Cos can gain $357 bn in profits a year with people focus, ESG: Infosys arm

While digital adoption and ESG orientation individually drive profits, they are more effective together, says the Infosys Digital Radar 2022 report

Digital adoption alone is no longer enough to meet business objectives and drive profits, and companies must now use the technology to differentiate beyond traditional IT metrics, reaffirming the importance of people-focused transformation and ESG in achieving business success, according to new research from Infosys Knowledge Institute (IKI), the thought leadership and research arm of Infosys.

According to the report Infosys Digital Radar 2022, improving average transformation effectiveness has the potential to unlock $357 billion in incremental profits globally, based on data from the top survey respondents. While digital adoption and ESG orientation individually drive profits, they are more effective together.

Salil Parekh, CEO, Infosys, commented: “Enterprises are at an inflection point post-pandemic. COVID- 19’s widespread disruption and the subsequent digital acceleration have permanently altered how the world views technology. While some enterprises have seen this as an opportunity to move beyond the questions of whether and how far to digitize, some still haven’t realized the need to use these digital tools to engage their stakeholders more purposefully and respond to calls to serve people, planet, and community.”

When companies have high levels of tech adoption and strong ESG commitment, four out of five times (81%), they also use technology most effectively. ESG and technology effectiveness are connected because ESG informs company culture, shapes mindset, and provides a purpose that guides decision- making up and down the line. Improving ESG leads to higher effectiveness than simply adopting more technology. While adoption is necessary and positive, ESG focus further doubled tech effectiveness, indicating that ESG commitment now drives value in its own right.

The study reveals that While businesses once faced a ‘digital ceiling’, unable to reach the most advanced levels of tech adoption, these adoption thresholds have become the minimum standard.

Infosys Digital Radar 2022 assessed the digital transformation efforts of companies on a Digital Maturity Index and found that companies have progressively adopted technology year-over-year. The report, which surveyed nearly 2,700 digital transformation leaders from the US, Europe, Asia and Australia, ranked the most digitally advanced companies as ‘Visionaries’, followed by ‘Explorers’ and then ‘Watchers’.

From 2018 to 2020, a meaningful portion of businesses lagged far behind, watching the technology journeys of others before starting their own. This year’s findings, however, show that all respondents have graduated from the ‘Watchers’ category and are now all either ‘Visionaries’ or ‘Explorers’. Infosys has found that each industry has reached an age of digital maturity never seen before. The percentage of companies achieving moderate transformation success, the ‘Explorer’ tier, rose minimally. However, the ‘Visionary’ cluster grew from 22% in 2020 to 30% in 2021, the largest year-over-year increase for this cohort in the survey’s history, indicating that companies have broken through the ‘digital ceiling’ and being a top adopter is no longer an operational or financial differentiator.

Companies across all industries have rushed to broadly implement technology

Companies are significantly increasing adoption of emerging technologies. More respondents reported implementing artificial intelligence (AI) and blockchain (73% and 71%, respectively) than mature and foundational cloud and legacy modernization (69% and 68%, respectively), suggesting that once emerging technologies (like AI) now show real promise, and enterprises are moving quickly and aggressively to implement them than in earlier times.

More than 90% of companies indicated they had at least started to adopt the 19 digital initiatives surveyed. Technology adoption in the healthcare industry, for example, increased from 60% to 98% since 2019. The adoption rate for the manufacturing sector increased from 81% to 97%, and the rate for the financial services sector grew from 59% to 94% in the same period.

Jeff Kavanaugh, VP and Global Head at Infosys Knowledge Institute, commented: “This year’s Digital Radar research revealed a significant shift – no longer are enterprises sitting, waiting, and watching from the outside as others embrace digital. The most successful businesses are no longer early digital adopters, nor those that invested the most in AI, blockchain, and IoT. Those most successful firm’s now see value in the relationship between digital technologies and the people they serve. The companies best prepared to enter the post-pandemic era have already realized that technology itself isn’t a differentiator, but a commitment to people and purpose.”