According to the survey “The Barometer of Digitization 2018”, conducted by Valoria in collaboration with Doingbusiness.ro, in nearly 6 out of 10 companies (59%) there is not enough knowledge and expertise for top managers to assess and develop a model digital business. In companies with a strong influence on digitization, the percentage of those who believe that their managers have this expertise is 55%, but decreases to 22% -23% in the case of medium and poorly influenced digitization.
“As technology advances, the implications for companies are all the more obvious: start-ups with growing exponential growth become global leaders, digital consumption reconfigures traditional consumer approaches, a new type of employee appears, and the labor market turns fast. The Barometer of Digitalization is the study showing the transformative effect of digitization on companies in Romania. Compared with the 2017 edition, this year’s results indicate an acceleration in the digitization process among Romanian companies. Classification of companies based upon a maturity model, identifying the obstacles they face, the digital products/services they plan to adopt, and measuring the impact of digitalization on turnover, profit, employee numbers or company value make The Barometer of Digitalization a benchmarking study”, says Constantin Măgdălina, Expert Trends and Emerging Technologies, co-author of the research.
47% of companies say they have been greatly influenced by digitalization
In Romania, 47% of companies in 2018 compared to 35% a year ago, say that digitalization has already had a big influence on them and only 2%, compared to 7% in the previous study, say they had no influence.
In 2018, 53% of companies, compared to 31% in 2017, say they are confident about digitalization because they have the knowledge to navigate the process. On the other hand, 47% still have difficulties with the digital transformation. Of these, 28% are (somewhat) unconvinced to capitalize on this trend. Only 1% of companies say they do not think digitalization is good for the company.
It is noteworthy that 81% of companies strongly influenced by digitalization are confident and believe they have the knowledge to go through this process. On the other hand, the percentage of those who are somewhat confident that they will capitalize on this trend are still the highest (45%) among the companies that say they were moderately influenced by digitalization, almost equal (44%) with the least influenced.
29% of companies say digital business models will turn their industry into 1-3 years
Beyond the transformation of technology and processes, the most powerful transformation effect of digitalization is the one at the level of the business model. Thus, in 2018, 25% of the Romanian companies, compared to 19% in 2017, believe that digital business models have greatly changed their industries. Also, the percentage of companies in Romania that consider digital business models as a threat increases from 12% in 2017 to 21% in 2018.
If in 2017 21% of companies expected digital business models to turn them over the next 1-3 years to a very large extent the industry in which they operate, in 2018 their percentage has increased to 29%. Similarly, 39% in 2018 vs. 38% in 2017 companied say digital business models will greatly transform the industry, and 23% vs. 27% believe digital business models will only somewhat affect their industry in the next 1-3 years.
Only 54% of companies have made digitalisation the central part of the business strategy
This survey by Valoria reveals that just over half of companies (54%) have made digital transformation a central part of their business strategy. For the companies most influenced by digitalization, the percentage is 73%, but the percentage drops to 44% for the moderately influenced ones and 22% for the ones least affected by digitalization. Conclusion – There is still much to be aware of and to do for active companies in Romania to benefit from digitalization.
Unfortunately, 62% of the companies in 2018, compared with 67% in 2017, say they did not give the responsibility to a leader for digital business development. The consequences can be delays in strategic decisions, insufficient support for the implementation of digital transformation strategies, and inefficiencies in achieving technology integration across the company.
Research results show that in 2018, in nearly 6 out of 10 companies (59%), there is not enough knowledge and expertise available to top executives to assess and develop a digital business model. In the companies highli influenced by digitalization, the percentage of those who believe that their executives have this expertise is 55% and drops to 22% -23% in the case of the companies moderately and least influenced by digitalization.
33% of companies say they have competitors that are severely affected by digitalization
Most companies in Romania (33%) believe that their competitors are largely affected by digitalization, 14% think that they have very badly affected competitors and 9% have competitors that are badly affected by digitization. Only 2% believe that those who are competitors were not affected by the digital transformation at all.
In 2018, 71% vs. 67% a year ago from the companies highly influenced by digitalization believe they competitors have affected and very affected by this process. The percentage drops to 33% in 2018 vs. 37% in 2017 in the case of the companies moderately influenced by digitalization and to 17% vs. 15% in case of the least influenced by digitalization.
On the other hand, 60% of respondents say they have capitalized on digitalization to have a competitive edge. The percentage increases to 78% in the case of companies which have been strongly influenced by digitalization, decreases to 52% in the case of the moderately influenced ones and to 22% in the case of the least affected by this transformational process.
Obstacles in digitalization
The main obstacle that companies see in the way of the digital transformation is their perception that they do not have digital consumers (40% in 2018 vs. 55% in 2017). This indicates the need for a better understanding of the mechanisms of digital interaction with consumers, considering that on average 60% of the purchasing process takes place online. In the second place, 40% of companies say that the main obstacle is the high costs involved by this transformation, and 38% of companies even recognize their own resistance to change as an obstacle to digitalization.
In 2018, resilience to change is viewed as an obstacle by 17% of companies that have been strongly influenced by digitalization, but only for 15% and 14% respectively of the medium and less influenced by this transformational process. The lack of digital competences in the management has percentages ranging from 10% in the strongly influenced companies to 12% in the medium-influenced ones and then to 14% for those least affected by digitalization.
Benefits of digitalization
The most important cumulative benefits of integrating the digitalization process over the next 5 years are: process simplification (58% in 2018 vs. 46% in 2017), cost savings (48% vs. 46%), increased operational efficiency (48% 35%), revenue growth (31% vs. 21%) and better performance measurement of the company (28% vs. 34%). On the last place is the benefit related to the fact that it facilitates the recruitment and retention of employees (3%).
In 2018, 15% of companies that are strongly influenced by digitalization, 18% of the medium-influenced ones and 16% of the least-influenced consider that digitalization will contribute to the company’s operational efficiency. Companies that have been moderately influenced are the ones who most believe that digitalization improves their decision-making with data analytics (10%). Companies that have been less influenced by digitalization are those who believe they will benefit from the simplification of processes (13%), competitive advantage (13%) and innovative products (13%).
“The Barometer of Digitalization is the only comparative study that shows the evolution of digital transformation among Romanian companies. Compared to 2017, this year’s edition shows a concern to increase the level of digitalization. The aggregate analysis and interpretation of collected data is also supplemented by the analysis of data relevant to 13 industries. In the over 80 pages of the report, the most important aspects of digitalization are scanned for any company leader who wants to find the level of digitalization of his industry and draw conclusions with a diagnostic value related to the digitalization of the company he is leading”, says Elena Badea, Managing Director Valoria, co-author of the study.
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About the survey
This survey released by Valoria gauges the perceptions of managers and top executives about the impact of digitalization on Romanian companies. The questionnaire, which received 369 responses, was applied between 15 March and 30 April 2018. The report refers to digitalization as the use of storage and processing technology, search and retrieval of information between online users. 5% of respondents come from companies with a turnover of more than EUR 100 million, 5% of companies with a turnover of EUR 50-100 million, 22% of companies with a turnover of EUR 10-50 million, 41% of companies with a turnover between 1-10 million EUR and 27% under 1 million EUR turnover. 31% of the respondents are CEO/President/Chief Executive Officer, 6% Vice-President/Chief Executive and 29% Managers. This study has been conducted in collaboration with Doingbusiness.ro.