Number of companies investing heavily in digital doubles – PwC

The number of UK companies investing more than 15 per cent of annual revenues in digital technology has more than doubled in the last year from 10 per cent to 24 per cent, significantly higher than their global counterparts.

PwC’s 2017 Digital IQ Survey paints a more positive picture of the levels of digital understanding and adoption amongst UK organisations as compared to the global average.

The survey, now in its tenth year, looks at how well companies understand the value of technology to drive business, based on the responses of 2,218 senior business and IT executives from 53 countries, including 203 from the UK.

​Douglas Shand, ​head of innovation for PwC in Scotland, said: “Ten years ago, UK organisations’ Digital IQ was very different to the picture we see today. There was little understanding of where digital responsibilities lay, often leaving initiatives siloed within the IT department.

“Thankfully, we’re now seeing this beginning to change, with the results of our 2017 Digital IQ Survey indicating that UK organisations are embracing digital and increasing investment​ as people realise the ever-inclusive role digital has to play within a firm.

“In an ever-changing landscape of new and emerging technologies there will always be new challenges, but it’s important to focus on unlocking the value these new opportunities can bring.

“This doesn’t mean firms or individuals should be complacent. There’s still a lot of work to be carried out at all levels to ​maximise the opportunities from digital.”

More than four-in-five UK executives (UK 86 per cent; global 72 per cent) believe that clarity of roles and responsibilities around digital ownership is no longer an obstacle to delivering against their digital technology objectives.

UK executives are much more confident than the rest of world that their senior business leaders understand digital technology, with 83 per cent of respondents agreeing their CEO’s digital IQ was high (above 70 per cent), compared to the global average (62 per cent) and a mere 57 per cent in the US. Moreover, 74 per cent of UK executives believe their CEO is a champion for digital, above the global average of 68 per cent (up from 33 per cent globally ten years ago).

One-in-ten UK companies now employ a Chief Digital Officer (CDO) (UK 11 per cent; global average 7 per cent), but of those who don’t yet have one in place 16 per cent are planning to add one (global: 5 per cent). A further 20 per cent of those without a CDO say this is because digital is now integral to the way their company does business, and it is part of every executive’s job description.

Whilst three quarters of UK businesses (73 per cent) now understand that digital means more than just something IT looks after, there remains a quarter (27 per cent) that still think digital is synonymous with IT, suggesting they aren’t investigating the full benefits of digital (global: 29 per cent). Amongst the UK public sector this thinking was more prevalent (45 per cent).

Spending on emerging technologies is healthy in UK companies, with 43 per cent spending more than a fifth of their technology budget on them, compared to 33 per cent globally.

Out of the PwC Essential Eight emerging technologies, current UK investments are prioritised on Internet of Things (IoT) (UK 84 per cent investing vs. 73 per cent globally) and artificial intelligence (AI) (UK 66 per cent; global 54 per cent). Over half of UK respondents (52 per cent) consider IoT to be the most important for cutting costs, as well as the most disruptive to business models (35 per cent).

Half of UK executives (UK 49 per cent; global 40 per cent) also say that their approach to emerging technology is business-driven, rather than shaped by technology or vendors – a sign they have clearer plans in place about using emerging technology to drive business value.

UK companies boast higher skill levels in areas such as cyber security, where 78 per cent agree they have the right skills they need compared to 64 per cent globally, digital strategy and planning (UK 72 per cent; global 53 per cent), and evaluating emerging technology (UK 70 per cent; global 53 per cent).

UK firms are therefore less likely to cite a lack of properly skilled teams as an existing barrier to achieving results in digital initiatives (UK 19 per cent; global 24 per cent), but over a third (37 per cent) think this will be an emerging barrier to tackle in future (37 per cent; global 39 per cent).

Marco Amitrano, head of consulting at PwC, said: “UK organisations have come a long way over the past decade and it’s positive to see them now leading on many aspects of digital transformation. It’s important that we now build on this rapidly.

“We hope that the Digital Strategy expected from the Government provides the catalyst that UK organisations need to continue progress, given the potential that digital advances such as artificial intelligence have to support future economic growth and business success.

“Our Digital IQ report outlines the importance of digital as a priority in any business strategy, requiring the right focus and leadership to extract the most value from investments.”