Trend Study - PAC for Fujitsu - Mastering Productivity

TREND STUDY

Mastering Productivity Are organisations in the EMEA region laying the right foundations for digital transformation?

Master ing Productiv ity – Copyr ight CXP Group, 2017 2

Mastering Productivity Nick Mayes Principal Analyst January 2017

INTRODUCTION

Digital transformation is impacting every industry sector in every single country in the EMEA region.

Those organisations that do not embrace the rapidly changing demands of customers, supplier ecosystems and regulators will very quickly fal l behind.

In the fi rst wave of digital transformation that has played out over the last five years, the focus for many organisations has been on overhauling and improving the customer experience by enhancing digital channels through the application of technology.

But technology and user experience should only be one element of a true digital transformation, albeit an important one. If the organisation does not have the appropriate structure, culture or ways of working to drive the new and changing outcomes that business is aiming to deliver, technology merely serves as window dressing.

The challenge facing most large organisations is that they were not designed for the digital age. Retailers that grew up in the 1970s were not built to support one-hour delivery. Banks that have been in business since the beginning of the last century were not designed to approve loans in a matter of seconds using advanced algorithms.

In order to thrive in today’s dynamic environment, organisations need to adopt new ways of working. This goes well beyond the adoption of new technology – i t’s about the transforming the enti re business to allow new business models.

Businesses in the EMEA region spend bill ions of euros on productivity and collaboration technology. However with research suggesting that only one in six employees is actively engaged in their organisation, * i t i s clear that technology alone is not the solution. And perhaps an bigger issue is around organisational productivity, with few businesses changing the way they work to the always-on 24/7, digital world in which they now exist.

To understand how organisations are improving productivity and collaboration through business and technology change, PAC undertook a study based on briefings with 500 senior business and IT stakeholders at large organisations in the EMEA region.

This report looks at whether senior decision-makers see digital transformational as being more than a technology issue, and explores how effectively they are measuring and monitoring levels of productivity and collaboration today.

The challenge facing most large organisations is that they were not designed for the digital age


KEY FINDINGS

Just 6% of businesses in the EMEA region claim to be mature users of productivity and collaboration tools

A very small proportion has ful ly integrated tool suites with high adoption rates among the workforce. The large majori ty have implemented some technology designed to improve productivity but i t is either not integrated or remains largely unused on a day-to-day basis.

14% of organisations claim to know how productive their employees are and have a programme of tech-enabled productivity in action

Again, this i s a very low level, with 40% saying that productivity is only tracked in certain areas of the business. 15% don’t track productivity at all .

• 52% see customer service as the area of the business that is the biggest priority for productivity improvements This ranks above marketing (45%) and operations (45%) and suggests that this is an area where businesses feel they have the biggest room for improvement.

• European companies are using a diverse set of metrics to

measure productivity.

• More than two thi rds are using increasingly inappropriate measures such as hours worked per unit of output, and revenue/profi t per head.

Of those companies that are measuring productivity, only 19% run this as an automated process and provide feedback to the business

More than 40% do not provide tracked information on productivity levels back to the business – businesses are missing a trick by failing to close the feedback loop.


KEY TRENDS

Key Trends by Stakeholder Business Leaders View customer services and marketing as the main targets for

productivity improvements; more cri tical on how effectively

productivity is being measured than IT leaders.

IT Leaders More positive about their organisation’s grasp of employee

productivity than their business counterparts; also more upbeat

about harnessing value from productivity & collaboration tools.

Key Trends by Industry

Banking & Insurance 50% say that employee productivity is known and tracked only

in the parts of the business that need it.

Manufacturing Almost a quarter track cost per unit of output; 46% see core

manufacturing processes as priori ty for improving productivity

Public & Health 26% plan to introduce productivity monitoring across the

business; just under 50% see finance function as a priori ty area;

Retail & Hospitality Of all sectors, retailers have the highest proportion (21%)

claiming to know how productive their employees are.

Services Just under a quarter say they have some employee

collaboration & productivity tools that aren’t really used.

Transport, Uti l ities, Telco &

Media

40% plan to introduce employee productivity monitoring across

the business; 49% see operations as a priori ty for improvement.

Key Trends by Region Finland 53% see marketing as the main priori ty area for productivity

improvement.

Germany Two thirds use some productivity and collaboration tools but

the technology isn’t integrated and adoption is inconsistent.

Spain Companies in this country have the highest proportion (28%)

who say that their collaboration technology is not really used.

Sweden More than 52% see customer services as a priori ty for

productivity improvements.

UAE One of the most advanced regions – 40% say they are working

towards maximising the benefits of productivity technology.

UK & I reland More than 53% see operations as a priori ty area for

productivity improvement; 16% don’t track productivity.


IN-DEPTH ANALYSIS

Digital transformation has become a boardroom concern across all industry sectors in the EMEA region.

A new wave of competition from digital native new entrants has sent shockwaves through everything from retail through to uti l ities and even to well-established markets such as insurance.

Meanwhile, the shift from traditional distribution and sales channels to digital models has been so quick and significant that well -established big brands have disappeared into the history books. The Blockbuster video retail chain is perhaps the most famous, but closer to home, there are many other examples in the EMEA region: Bri ti sh Home Stores and Arcandor are prominent examples in the retail sector, while the challenges at Deutsche Bank show how even the true powerhouses financial services are struggling to adapt.

The extent to which digital transformation has gone from being something that plays out at the edges of the organisation, to one of the most important elements of corporate strategies, is highlighted in the findings of the study. Out of a sample base of 500 senior business (CXO-level and l ine-of-business leaders) and IT stakeholders at large enterprises and public sector organisations, just 10% view digital transformation as “just hype” and that i t will have no impact on their business. Interestingly, i t was in those industry sectors where the impact of digital transformation has been felt the earliest – retail (8%) and financial services (3%) where scepticism towards i ts impact was at the lowest level.

A core group of 17% of participants state that digital transformation is al ready a matter of l i fe and death to their business, with a further 30% expecting that to become the case in the medium term. But interestingly, more than 40% say that while digital will have an impact, they have other concerns to address. This was particularly

Fig 1. What does digital transformation mean to your organisation?

Just 10% of senior business and IT stakeholders view digital transformation as “just hype” and that it will have no impact on their business.


Fig 2. Do you agree that digital transformation goes beyond just technology – it requires new ways of working as well?

the case among public sector organisations (45%), where financial challenges are the most pressing priori ty. This serves as a reminder that any transformation programme needs to operate within budgetary constraints.

But to what extent do organisations believe that digital transformation goes beyond the implementation of technology? Many have implemented technology but have failed to reap any value from it because the organisation and culture of the business fai led to adapt. Going back to the Blockbuster example, the company invested tens of mil l ions of dollars in a new digital rental platform in the years leading up to i ts bankruptcy, but fai led to move at the same speed as native digital challengers such as Netfl ix.

Encouragingly, the large majori ty (86%) of participants in the study believe that digital transformation is not just a technology issue, and that i t requires new ways of working as well. As might be expected, business leaders (86%) were sl ightly more positive in this sentiment than their IT counterparts (84%), but the narrow gap suggests that neither side has any il lusions about the need to consider the bigger picture.

While implementing these wider changes to the business is necessary to enabling real digital transformation, i t can be a costly and hugely challenging undertaking. The majori ty of companies that have been operating for more than a decade were not designed to thrive in the digital age. They were built for stable operating environments, where ways of working were well established, and layers of controls, checks and measures were imposed on processes throughout the organisation.

One big part of the challenge is that businesses don’t have a clear understanding of their current levels of productivity. If you don’t know how productive you are, how can you successfully apply technology in the right way and to the parts of the business that need it the most?

The large majority of participants in the study believe that digital transformation is not just a technology issue, and that it requires new ways of working as well


Only 14% of participants in the study claimed that they know how productive their employees are and have ongoing programme of technology-enabled productivity in place. The level was strongest in the retail (21%) and the services (20%) sectors, and from a regional point of view in Sweden (27%) and Finland (25%).

But for the large majori ty, employee productivity is something on which they have at best, a partial view. 40% say they track productivity but only in the parts of the business that need it, while a surprisingly high 15% don’t track productivity at all. More than a quarter of Spanish organisations fal l into this category.

However, productivity is clearly an increasingly important topic for businesses with factors such as increasing competition, the commoditisation of services across sectors ranging from uti lities through to manufacturing, and the advent of robotic process automation putting i t under greater scrutiny at a boardroom level. Almost one thi rd of businesses in the EMEA region plan to introduce employee productivity monitoring across the organisation in the short term, with companies in the transport, media and uti l i ties industries (39%) and the public sector (31%) leading the charge.

So what metrics are organisations using to measure their levels of productivity? It seems that many continue to think of productivity in the same way that they have done so for decades, in terms of throughput rather than outcomes. For a customer-centric business, having your contact centre team measure the number of customer calls completed each hour does not tel l you how satisfied the customer was with the interaction. Also, did the operative have to engage with other areas of the business to respond to the customer call , and how effectively did they do this?

Fig 3. Are you able to baseline, measure and track employee productivity in your organisation?

For the large majority, employee productivity is something on which they have at best, a partial view


Fig 4. What metrics do you use to measure productivity in your organisation?

The study found that organisations use a diverse set of productivity metrics, with hours worked per unit of output the most popular (cited by 27% of the participants). This metric is predictably popular in the services sector, with many areas of that market sti l l based on hourly rate commercial models. Elsewhere, profi t per head leads the way in the financial services sector (34%), and revenue per head is the main indicator used in the retail segment (28%).

And are these metrics being tracked and monitored? Just 19% state that they have an automated process in place to provide information back to the business, with companies in Sweden (31%) leading the way. But for the majori ty, there are some big gaps in the process. Some 42% state that while productivity is tracked automatically, they do not provide any feedback to the business. The proportion of participants fai ling to close this loop is particularly high in the financial services (59%) and retail (48%) sectors.

Fig 5. If metrics are used, how do you track and monitor them?

Just 19% or organisations state that they have an automated process in place to provide productivity information back to the business


The main takeaway here is that organisations are using a fragmented set of metrics to assess productivity, and many of these metrics do not drive a customer-centric approach. On top of this, they are missing the bigger picture by only focusing on employee productivity and there remain some big gaps in the way that these measures are monitored and tracked

The study also questioned participants on which areas of their business they believe are the highest priori ties for improving productivity. Interestingly, the responses were weighted in favour of cl ient-facing activities such as customer services (52%), marketing (48%) and sales (44%). One reason behind this is that customer service is seen as an area where productivity gains wil l have the biggest impact – enabling agents to spend more time enhancing customer engagement and driving further sales opportunities,

However, different industries are priori tizing different areas of the business for productivity gains. While customer service is king in retail (61%) and services (60%), manufacturers understandably see production (46%) as a key area, and financial services companies rank marketing (54%) as the function that requires the most urgent attention.

Technology is an important weapon in the battle to improve productivity, and companies are investing bill ion in new productivity and collaboration tools. But is this investment being channelled in the right areas? Technology is meant to l iberate workers to enable them to focus on driving innovation and business value, - yet the latest annual survey on employee engagement from Gallup 1 found that just 32% of employees state that they are engaged in their jobs, with 51% “not engaged” and 17% “actively disengaged.”

Fig 6. What business areas would be the highest priority when it comes to targeting productivity improvements?

1 Employee Engagement Study, Jan 2016

The study found that most organisations acknowledge that they are not making the most effective use of productivity and collaboration technology


The study found that most organisations acknowledge that they are not making the most effective use of productivity and collaboration technology. Just 6% claim to have a fully integrated suite of productivity and collaboration tools that are widely used by the workforce, and underpinned by an ongoing programme of improvement. The services sector has the highest proportion in this category with 12%, ahead of retail at 7%.

But just under half of the participants (45%) state that while they have implemented some tools, they are not integrated and adoption across the workforce has been patchy. This category is well represented in the financial services sector (48%), which highlights the challenge of imposing standard technology tools and working practices across what are often heavily siloed organisations. A further 16% of participants state that while they have some productivity and collaboration tools, they aren’t really used, with high proportions in the services (24%) and manufacturing (20%) sectors. These are alarmingly high levels given then level of investment that businesses have made into tools and platforms to support collaboration and information sharing including enterprise social , and must prompt questions about if and how the business value of these initiatives is being measured.

Fig 7. What statement best describes your organisation’s maturity in the provision and adoption of employee productivity and collaboration technology?


xxx

Fig 6. To what extent are you using robotic process automation to increase reliability, speed and focus of external and internal base processes?

CONCLUSIONS

Business in the EMEA region are failing to adopt new ways of working to drive enterprise productivity and have a l imited view and understanding of their current productivity levels.

This i s one of the key takeaways from the study, and it is a major concern given that so many are looking to drive productivity improvements in order to increase employee engagement and competitiveness in the digital age.

The application of technology alone has not proven to be the solution. Too many businesses and public sector agencies have invested in productivity and collaboration tools and platforms, but they are not ful ly uti l ized, integrated or deployed.

The study found that the large majori ty of organisations acknowledge that digital transformation requires significant changes to the organisation that go far beyond the rol lout of new technology, and this is encouraging.

But i t is not easy. I t requires a transformation that makes constant change part of the culture, and ensuring that employees and business functions are enabled, motivated and measured on delivering outcomes that are cri tical to the future success of the business – delivering on the promises that are made to the customer.

Organisations should look to priori tise the business units that they feel can gain the most from short-term productivity improvements, and deliver the greatest customer and business impact.

Focused projects designed to truly understand how teams and units work and interact within value chains to deliver customer outcomes can provide the platform to building an adaptive, and responsive organisation that is fi t for the ever-changing business environment.


A FUJITSU VIEW

NEW WAYS OF WORKING

When we talk about Mastering Productivity, we are talking about New Ways of Working. We think about bringing people into the heart of digital transformation, enabling them to be more productive and innovative, supporting technology enabled workstyles.

• We want them to adopt new ways of working that deliver outcomes more effectively

• We want them to be organised in a way that is buil t around the customer oriented work

• We want them to be supported by easy to use technology

• We want to make the transition as painless as possible

• And we take a modern view of compliance and regulatory discipline as part of the process

At Fuji tsu, we clarify what New Ways of Working will do for the organisation, create a concrete business case with benefits that can be financially realised, and insti tute a process to actively manage benefits realisation.

A FOUR-STEP PROCESS

We then embark of a four-stage process i teratively, stacking up the improvements and ultimately generating a network effect. We start with defining the outcomes for the chosen area, taking great care to define those outcomes in customer terms. We look at new ways of working that delivers value - designing the work to achieve these customer outcomes. Once we have our new ways of working, we address how to organise around that work. Agil i ty, flexibili ty and a focus on outcomes is the goal so we look to those involved in the work to organise themselves. The ideal is where teams are self-di rected, self-motivated, self-organised and self-measured.

AN APPROPRIATE ROLE FOR TECHNOLOGY

Only when we reach this point, do we recommend addressing the technology. Again, there is a great deal of hype around what technology can do for an organisation, covering all sort of technology categories. The reali ty is that technology can only go so far. I f organisations deploy technology to support activities and work that does not lead to the right customer outcomes, they simply become better at doing the wrong thing. By aligning the appropriate technologies, deployed in a flexible, adaptive manner, to new ways of working, employees can achieve amazing things.

We call that Mastering Productivity.

Contact: Marcus Robbins Microsoft & Information Management Propositions – EMEIA Region Tel .: +44 (0) 7867 830526 [email protected] tsu.com @marcus_robbins


METHODOLOGY

This study is based on interviews with 500 senior decision-makers with responsibil ity for driving business and IT strategies at large organisations in the EMEA (Europe, Middle East & Africa) region. The study was completed during the fourth quarter of 2016. Here is a more detailed breakdown of the participants:


ABOUT FUJITSU

Fujitsu is the leading Japanese information and communication technology (ICT) company, offering a full range of technology products, solutions, and services. Approximately 156,000 Fujitsu people support customers in more than 100 countries. We use our experience and the power of ICT to shape the future of society with our customers. Fujitsu Limited (TSE: 6702) reported consolidated revenues of 4.7 tril l ion yen (US$41 billion) for the fiscal year ended March 31, 2016. For more information, please see http://www.fujitsu.com. About Fujitsu EMEIA Fujitsu enables customers to capitalize on digital opportunities with confidence, by helping them to balance robust ICT and digital innovation. Fujitsu’s full portfolio of products, solutions and services gives its customers a competitive advantage in the era of digital transformation. In Europe, the Middle East, India and Africa (EMEIA) the company employs more than 29,000 people. For more information, please see http://www.fujitsu.com/fts/about/

ABOUT PAC

Founded in 1976, Pierre Audoin Consultants (PAC) is part of CXP Group, the leading independent European research and consulting fi rm for the software, IT services and digital transformation industry.

CXP Group offers i ts customers comprehensive support services for the evaluation, selection and optimization of their software solutions and for the evaluation and selection of IT services providers, and accompanies them in optimizing their sourcing and investment strategies. As such, CXP Group supports ICT decision makers in their digital transformation journey.

CXP Group also assists software and IT services providers in optimizing their strategies and go-to-market approaches with quantitative and quali tative analyses as well as consulting services. Public organizations and insti tutions equally base the development of their IT policies on our reports.

Capitalizing on 40 years of experience, based in 8 countries (with 17 offices worldwide) and with 140 employees, CXP Group provides i ts expertise every year to more than 1,500 ICT decision makers and the operational divisions of large enterprises as well as mid-market companies and their providers. CXP Group consists of three branches: Le CXP, BARC (Business Application Research Center) and Pierre Audoin Consultants (PAC).

For more information please visi t: www.pac-online.com

PAC’s latest news: www.pac-online.com/blog

Follow us on Twitter: @PAC_Consultants

PAC - CXP Group 15 Bowling Green Lane EC1R 0BD London United Kingdom Phone: +44 207 251 2810 Fax: +44 207 490 7335 [email protected] www.pac-online.com

http://www.fujitsu.com/fts/about/

Trend Study - PAC for Fujitsu - Mastering Productivity

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