy in the context of a digital world. “You also have to build fast and interate. And, hand in hand with this is creating a culture which allows and tolerates failure but not to perpetuate it,” he cautions. If that sounds like a page out of the startup culture manifesto, then imitation is the highest form of flattery.

The third priority area revolves around the customer with a focus on becoming hyper relevant to them. Gone are the days of the customer waiting days for their transactions to be approved. Customers expect and companies have to approve things on the fly, today. “So, how do you ensure you are building experiences for customers that are relevant to them?” poses Lim.

With speed becoming more important, another priority area naturally evolves around creating flexible structures that cut across silos with corporates willing to break functional barriers. At the same time leaders must ensure staff are given the necessary skills, knowledge to drive digital change.

The need for this flexible structure to accommodate a more digital oriented business has also led to the thinking of creating new teams dedicated to support the new business models. Another line of thinking is around creating a two speed business model, where one strengthens the core and finds savings from existing business that can be used to fund innovation and new business models.

The fifth priority area is around leveraging the ecosystem and this is an area that Accenture itself has done a lot of work in and is thus well suited to help clients in, Lim points out. “Look at our own journey to transform where we have aggressively been expanding our capabilities in new areas, either through partnerships or acquisitions to the extent that we are today, the largest digital advertising company,” he says.

While that is not your traditional consulting firm skill set to possess, Lim points out that it is an important skill set to have in the digital era and allows it to be nimble. With no company being able to do it all alone, even one with talent and resources available to Accenture, it has partnered with various players in the digital ecosystem, from startups to incubators to VCs to various tech specialists in the different verticals.

Lim also makes an interesting point about leveraging the innovation ecosystem. In the past, companies would be absorbed into Accenture but as of three years ago Accenture took the approach that it had to assimilate the working ways and cultures of its acquisition companies.

“We too have to adopt new ways of working and to learn from the companies we acquire or partner with and now we leverage off the new acquisitions, their brands and people and assimilate them as part of the overall Accenture umbrella.”

Most important thing … start..move faster..get a trigger

Aside from his Yes/But takeaway from the inaugural DPI, the strongest feeling that Lim takes from the results is the need for corporate players to start their digital journey now and to move faster. “Make sure there are a few things you can build momentum around and as people start feeling and seeing changes, then companies can broaden their digital adoption and after that, eventually, they can answer the question about whether they need a chief digital officer. But for many companies, the reality is that they need a trigger.”