Companies most often invest in digital transformation to boost productivity, reduce operating costs and deliver better experiences for customers and employees. Digital leaders enjoy many strategic advantages. But when the pandemic disrupted virtually every organization at every level, did digital maturity make organizations better at meeting customer commitments, keeping employees productive, and maintaining IT continuity?
Based on our comprehensive analysis of operational data from thousands of large enterprises on the ServiceNow Now Platform® worldwide, the answer is an emphatic yes, indeed. As COVID-19 spread across the globe during the first half of 2020, organizations that had already invested in workflow digitization outperformed digital laggards in several operational areas, the data show. Compared to laggards, digital leaders managed larger case volumes, improved service quality and shrank issue resolution times.
The story only gets better for digital leaders, because investment in workflow digitization across HR, IT, and customer service delivery also correlates to improved financial performance, according to our analysis of publicly available financial data from several thousand companies that run digital workflows on the Now Platform®.
The COVID-19 stress test
Before the crisis, digital leaders were already well ahead on active platform users and automation maturity. In the second quarter of this year, however, they found themselves managing a 200% to 800% increase in case volumes by workload type, compared with industry peers that are digital laggards.
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Despite the surge in volume, leaders largely maintained their service delivery advantage (incident resolution within SLAs) over their laggard counterparts. In fact, digital leaders improved incident resolution cycle times by 6% versus the last quarter of FY19 while laggards saw their resolution rates fall by a whopping 20%.
The undeniable takeaway is that digital leaders delivered. They did right by their most important constituents amid historic uncertainty and are poised to extend their strategic gains over digital laggards in the post-COVID era as well.
The digital transformation divide
Regardless of size, sector or revenue, most organizations are now operating on one side or the other of a digital transformation divide – a growing chasm, which the pandemic has exacerbated, between organizations that are rapidly adapting to required changes in managing employees, customers and IT workloads, and those that aren’t.
The analysis is part of the inaugural ServiceNow Digital Transformation Index (DTI), which measures the operational impact on organizations of digital transformation – the process of implementing advanced technology to automate business functions and deliver new and more efficient services to employees and customers.
ServiceNow hosts 9,000+ enterprise deployments on the Now Platform, supporting more than a billion incidents and cases per year. These cases impact several million employees and customers around the world. As such, they are a useful proxy for the impact of workflow digitization on the global economy as a whole.
For customers that give us permission to analyze their data, we actively track 300+ business volumes that we can connect to more than 1,000 business KPIs, such as mean time to resolution for a Tier One customer issue. When we correlate these operational metrics with publicly available financial data, we have unparalleled insight into the relationship between workflow digitization and business performance.
Consider SG&A (sales, general administration) as a percentage of revenue, a common financial metric used by organizations to gauge the financial impact of digital transformation. Across all industries, digital leaders have a 6% advantage over their industry peers.
Results vary by industry, but this digital divide repeats itself for many other financial measures, including revenue growth, operating margins and cost savings. These gains were made by digital leaders in every sector, including financial services, telecommunications, healthcare, media and manufacturing.
The DTI, is based on anonymized data from thousands of companies across about a dozen industries worldwide that run IT, employee and customer service workflows on the Now Platform. Our inaugural DTI analysis covers the period from January to April 2020, coinciding with the global spread of COVID-19. This data shows that digital leadership is transformational to organizations of all sizes, in every sector, and that the advantage that digital leaders hold over laggards will continue to grow.
Leapfrog for laggards
So how can digital laggards catch up with leaders? Clearly not with traditional thinking. Personally, I don’t believe in silver bullets, but there are lessons to be learned about boosting an organization’s digital velocity from the collective wisdom of thousands of deployments. I call this “digital leapfrogging.”
Companies that leapfrog successfully go wide on employee experience investments versus going deep on IT modernization investments. They invest in improving the professional lives of thousands of employees, instead of getting stuck trying to build a perfect digital foundation.
Take the example of one global energy company that transformed from digital laggard to leader. This customer deployed the Now Platform to its workforce using a go-wide employee-experience strategy that incorporated healthcare services, facilities management, logistics, travel and field engineering.
When you manage this spectrum of processes in silos, it creates a drag on enterprise productivity. And that’s the lesson digital leaders understand: Employees don’t live in silos, no matter what their functional specialization might be.
After launching its instance of the Now Platform, the company saw an explosion of hundreds of thousands of automated employee requests attracted by a service catalog almost seven times more comprehensive than the energy industry average. Half the company’s employees are now active on the Now Platform.
Business results include a 15% improvement in employee satisfaction; an industry-leading reduction in SG&A costs; and more than $100 million in employee productivity available to be re-invested in strategic efforts. The company achieved these results in months, not years.
From laggard to leader
In the short term, digital laggards will be forced to focus their transformation efforts on repairing cracks in their operating models. We are seeing many organizations accelerate investments that focus on bouncing back from the digital stress test imposed by COVID-19. As businesses stabilize, however, they should consider three key actions to accelerate their digital transformations:
- Move cross-functional workloads into an enterprise platform
- Rebalance IT investments towards future-proofing operating models
- Create automation that protects and empowers employees
Taken together, our analysis shows that before the pandemic, digital transformation was becoming an increasingly important driver of operational performance and financial success. The COVID-19 pandemic has only accelerated this trend. Going forward, we predict digital leaders will continue to increase their competitive advantage. Laggards will recede farther into the rear view, and face increasing pressure to invest more boldly in their digital future.