in a while Seeing significant, faster-than-ever changes across the IT portfolio, a new survey shows that a company’s core technology has never been more important. In our latest McKinsey Global Survey of technology and business leaders,
The results show a much greater focus on investments in cybersecurity and cloud technologies – even as most companies continue to transform their core architecture and infrastructure together.
The survey also confirms that the competitive gap between winners and the rest has only grown during the pandemic. Compared to IT organizations at other companies, the top rankers rated in the top quartile of effectiveness for 15 key technology activities and capabilities by survey respondents made much more progress in their cyber, digital, and cloud moves. The responses from these top performers point to a few key practices for companies trying to catch up, or at least not hold back even further: a more aggressive and holistic agenda for technology transformations, greater involvement of technology leaders in business strategy, and a more proactive approach to people development. As we’ve seen in previous surveys, the latter is a bigger challenge than technology during these transformations.
Cybersecurity comes to the fore in response to new realities
Our most recent survey results confirm the acceleration of corporate investment in technology transformations and the overall high value of these transformations.
especially in companies where creating IT strategies is a joint effort of technology and business leaders. At such companies, respondents are more likely to report that their conversion has had a positive impact on each of the four value creation measures we asked: increased revenue through existing streams, increased revenue from new streams, reduced costs, and better employee satisfaction.
Yet the transformation landscape has changed dramatically over the past year. A greater proportion of respondents (30 percent to 41 percent) than in the previous survey cite the increased probability of cyber threats as a major transformation challenge. Survey respondents also report a significant increase in cybersecurity transformations (from the previous 45 percent to 62 percent) at their companies, followed by infrastructure and architectural transformations. A significant proportion of survey respondents say their companies are tracking several of these key transformations at the same time, which helps understand and address their interdependencies: 42 percent report both cyber and infrastructure transformations, and 40 percent report both infrastructure and architectural transformations. .
What’s more, survey respondents are betting that an increasing number of cyber incidents—coinciding with increased reliance on digitization, proliferation of endpoint devices, and growing vulnerabilities in hybrid and remote work setups—is not a pandemic-era phenomenon but rather part of an epidemic. new business reality. Cybersecurity is the transformation that respondents most cited as the transformation their company will see in the future. next two years; share has more than doubled since the previous survey (Annex 1). Survey respondents say there is high demand for cybersecurity talent to meet this need – second only to advanced analytics specialists because of the role that tech organizations are most focused on recruiting.
A widening performance gap between top IT organizations and others
Our previous survey was conducted in the early days of the pandemic, when respondents at companies with top-performing IT organizations reported various ways to make their technology a key priority for their organizations. Such companies had technology leaders who were more involved in the business. They adopted more advanced technologies. They were performing more technology transformations. In the end, they created more value with these efforts. This year’s results show that on all these fronts, the top performers are ahead of their predecessors and are poised to become more competitive as other companies adopt many of the same practices.
For example, 73 percent of respondents at top-performing companies now say the most senior technology leaders (chief information officer or chief technology officer) are highly involved in shaping company-wide strategy and agenda. Only 31 percent of other respondents say the same – a gap more than double that in 2020 (Annex 2).
The results show that companies in the top-performing group are also moving away from the pack in their use of more advanced technologies such as advanced analytics and edge computing, and at the level of overall transformation activities. In the most recent survey, top performers are much more likely than other companies to follow five of the ten transformation moves we asked (our “technology-advanced” approach) than the previous one – specifically, data and analytics scaling and changing the deployment model of IT.
Also, transformation approaches are more holistic: According to respondents, the gap between the average number of moves of top performers and other companies has grown since the previous survey. These top companies also stepped up their game in improving their architecture and were less likely than others to report in the previous survey (Appendix 3). The top performers stay ahead of their peers when it comes to cyber transformations, but other companies are likely to continue such efforts much more than before.
As we have seen in previous years, human issues rather than technology tend to be the biggest barriers preventing companies from achieving their transformation goals. The COVID-19 crisis has increased risks because the way people and teams work has radically changed, and the results show that top performers during this time are taking a more proactive and effective approach to talent, culture and human development. These respondents are much more likely to say that their companies are redesigning their technology organizations to better support their business strategies during the crisis and have effective core capabilities to manage IT capabilities (Appendix 4).
Leaders of top-performing organizations also seem to be much more influential on these issues: 47 percent of respondents at these companies say senior technology leaders very effectively support a culture that promotes new and digital ways of working, such as “fail quickly.” ”, across the organization. In all other companies, only 3 percent say the same thing (Annex 5).
Companies are accelerating their cybersecurity defenses and adoption of cloud technologies that can create a more resilient infrastructure, accelerate technology deployment, and bring digital products to market faster.
Migration to the cloud gains momentum
According to the survey, companies are also accelerating their adoption of cloud technologies that can create a more resilient infrastructure, accelerate technology deployment, and bring digital products to market faster. Thirty-six percent of respondents say their companies accelerated the transition to cloud technologies during the pandemic, and 86 percent expect this momentum to continue post-pandemic. In companies with a higher level of digital maturity, respondents are more likely than others to report cloud migrations. But exactly half of those surveyed say their companies are planning large or full-scale cloud transformations in the next two years. The most important benefits of using cloud computing (Annex 6) are the optimization of technology costs (56 percent); risk reduction (41 percent), such as improvements in business resilience and cybersecurity defenses; and digitization of core operations (39 percent).
These efforts are not without their difficulties. Companies already embarking on a cloud migration often face technical issues, conflicts with the business over timing, and failure to realize the expected value of the migration (Appendix 7). Again, these difficulties are less acute if there is a prior close partnership with the business. In companies where the technology strategy is co-created with the business, respondents are 34 percent less likely to report technology discrepancies over timing and 60 percent less likely to report difficulties in delivering expected value. These results confirm the notion that treading the same path as business is essential to tapping into the massive potential of the cloud – could require up to $1 trillion in value globally, our other research suggests.
Looking to the future, the need for corporate technology to be dynamic and respond to the changing needs of the business world will continue to grow. Companies that do not already have a strong technology foundation are preparing to lag even further behind. To take full advantage of technology, companies will have no choice but to simultaneously watch multiple transformation games such as cloud, cyber and talent and continue the course for each. The survey results show that even the more emerging aspects of the technology agenda (cybersecurity and the cloud) have real lasting power and relevance, only increasing the demands of technology leaders and partners.