UK companies are trailing behind their overseas counterparts when it comes to digital investment, as new analysis by PwC reveals a more cautious approach to digital spending plans compared to companies overseas as well as a “follower” mentality when it comes to innovation.
The UK findings of the 2015 Global PwC Digital IQ Survey reveal that companies are struggling to correlate digital investment with financial growth, while a majority of respondents point to a skills shortage in digital expertise as one of the main barriers to progress.
The 7th annual Digital IQ Survey of almost 2,000 business and IT executives from across 51 countries sets out to explore how well companies understand the value of technology to drive business. Analysis of the UK data reveals sharp contrasts between companies in the United Kingdom and other nations.
UK companies appear to be investing less on digital than their global counterparts with only 10% of local firms spending more than 15% of revenue on digital investments compared with 31% of firms globally. In the US, the number stands at 35% of companies, 24% in Australia, 41% in China and 32% in Germany.
The lack of investment appetite by UK firms may be because only a minority of companies see a link between spending on digital and improved financial performance, compared to executives globally. At a global level, the survey found digital investment is on the rise with 45% of executives stating their number one expectation from investments is revenue growth. But in the UK, only 4% of businesses believe spending on digital enables revenue growth, 12% expect it to increase profits, and just 4% thinks digital will have a positive impact on brand and reputation.
The 2015 Digital IQ Survey shows that UK business is concerned by a lack of clarity over who has ownership of digital within their companies, with 67% seeing it as a barrier to progress. The survey found little alignment of digital roles and responsibilities within organisational structures.
In the UK, the CEO is still taking responsibility for digital in 49% of firms while CIOs appear to have limited or no influence over their firm’s external digital efforts, focusing instead on internal IT initiatives. As well, only 10 % of companies say a chief digital officer is responsible for digital.
According to the survey findings, UK companies tend to demonstrate a “follower” mentality when it comes to sourcing ideas for innovation. Unlike their global peers, a more traditional path of reactive competitor analysis has been the preferred method of looking for new digital ideas rather than engaging outside their immediate community.
Less than 10% of UK firms actively engage their external business networks for sources of innovation, such as suppliers, or leaders from other companies or industry. This is in contrast to 60% of firms in Germany, 61% in China, 37% in Australia and 28% in the US.
The PwC survey also reveals the UK is suffering from a skills shortage with 78% of respondents saying a lack of properly skilled teams in digital is one of the top barriers to progress in the UK.
Less than half of UK firms (48%) say they have a single, multi-year digital roadmap incorporating business and IT capabilities while only 45% of UK respondents believe they have a creative strategy and necessary design skills in place. This latter figure compares to 68% of firms in the US and 69% in China.
The PwC analysis finds that the UK largest investors in digital amongst SMEs are within the IT and Financial Services sectors, helping to explain the UK’s relative success in fintech.
Jonathan Tate, UK and EMEA technology consulting leader at PwC commented: “The sharp variations in investment appetite between UK and our global respondents suggests there are gaps that need to be addressed both at the organizational level and as a leadership issue.
“In the UK, the motivation for digitisation is there but the focus has been on cyber security and data intelligence. Greater guidance on preparing digital roadmaps and sourcing the right skills set is now needed to ensure UK businesses keep up with their overseas competitors.”
The Digital IQ Survey comes after PwC’s 2015 Global CEO Survey which found almost 60% of UK leaders were concerned by the speed of technological change, while 62% were concerned that changes in technology would disrupt the core provision of their product or service.
Ashley Unwin, Head of Consulting at PwC, commented: “With nine out of 10 leaders believing the CEO championing the use of digital technologies is the most important factor in helping their organisation get the most out of digital investments, our latest Digital IQ report is another timely reminder about the priority that digital should play in any business strategy.”
Full press release on pwc.blogs.com